LAST MILE BIG AND SMALL

Transcription

1 LAST MILE BIG AND SMALL

2 Omnichannel delivery volume growing US Online Sales, $B $195.0 $225.0$ % $349.0 $297.0 $434.0 $385.0 Delivery Accelerating for Big and Small Large format home delivery expected to grow at 4-5% (unit) CAGR between ~90 MM units delivered in ecommerce mcommerce(% of total ecommerce) % CAGR; leaders achieve >20% online CAGR in past 3 years 2017 FedEx handled 290 million small format shipments between Black Friday and x-mas UPS /FedEx seeing >4% volume CAGR between

3 Role of Last Mile in omnichannel success? Small Format Large Format What is Last Mile? How does Last Mile fit into your broader omnichannel supply chain? How critical is Last Mile in driving omnichannel growth? Do you see future Last Mile as table stakes or as a source of differentiation?

4 Delivering on customer expectations? Is cost the biggest consideration or do customers care about other service elements? Do customers care about Same Day Shipping? Are they willing to pay for it?? Is the industry doing a good job of delivering against expectations?

5 Expectation gap for large format Small Format Large Format Source: AT Kearney

6 1-2 days Next Day Same- Next Day and for small format Small Format Large Format customers want Faster Fulfillment Consumables & Baby Toys Current Retailer and Free Shipping Customer Expectations Same Day 70% say Free Shipping a big decision driver Electronics Hardlines Apparel 25% willing to a pay a bit more for Free Shipping

7 Structural challenges today Small Format Large Format What do you see as the biggest challenges that retailers face in unlocking breakthrough Last Mile performance? What are the root causes of the above challenges?

8 Large format: Retailer / Carrier impasse Challenges (based on survey of 20 retailers and carriers) Source: AT Kearney

9 Small format: Same Day pains US Same Day Delivery Forecast in 20 Cities Getting upstream inventory deployment right is hard Segmented flow path face trade-offs Majority of Same Day demand outside FedEx and UPS coverage Source: BI Intelligence Value of merchandise delivered Same Day in 22 cities ($B) Sub-scale density via today s dedicated/3pl Same Day models $25-45 per average delivery drop in urban areas $10-20 in fully optimized routes Cost is significant % of profit given projected basket size

10 Path forward for Large Format? What solutions are retailers and your organization pursuing to unlock Last Mile delivery performance? Do you expect carrier consolidation to be a big driver of unlocking cost and/or service efficiency? To what extent are retailers and your organization pursuing non-dedicated (co-mingled) deliveries?

11 Path forward for Small Format? What strategies and end-to-end capabilities are retailers pursuing to enable Same Day? What role do you expect traditional delivery models (FedEx/UPS) to play in future Same Day? Are marketplace solutions viable (e.g. Google Express, Deliv, Zipments, TaskRabbit)? What are the key challenges for retailers in adopting marketplace platforms?

12 Thanks please reach out Belinda Bathie Josh Delay Marie Robinson Mike Hu Sumit Chandra