Why E-commerce firms will have their own trucking fleets in the future

Whenever you buy anything from an e-commerce store and the parcel is not delivered on time, you probably would get furious at the store and think twice before buying anything from it the next time you want something. In fact, there are chances that you never visit that store again.

The e-commerce store not just lost a customer, i.e., you. In fact, it lost a source of a steady stream of revenue to its competitor, but is the ecommerce store really at fault here?

It usually doesn’t matter to the average customers whether the delay was due to the failure of the e-commerce store management or the third party trucking company that was assigned to deliver your product on time. They just get angry when their delivery gets delayed. But if the problem was on the part of the e-commerce store, then they should definitely be penalized by you. However, the trucking company’s ineffectiveness should never hurt the business right?

Handling the ever picky and fickle customers:

The e-commerce retail universe has empowered the clients with the immense power to decide what they want and when they want it. Now a single misstep on the part of the e-commerce store will budge the customer to open a new tab and go to some other online store and continue his/her shopping spree from there. Even more influential is that fact that customers are even more fickle when it comes down to delivery times.

Nothing gets a customer more disappointed with an e-commerce store than late delivery. If you want to buy a toy for your baby girl on her 3rd birthday, would you tolerate if that gift arrived after the birthday bash ends?

Certainly not and that’s the reason many e-commerce stores like Amazon are starting to handle and build their own trucking fleets to stop depending on trucking firms to decide their fate and impression on customers.

The next Billion Dollar Opportunity?

Trucking is definitely a lucrative industry with over $700 billion of revenue each year, and for e-commerce stores, this may be the next billion-dollar business opportunity.

Delivery from an e-commerce store consists of three parameters, i.e., the first mile, the middle and the last mile. All three should be working in prime unison if the parcel is on towards making its way to the consumer on time. But with the increasing reach of e-commerce stores, more houses would need to be served and that too on time which positions the Last Mile part of the delivery process as a crucial differentiator in providing the best customer experience.

40% of online shoppers will trust a brand more if the delivery gets to them faster. Consumers also require more flexibility when it comes to transportation options as 66% of them now choose whether to buy or not from an e-commerce store, depending on the number of delivery options available to them.

If the product can reach on the demanded time, the business will definitely experience the benefits. But having said that, how should e-commerce stores proceed forward with it?

Prioritizing Freight Deconsolidation:

Modern day online shoppers are provided with a tracking code which helps them keep track of the delivery and at the same time, gives them a sense of reassurance that their order is on the way. These tracker moves are directly connected to how freight deconsolidation is handled, and that’s exactly where the incentive lies for e-commerce stores to build their own fleets.

Different parcels have different destinations within a particular geographical area, and with their own fleets, e-commerce firms could consolidate their freight faster as they can build specialized fleets with smaller, compartmentalized trucks instead of using bigger trucks like the class 8, allowing goods to move faster and reach customers on time.

Larger Class 8 trucks might be required for servicing the upper end of the supply chain, i.e., the first mile and the middle mile, but if e-commerce stores build their own fleets with smaller, specialized trucks to fire up the last mile, they could transform concepts like same-day delivery and distribution points.

This could create the ultimate point of differentiation between e-commerce stores, especially during Christmas season. The two largest US transportation carriers FedEx and UPS, missed their delivery 5% and 9% of the time respectively during Christmas in 2015.

If customers need to be captured for the long term, the best way for e-commerce stores to counter the problem of late delivery is to build their very own trucking fleets, even if it’s for last mile delivery first, and then move on to the upper ends.

Amazon, one of the biggest e-commerce store and the pioneer in online retail strategy has already gone out to build, not just its own trucking fleet, but a whole logistics system which includes land, air, and sea freight transportation and some believe it to go even bigger in the times to come.

It’s a bid from Amazon to firstly, capture a big share of the $2.1 trillion global logistics industry. Secondly, Amazon plans to build better inventories, cut down slack times, anticipate demand better and above all, provide the ultimate experience to its customers.

Even other e-commerce giants like Ali Baba and Walmart are indulging in similar behavior, and it’s just a matter of time before more and more companies start joining the bandwagon. Building their own fleet can trigger a whole-scale transformation of how a product starts off from a factory in China and ends at a doorstep in a home in Los Angeles or an Office in New Jersey, all handled and managed effectively, by a single e-commerce firm.

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