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Lessons Learned from the Largest Brands Operating During COVID-19

It has been an unprecedented year in the transportation industry from elevated volumes during COVID 19 to a highly anticipated peak season, there is a lot to discuss. Join the experts covering lessons learned from the largest brands operating during these times.

A Look Back: Lessons Learned from the Largest Brands Operating During COVID-19
 Ali Carr

Green Mountain Technology presented, “Lessons Learned from the Largest Brands Operating During COVID-19”, during this year’s Home Delivery World. See our Knowledge Center for additional presentations!


Transcript

 

LINDSAY BODKIN, HOST: Hi thanks for joining us today. It has been an unprecedented year in the transportation industry – from elevated volumes during COVID-19 to a highly anticipated peak season – there is a lot to discuss. We’re going to cover, Lessons Learned from the Largest Brands Operating During COVID-19.

LINDSAY BODKIN: Before we get into that, a few introductions are in order. My name is Lindsay Bodkin, Director of Marketing and PR at Green Mountain Technology. We help the largest brands optimize their Parcel and LTL spend.

LINDSAY BODKIN: I’m joined by my colleague, Cam Elliott, who manages our content strategy. Cam there is so much going on in the industry to discuss!

CAM ELLIOTT: Yeah, hi everyone! Absolutely, this has been just a crazy busy summer for Parcel and LTL. We saw average daily volume for both of the Big Two [FedEx and UPS] break even peak season records – and that’s before peak season, so that’s like insane. And in May, we saw e-commerce shoppers spend an estimated $82.5 billion – also insane! That definitely blows projections way out of the water for when something like that might happen for e-commerce.

LINDSAY BODKIN: Absolutely, so given this environment, let’s dig into three lessons that we are seeing from our clients. The first one is that carrier diversification is really key to make sure that you can mitigate any potential risks or capacity issues in your network. Leveraging regional and alternative carriers is really a powerful way to diversify your carrier base, in fact 17% of retail volume went to a regional carrier in the first 7 months of 2020 – that’s compared to only 4% the prior year.

LINDSAY BODKIN: That jump from 4 to 17% really shows a widespread usage of regional carriers, and how quickly that’s growing. I will say this transition is not always a simple one.

LINDSAY BODKIN: Big Data is king in this scenario. You need detailed data at your fingertips to ensure that you’re intelligently shifting volume to regional partners. You have to maintain your required volume thresholds with the Big Two [FedEx and UPS] while intelligently shifting your volume to regionals based on zip codes that you know can be served in a faster or cheaper manner.

CAM ELLIOTT: Yeah, absolutely Lindsay, and I think we’ve known for some time there are so many varying carriers available to you – whether they’re regional, they’re alternative, they’re niche. When we think about some of the more traditional ones, such as Shipt, Instacart, Roadie – but we’re also seeing this year many new ones coming onto the scene such as One Live X, PCF, and more.

CAM ELLIOTT: I think this is really showing that they’re – when we think about how consumers are expecting their shipments to arrive, shippers are really responding to that, so we’re seeing our own customers use these types of carriers for very time sensitive, very temperature sensitive products.

CAM ELLIOTT: And I think your point about carrier diversification is really critical when we think about how someone might implement these carriers and why they need to. This is a strategy that requires so much homework, there’s a lot of Big Data to consider to make the right decision and to choose the right partner – not just for you, but also for your customer.

CAM ELLIOTT: We have to remember sometimes this requires contract negotiation to make room for either an additional carrier or to go dual source [both FedEx and UPS] if that’s what’s best for your customer, or you and your network. However, keep in mind that bargaining leverage has largely shifted to the carriers themselves.

CAM ELLIOTT: They have all the capacity they want and then some, so understanding the right cost savings goals and contract terms for you is really going to be crucial as you start to navigate those conversations. And you obviously don’t want to agree to something that’s helpful today but hurtful tomorrow if the industry does suddenly shift again.

LINDSAY BODKIN: Yep, Cam, I agree, and in fact – moving into the second strategy that we see from major brands is simply eliminating that last mile altogether. Persuade consumers to choose In-Store or Curbside Pickup. We saw that in NRF’s Spring 2020 Consumer Review, consumers really prefer this in a lot of instances.

LINDSAY BODKIN: Three-fourths of respondents said they were interested in Buy Online Pickup In Store (BOPIS), and 90% of respondents said Curbside Pickup was convenient after trying it. The greatest challenge with this strategy is simply maintaining accurate inventory visibility. The last thing you want as a consumer is to place an order, get in your car and head to the store to go pick it up, and then you get an email on the way that it’s out of stock.

LINDSAY BODKIN: You want to be able to stay in front of your inventory and have it accurately located in the store locations where your consumers need it – when they order it, right? So in addition to accurate inventory, a robust point of sale system and flexible labor are keys to managing the strategy well.

CAM ELLIOTT: Yeah, Lindsay, absolutely I think with this kind of strategy there is so much to wrangle. And when we think about recent case studies, I think Target is a really great example of someone implementing this kind of strategy well. Their Q2 sales were astronomical, largely thanks to Curbside [Pickup], Buy Online Pickup In Store (BOPIS), and their use of their alternative carrier, Shipt.

