Leveraging supply chains for parcel deliveries

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The dramatic rise in online shopping has resulted in an increase in parcel deliveries which has yet to be translated into profit. Craig Bunker considers how leveraging supply chains to carry out parcel deliveries, can help businesses bolster their margins.

One of the issues currently facing retailers is the cost of parcel deliveries. As more and more customers opt to have purchases delivered to their homes, companies are under pressure to increase their parcel distribution capacity. In this context, retailers are looking for home delivery/collect solutions to reduce their reliance on the parcel channel and provide a better customer experience.

Evolving Delivery models

One possible solution, which is currently being employed by companies such as Tesco and Asda, is the Click and Collect model. This system allows customers to select a product online and then pick it up from a nearby shop, where it was delivered using the retailers supply chain. This system does not, however, cater for customers who would prefer not to leave their homes.

The solution to this issue is to use a local courier service to deliver the good from the shopping outlet to the customer’s home. This method not only leverages the retail supply chain, consequently eliminating the need for a parcel hub and depot, but also ensures a shorter distance for the courier to travel. The reduced travel time lowers delivery costs, and also provides additional flexibility, meaning customers can select the time they would like their order to arrive. Companies currently experimenting with this system include Aurora Fashions.

Developing a Sustainable Parcel

It is unlikely that the modern consumer will settle for a single parcel delivery option. The success of online shopping is largely driven by convenience and retailers need to find innovative ways to balance increased demand with rising delivery prices. The model described in this post may well prove an important piece of that puzzle.

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