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Third-Party Logistics: Final Delivery - Shop. Select. Deliver.

Analyst Insight: Final delivery - it's the last phase of the delivery process that places goods into the consumer's hands. What will final delivery look like in the future? There are multiple competing business models to fulfill the final delivery need, ranging from the engagement of independent contractors, to wholly owned internal operations and systems based on crowdsourcing. In the end, the maximum value provided to the end customer will determine who is most successful - not just who delivers the product. -- Lisa Kennedy, Project Manager, Tompkins International

Third-Party Logistics: Final Delivery – Shop. Select. Deliver.

How can maximum value be provided? The ideal solution would be for a delivery company to actually "shop" for the best price and suggest alternatives, in addition to the standard delivery service.

Consider a typical scenario: A consumer needs a particular product. There is a time frame in which they want the product. A final delivery service provider could offer the following:

" Shop: Search for the product that he or she wants at the lowest price.

Select: Present options to select alternative priced products based on features.

Deliver: Offer delivery at a specific time and place.

Can final delivery service providers deliver value across this spectrum of customer expectations? 

Final delivery by a retailer often deprives the customer of the value of "shopping the product." However, offering alternative selections based on a feature comparison can fulfill the consumer desire for selection. The only true full value can be offered by an independent company that covers the cost of delivery within the value provided to the customer through shopping for the best price.

Let's go back to the beginning. In 2002, Amazon's basic principle was to find opportunities to serve new customers"or serve existing customers in new ways"and build new business models to meet these needs. But how can a final delivery service provider be transformational? What could be the future if the final delivery company wants to meet the customer needs? 

A final delivery company can establish itself as a top competitor by continuing to increase the value it delivers to customers. That value can be enhanced further by providing unlimited flexibility in delivery options. In addition, a shop feature can be added, especially to commodity products. This evolution will require the final delivery service provider to transform itself into a technology company.

A transformed final service offering could look like this:

1. Customer creates product list.

2. Third-party logistics provider scans retailer sites to find product with the best price.

3. 3PL offers substitutes at different price points noting price/feature differences.

4. Customer makes final selections.

5. Customer defines delivery preference.

6. 3PL makes final delivery.

                                                   The Outlook

The race is on to establish who will take the lead in final delivery. If final delivery remains with retailers, consumers will have fewer options when "shopping" for their list of products. Final delivery service providers have the ability to take margin from retailers and give it to service providers based on their ability to seek out the best price. As long as 3PLs continue to add value to customers, they will survive in the market.

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