The Changing Last Mile

The Changing Last Mile

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  RETAILSUPPLYCHAIN TRANSFORMATION Accenture Post andParcel Industry Research 2019 THE CHANGING LAST MILE
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  Copyright © 2018Accenture. All rights reserved. 2 Price RETAILERSARE WEAPONIZINGLASTMILE Free Fast Free + Fast Control WE ARE HERE
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  Copyright © 2018Accenture. All rights reserved. 3 CONSUMERSDEMANDMORE SPEED Of consumers are willing to pay for same day or faster delivery 88% Of online shoppers say knowing the estimate or guaranteed delivery date is important63% Of consumers would consider receiving their order via drones to speed up delivery40% Of consumers rate the speed of delivery as the top feature they are looking for in their delivery service provider 28% Of millennials consider an online retailers’ ability to deliver on the same day before purchasing via the online store 30% Of retailers offered same day delivery in 201851% Thetopreasonthatcustomersusesamedaydeliveryisthe needforimmediatereceiptoftheirorders. Source: https://www.gopeople.com.au/blog/same-day-delivery-trends-and-statistics-to-guide-your-business/
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  Copyright © 2018Accenture. All rights reserved. WHYLASTMILE MATTERS Thebullseyeisbeingthe firstretailertooffersame- daydeliverynationwide. “ Brian Cornell, CEO of Target Of customers increasingly expect online providers to offer a one-hour delivery service in metropolitan areas54% Of customers consider “fast delivery” to mean same-day delivery 96% most important delivery consideration for online shoppers is fast delivery, and is preferred to a free delivery option 2nd Sources: Accenture, Adaptive Retail Survey, 2017; MetaPack, 2017 State of eCommerce Delivery, Accenture analysis 4 Of millennials attach special importance to ultra-fast delivery options 66%
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  Copyright © 2018Accenture. All rights reserved. 5 MOBILEIS FUELLINGTHECHANGE Discovery Purchase Of digital advertising is mobile advertising 70.1% Growth in mobile advertising in 2017 30% Of retailers focused on enabling social selling 35% Of ecommerce is mobile commerce (mCommerce) 40% Growth in mCommerce in 2017 45% Of ecommerce purchases are apps generating 4x conversion rate to conventional mobile 44% App purchase data: http://www.businessinsider.com/mobile-apps-most-popular-e-commerce-channel-q4-2017-2018-2 Mobile advertising: https://forecasts-na1.emarketer.com/584b26021403070290f93a57/5851918a0626310a2c186a4d Social selling: http://totalaccess.emarketer.com/article.aspx?r=1016811 Mobile ad growth: https://content-na1.emarketer.com/us-ad-spending Mcommerce growth: http://totalaccess.emarketer.com/reports/viewer.aspx?r=2002139 Mcommerce marketshare: https://www.statista.com/statistics/249863/us-mobile-retail-commerce- sales-as-percentage-of-e-commerce-sales/
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  Copyright © 2018Accenture. All rights reserved. ARTIFICIALINTELLIGENCEIS SUPERCHARGINGTHECHANGE Front Office AI—Transforms the Consumer Recommendations Predicting Buyer Behavior Inventory Placement Fulfillment Optimization Order Management Targeted Offers Back Office AI—Transforms the Network CONSUMERS’ CHANGING EXPECTATIONS More Relevance Greater Convenience Instant Information Expanded Choice Increased Control Default Personalization 6
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  ECOMMERCEFULFILLMENT METABOLISMIS INCREASING Faster Cycles Fragmented Inventory& Shipments Shorter Distances From Supply Chain to Supply Network 1 2 3 4 7Copyright © 2018 Accenture. All rights reserved.
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  INVENTORY IS GETTINGCLOSER Amazon’sChanging Fulfillment Landscape 1995 2005 2017 1 FACILITY 6 FACILITIES 787 FACILITIES Including 458 Whole Foods 8Copyright © 2018 Accenture. All rights reserved. Source: MWPVL.com, amazon.com,
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  Copyright © 2018Accenture. All rights reserved. Have consolidated demand planning, replenishment, allocation and order management for offline with online INCREASEDFOCUSON ONLINE-OFFLINESYNERGY 74% Say they have strong synchronization between inventory and channels 58% Have good real-time visibility of inventory with 60% actively improving that capability 57% Increase in warehouses focused on online-offline fulfillment15% Of warehouses offer ecommerce fulfillment services (up 20% over 2 years) Retailers are quickly moving toward an online-offline approach that allows them to use their offline capabilities as a strategic advantage online. 1/3 Rate integrating ecommerce and in-store capabilities as business critical 78% Sources: Accenture, Adaptive Retail Survey, 2017; MetaPack, 2017 State of eCommerce Delivery, Accenture analysis 9
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  Copyright © 2018Accenture. All rights reserved. 10 Daily Retail Transactions per Store, 11/17 THEONLINE-OFFLINESYNERGY ADVANTAGE 12,000 8,000 4,000 Offline Online DailyTransactionsperStore 0 Carrefour China Yonghui Hema 50% ONLINE-OFFLINE SYNERGY BENEFITS OFFLINE… …AND ONLINE SALES Increase in offline transactions with a robust online presence 50% Increase in online sales in the first 6 weeks after a new store opens 52% Sources: Kleiner Perkins Internet Trends Report https://www.kleinerperkins.com/files/INTERNET_TRENDS_REPORT_2018.pdf The Retail Bulletein https://www.theretailbulletin.com/news/insight_new_physical_stores_increase_retailer_website_traffic_by_52_07-08-17/
