Both sides must transform the current risks into catalysts to reshape what has historically been a transactional partnership into a transformative collaboration.
The risk of not meeting the demands of consumers stretches beyond missing out on additional revenue. Failure to deliver on-time and in-full orders to customers could also lead to brand damage and the loss of loyal customers, and make it difficult to convert the business of new customers. Both sides must transform the current risks into catalysts to reshape what has historically been a transactional partnership into a transformative collaboration.
Embrace a new mindset
One strategy that could help smooth out high shopping volumes is to shift the timing of promotions, a strategy called “flattening the curve.” This can help retailers by creating early momentum heading into rush periods. It will also help carriers by spreading out shipping volumes across busy seasons.
Curbside pickup is also a valuable tool to help mitigate risk associated with extremely high and unpredictable shipping volumes. Retailers might consider incentivizing buying online and picking up in store (BOPIS) by offering discounts, free gift wrapping or additional rebates for shoppers selecting BOPIS.
But retailers can’t convince all customers to shop early and pick up in store, so collaboration between retailers and carriers will be essential to tackle the shipping constraints that will surely exist, even with these strategies in play. When it comes to working together more strategically, both sides should consider:
- Taking steps to strategically distribute volume and position inventory further down in the supply chain
- Implementing technology solutions to mitigate real-time challenges and forecast supply chain ebbs and flows
- Working together to understand cost drivers — and push to slower deliveries or underutilized network lanes
- Finding capacity that doesn’t add material cost to carriers
- Discussing optimized timing for surge rates
- Considering nontraditional partnerships with entities such as app-based delivery services, leveraging the gig economy to harness untapped capacity for last-mile delivery (it’s a next-level solution, yes, but one that should be considered in these unprecedented times)
- Asking consumers to opt for a consolidated delivery day or provide a discount for picking up at a central location, such as a pickup locker to reduce the number and range of stops a carrier is asked to accommodate, creating synthetic density in the supply chain
Synthetic density is a tool that may require both time and experience for customers to fully appreciate its value. For instance, take a customer who is reluctant to retrieve their package at a pickup locker. If that method proves to be the only viable option to get the package delivered before Christmas due to heavy volume with the traditional shipping channels, it may gain in consumer acceptance. The best way to maintain customer satisfaction is to create a system that offers a variety of options that meet the demand for both convenience and, when it’s needed, urgency.
Be ready for anything
It’s impossible to predict exactly how COVID-19 will behave in the next few weeks, in early 2021, and beyond. Contingency plans of all types are a wise investment of time and resources, even if they never end up needing to be implemented. The key to getting through any of these challenges will be collaboration between retailers and carriers. Keep the lines of communication open and be ready to adjust at a moment’s notice through a collaborative mindset.
If 2020 has proven anything, it’s that few things ever go according to plan.
Summary
COVID-19’s volatility has made it difficult to predict and plan an effective strategy for consumer behavior and the delivery of goods. However, with collaboration between retailers and carriers, many of these challenges can be mitigated.
