Keep your friends close; keep your enemies closer.
For retailers, the ancient adage may be the answer to streamlining last-mile delivery, according to Shekar Natarajan, chief supply chain officer at American Eagle Outfitters Inc.
There’s a growing consumer appetite for delivery consolidation, Natarajan said Monday at National Retail Federation’s NRF Supply Chain 360 conference in Cleveland. With collaboration from e-tailers, consumers could receive a single box of items ordered from multiple retailers and brands — “like a moving shopping cart,” he said.
The benefits of “frenemy” last-mile delivery networks are self-evident and substantial. For retailers, they get more density of goods delivered at the consumer’s doorstep at a lower cost. For consumers, there are fewer boxes to break down and dispose of, plus a cleaner conscience.
Collaborative deliveries also allow small- and mid-size retailers to continue to compete with giants such as Walmart and Amazon, Natarajan said.
“I see a world where there’s no alternative,” he said. “In the absence of scale, only hyper-giants can survive.”
There are significant challenges in getting retailers normally involved in cut-throat competition to collaborate on deliveries, Natarajan said, including simply getting legacy supply chain data management systems to connect smoothly. But he pointed out that the practice could easily be concentrated initially in specific regions.
“Some 51% of GDP is concentrated into 25 cities, so we don’t have to conquer the world,” he said.
He predicted that a widespread effort could mean 90,000 fewer trucks on the road, 49 billion fewer miles driven annually, $40 billion in savings per year for retailers and a 30% smaller carbon footprint for retail order deliveries.
“Sharing and consolidation is the way,” Natarajan said. “Just because we have abundance doesn’t mean we should use it.”
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