Shipping Shift: Why Not Use Every Store As Its Own DC?

Written by Evan Schuman
February 15th, 2012

Every time we hear one of these shipping company nightmare stories—with packages lost or recklessly damaged—it’s a painful reminder of how much retailers are at the mercy of these shipping partners. When a consumer makes an E-Commerce purchase and something happens to the product en route, who does the consumer blame? (Yeah, life’s not fair. Get used to it.)

As a practical matter, there’s little IT can do to take control of these third-party shippers. Nor can the department get better visibility into its package-tracking operations, because they are limited to how sophisticated that shipper’s internal tracking systems are. But there may be a way to flip this problem into an advantage. What if chains viewed every store as a local distribution center? And used local talent to deliver not only to customers but on the same day? This approach enables the merged-channel retailer to extend that experience right back into the customer’s front yard and maybe through the front door.

The original business argument for outsourcing product distribution to the third-party likes of FedEx, Airborne/DHL, UPS, USPS and others was supposed to be lower costs, courtesy of economies of scale, along with advanced tracking services. But along with those benefits, retailers had to turn over a super-crucial part of their business to people who had little reason to care.

FedEx, usually seen as the shipper with the best tracking system, loved to play games with those systems. Several years ago, when we used to receive many daily FedEx deliveries, we noticed that 10:30 AM often came and went with no delivery. Then, maybe at 11:20 AM, the packages would arrive. Calling to get the shipper the credit for failure to meet the 10:30 AM delivery deadline, we discovered that the packages had been time-stamped 10:28 AM.

You guessed it. When we ran into the delivery guy a few days later, he revealed the least well kept secret in FedEx’s operation, which is that delivery folk would pull over at about 10:25 AM and scan all of their undelivered packages while in the back of the truck. So much for the fool-proof proof-of-delivery systems.

And FedEx had little reason to look into such issues, because it would accomplish nothing but hurt its on-time delivery record. These are your distribution partners, and FedEx is one of the better ones.


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