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  Copyright © 2018Accenture. All rights reserved. 11 ADAPTING TO FAST AND FREE DEPENDS ON STARTING POINT 3EMERGINGMODELS FOR E-FULFILLMENT Source: Company financial statements, Accenture analysis END-TO-END CONTROL1 2 3 • Critical mass and size • Own assets: conveyance and warehousing • Digital-driven (AI, Analytics) operations PARTNER ON LAST MILE DELIVERY PARTNER ON FULFILLMENT AND LAST MILE • Frequent consumer purchases and/or highly impulsive categories • Network of stores covering population • Fulfillment from store • Small, low frequency and/or limited footprint retailers • Limited or basic supply chain capabilities • Limited resources to invest Marketplaces Groceries Hypermarkets Specialized Most Other Retailers MODEL TYPICAL CRITERIA RETAILERS
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  Copyright © 2018Accenture. All rights reserved. 12 Logistics arms of Amazon and Alibaba are not much larger than the size of most posts’ parcel businesses MODEL01:OWN END TO END -25% -15% -5% 5% 15% 25% 35% 45% 1100 10 13020 30 14010040 50 9060 70 80 120 USPS Amazon Logistics DPDHL FedEX LaPoste RoyalMail Amazon UPS Yamato Alibaba SingPost Parcel+LogisticsRevenueCAGR [FY2013toFY2016] Parcel + Logistics Revenue [FY 2016] Postal organizations Integrators [Bubble size indicates 2016 revenues] Source: Company financial statements, Accenture analysis 01 02 03
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  Copyright © 2018Accenture. All rights reserved. 13 Competition is on the rise—Retailers MODEL02:USEPARTNERS FOR LAST MILE TRADITIONAL PLAYERS Instacart Same Day: In all its 1,200 cities across 25 states in the USA; Partners: Walmart Same Day: Partnered with various new age players to offer same day delivery in multiple regions. Partners: Tesco Same Day: Extended Same Day Click + Collect service to 300 locations covering over 99% of UK households. It also launched one-hour grocery delivery in London though a tie up with Quiqup. NATIONAL WEST MIDWEST SOUTH NORTHEAST Postmates Doordash Deliv Google Home Google Express Source: BI Intelligence, CBInsights, Press Releases, Post&Parcel , Accenture analysis 01 02 03 Whole Foods Petco Costco PCC Natural Markets Smart & Final Mollie Stone’s Markets Sur la table Gelson’s Natural Grocers Stater Bro’s Markets BevMo! 99 Ranch Market Bashas’ Target Cub Foods Binny’s Shop’n Save Schnucks H-E-B Central Market Spec’s Total Wine Publix Food Lion Fairway Key Food Farm Shoppers Giant Pricerite Farm Fresh
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  Service % Population SameDay 20% Next Day 52% 2 Day 92% 3 Day 100% 4 Day 100% Copyright © 2018 Accenture. All rights reserved. 14 Monarch FX MODEL03:USE PARTNERSFOR LOCAL FULFILMENTAND LASTMILE Darkstore Largest fulfillment center network Enabling 1-hour delivery, same-day delivery and the lowest rates for regular shopping 2018 Network & Coverage Source: Company websites 01 02 03 Chino Dallas Atlanta Columbus N-NJ
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  Copyright © 2018Accenture. All rights reserved. 15 EXchain Shipwire Shipwire is a global fulfillment company with offices in China, Hong Kong and Europe; offers same day delivery With more than 10 years in service, EXchain is a leading delivery fulfillment company in Hong Kong; offers same day delivery Source: https://www.chinaimportal.com/blog/fulfillment-centers-china-hong-kong/ 01 02 03 MODEL03:USE PARTNERSFOR LOCAL FULFILMENTAND LASTMILE
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  Copyright © 2018Accenture. All rights reserved. 16 TECTONICPLATESARE MOVING As the supply chain grows in strategic importance our research shows those networks are fundamentally changing, creating a new delivery reality. Local Last Mile Speed and Agility Ecosystem for Scale Retailers are focused on inventory proximity for cost and speed Retailers are making all elements of the supply chain faster and more agile New models with new partners will continue evolve to achieve synthetic scale
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  FOR MORE INFORMATION /in/brodybuhler ABOUTACCENTURE Accenture is a leading global professional services company, providing a broad range of services and solutions in strategy, consulting, digital, technology and operations. Combining unmatched experience and specialized skills across more than 40 industries and all business functions – underpinned by the world’s largest delivery network – Accenture works at the intersection of business and technology to help clients improve their performance and create sustainable value for their stakeholders. With 459,000 people serving clients in more than 120 countries, Accenture drives innovation to improve the way the world works and lives. Visit us at www.accenture.com. BRODY BUHLER Global Managing Director, Accenture Post & Parcel Industry @brodybuhler [email protected] Copyright © 2019 Accenture All rights reserved. Accenture and its logo are trademarks of Accenture. /in/andre-pharand/ ANDRE PHARAND Global Consulting Managing Director Accenture Post & Parcel Industry @andre_pharand [email protected] www.accenture.com/postal