3PL disruptors: what to learn from “out of the box” players

Traditional third party logistics operators are facing an important influx of new competitors in last mile delivery services from other actors, forcing them to reshape their features and value offer for a company’s supply chain strategy.

Earlier, we spoke about the main trends that are redefining the market of third-party logistics. Third-party logistics (3PL) around the world are shrinking in number and growing in size, according to Forbes magazine. According to The Huffington Post, companies are pressured to make strategic decisions regarding their future as a buyer or target.

But there are new actors who are disrupting the market and forcing the supply chain distribution industry to reflect how to add value to their service.

Amazon is expanding in the field, and according to Consafe Logistics, it’s actually starting to look like a “classic 3PL company” with the potential to challenge other companies and distributors.

For instance, it is pushing groceries through a subscription program called Prime Fresh Now, a fresh delivery service with great growth prospects with the millennial generation, and it has already expanded across the Atlantic to the United Kingdom.

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Amazon is not alone.

In June, retail giant Walmart announced it was teaming up with online transportation networks Uber and Lyft in a test for grocery deliveries. According to Fortune, these companies will be used for the last mile delivery in small areas of Denver and Phoenix when customers request home deliveries, with no additional fee.

Fortune quotes Michael Bender, the operations chief for Walmart’s e-commerce arm:

“We’ll start small and let our customers guide us, but testing new things like last-mile delivery enables us to better understand the various ways we can best serve our customers how, when and where they need,” he said.

Uber meets Walmart: what’s in it for them?

Uber already operates a delivery service called UberRUSH, servicing several cities in the United States. Among its features, Uber offers:

  • As many deliveries on the road as the customer wants.
  • Low delivery costs, zero overhead, “ because couriers don’t need to make round trips, you can actually expand your delivery zone.”
  • Real-time tracking, where customers can always see where on the map the delivery is, improving pickups and drop-offs.
  • Integration with other platforms, to build deliveries into day-to-day operations.
  • An interactive dashboard for requests, tracking, and notification.
  • Alerts, with an API integration for the company, to provide delivery updates via text and notifications.
  • Escalation, as Uber promises that “whether you want to make 27 deliveries or 2,700,” customers can rely on the company to handle them all.

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To Walmart, it isn’t just about fleet tracking and route mapping. It’s about saving money. According to Tech.co, a “seamless and uninterrupted supply chain management is a crucial factor to the success of any retail business.”

“High-level global positioning system (GPS) and radio frequency identification (RFID) techniques help to identify a product which is in transit and provide exact data about its location, temperature, etc. A customer can be provided accurate delivery information after a retailer tracks the traffic conditions, road blocks and average speed of transporter.”

The technology also helps merchants optimize their inventory and prevents over-stocking or shortage of products in warehouses. Smart systems not only provide data on underperforming and overstocked products, but they increase fuel efficiency by monitoring traffic conditions.

While to The Economist  “thinking outside the box” is helping the company achieve success in store, this wouldn’t happen without good supply chain management.

“Its scale and logistical skills help the company implement them better than others. For example, Walmart is already expert at the complexities of handling perishable items. It has tried delivering groceries, but is expanding a pickup service instead, betting that this will be both convenient for shoppers and profitable for the company.”

To Forbes’ contributor Trefis, groceries account for more than 50% of Walmart’s revenues, and providing convenient delivery options to consumers in this segment can further boost them.

They estimate that “as consumers prefer seamless and quicker delivery options, this strategy to use an existing network which is trusted by consumers can work in the favor of Walmart. It also reduces pressure on margins as the costs incurred in using these services can be covered by the delivery charges levied to the customers, and it does not require any investment in transportation infrastructure.”

It’s worth taking note and, instead of fearing disruptions to the 3PL logistics industry from other actors, we start learning from some features they are offering.

What do you think about the disruption of new delivery services for the 3PL industry?

Francisca HowardWriten by Francisca Howard

Francisca is a commercial engineer by University Adolfo Ibañez. She worked 10 years in the retail industry and the last few months she has been working as a business developer for Drivin, a SaaS solution that allows to distribution companies to reduce its transport costs as well as increase the service quality of their final clients.

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