CAM ELLIOTT: They actually saw a 734% increase in Curbside Pickup sales, and they saw a 350% year-over-year increase in sales fulfilled by Shipt. And you may remember that they actually acquired Shipt way back in 2017, so this has been a really interesting case study to look at how that acquisition in the past has really helped fuel them through this new industry.

LINDSAY BODKIN: Another great example of this is Walmart. Walmart saw 4x more customers try Curbside Pickup for the first time, with particularly strong growth among shoppers over 50 years old. And I think this one is really fascinating because it demonstrates more than anything how retail just won’t ever be the same. This is our new normal, right?

LINDSAY BODKIN: When you have consumers of all ages displaying new buying patterns, it really goes beyond a momentary trend. It’s a convenience that consumers are going to expect moving forward, even when the risk of Coronavirus is gone. It’s something that consumers prefer in a lot of cases.

CAM ELLIOTT: Yeah, and I think speaking of trends that are kind of changing where the industry is going – this takes us right into our third lesson which is really about smoothing out demand spikes with marketing. Personally, this is one of my more favorite lessons. I think it speaks to that ability to work collaboratively with the industry as a whole, and we’re seeing more and more shippers starting to work on their holiday promotions far earlier in that effort to “flatten the curve” of shipping during peak season.

CAM ELLIOTT: They’re doing this by spreading out promotional calendars in an effort to smooth out that demand cycle, whereas in the past we’ve really seen these kind of sales traditionally stick to the actual holiday day, so it’s been great to really see that kind of momentum and activity all in the effort of trying to keep capacity down – keep those spikes down – around very local specific days.

CAM ELLIOTT: Unfortunately what this may mean is the Black Friday and Cyber Monday that we all know and possibly love, or hate, is actually changed forever.

LINDSAY BODKIN: Yeah, we saw this especially with Amazon’s Prime Day. Last year, it was in July, and this year they’ve moved it to mid-October. I believe it was October 13th and 14th, and at the same day that Prime Day was happening all of the other major retailers were also launching  holiday promotions of their own – you had Zulily with the Holidaze event, Old Navy with Giftober, and Target with Deal Days.

LINDSAY BODKIN: This isn’t really a new strategy, but it’s one that we’re seeing  retailers take much more seriously. They are starting their holiday promotions much earlier, and in fact multiple clients have asked Green Mountain Technology to help spread the word as to how important this is.

LINDSAY BODKIN: All of the major retailers that we work with are really trying to encourage their peers to spread out that demand cycle – start your promotions much earlier in order to mitigate those capacity issues that no one wants during peak.

LINDSAY BODKIN: So, in summary as we wrap up and look at the lessons that we learned – that first one from major retailers and brands is that carry carrier diversity is really key to making sure you have a flexible and agile network that can withstand potential capacity issues as we get into peak.

LINDSAY BODKIN: And the second is that consumers want that Buy Online Pickup In Store or Curbside Pickup options. This is great for shippers because it completely eliminates the last mile, and it saves you [the shipper] money. But you do have to have accurate inventory in order to meet the needs and desires of your customers.

LINDSAY BODKIN: The last one is really about smoothing out that demand cycle and starting your holiday promotions earlier.

CAM ELLIOTT: Yeah, Lindsay, I think those are all really great lessons to take into consideration, we’re definitely seeing the industry move in this direction as a whole. And I think this leads us to a surprise – but maybe not such a surprise – 4th lesson, which is: don’t ignore Omnichannel strategy.

CAM ELLIOTT: It’s more important than ever before to implement an Omnichannel strategy that can bridge that gap between your brick-and-mortar stores, your distribution centers, and your e-commerce activity. E-commerce activity is not going away. E-commerce shoppers are here, and they’re here probably for a long time.

CAM ELLIOTT: So, it’s really important to look at how you’re managing not just getting that shipment to your customer through Parcel or LTL means, but really trying to figure out how do I [the shipper] get it to them [the customer] as efficiently and as quickly as possible, and in a way that is as cost effective to me and the consumer at the same time.

CAM ELLIOTT: I think you really hit the nail on the head earlier when you started to speak on inventory management being a critical tool/component for the industry. Today, it [Omnichannel] is just as critical as fast and affordable shipping, and Omnichannel strategy is really something that helps you gain new visibility into where your inventory is so that you don’t run into issues when it comes to strategies like the three we’ve listed above.

CAM ELLIOTT: Shippers and carriers alike have so much data available to them today – about consumer behavior and spending – and 2020 has really cemented that those utilizing that kind of data to make impactful decisions are only setting themselves up for success.

LINDSAY BODKIN: We certainly can’t wait to see how shippers and carriers alike navigate this unprecedented peak season. We hope that you’ll stay connected to Green Mountain Technology.

LINDSAY BODKIN: We have a Knowledge Center you can navigate to by going to greenmountaintechnology.com – there you’ll find a lot of great resources much like the content we shared today, one of which is our monthly column, Shipped Monthly, where we share all of the latest industry trends that we’re seeing in the industry and among our clients.

LINDSAY BODKIN: We hope that you will stay connected to us, and we really appreciate you joining us today! Thanks for your time.

CAM ELLIOTT: Thanks everyone!


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GMT’s video transcripts are created on a rush deadline and produced using automated transcription software. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of GMT’s overarching message is the video and/or audio record.

A Look Back: Lessons Learned from the Largest Brands Operating During COVID-19

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