The summer 2017 Amazon/Whole Foods Market mega-deal may seem like an expensive way to get into the grocery business, but for those in the trucking sector, especially carriers in final mile deliveries, the benefits for Amazon far surpasses diversification into food distribution. Driven by consumer confidence in eCommerce, the rise of omnichannel marketing by retailers, and the customer-focused standards already set by Amazon, this marriage has created a perfect storm for grocery suppliers and transportation service providers in the U.S. logistics industry and a new challenge in competing with the distribution model Amazon is pioneering.
Often referred to as the “Amazon Effect,” consumers’ demand for same-day order processing, free shipping and same or next day delivery is disrupting all segments of the U.S. supply chain. The velocity at which orders must move from billing, fulfillment and transit are being expedited without the regard previously available of bundling and consolidating to reduce costs. In order to meet current demands, manufacturers, retailers and logistics service providers are being forced to transition from batch-based systems to digital cloud-designed to solutions capable of responding and moving goods from warehouse to delivery providers in as near to real time as physically possible.
We’ve seen first-hand how direct purchasing outlets like Amazon have changed the transportation and logistics industry for the better, particularly during the “final mile,” or the last leg of delivery between distribution centers and buyers. However, outdated technology and analog processes are just two of the factors that may slow further improvement in final mile logistics.
Traditionally, global logistics leaders have used technology most effectively when transporting large loads across long distances, yet have suffered from high costs and low reliability when it comes to delivering goods to individual consumers. The primary challenge has been scalability, as a “one-to-one” delivery via truck transport is inefficient and expensive when compared to long-distance shipping to a single distribution center.
How will the Amazon and Whole Foods deal improve last-mile effectiveness to benefit both consumers and carriers, particularly when shipping perishable products like groceries? By redirecting the scope and scale of home delivery back to a brick-and-mortar location, direct purchasers like Amazon empower consumers to “own” the last mile.
If history can predict the future, then one thing is certain: Amazon will use Whole Foods to change consumers’ expectations for acquiring quality fresh and preserved foods. With new physical locations and access to a robust logistics network, Amazon is poised to take same-day perishable grocery delivery to geographic regions that have proven challenging for competitors to penetrate.
Essentially, according to Wall Street Journal economy reporter Dennis K. Berman, Amazon purchased Whole Foods Market for its “…431 upper-income, prime-location distribution nodes.” The long-term result will be a boon for the industry, which will reinvent last mile shipping best practices across the board, as well as for consumers, who will now enjoy a more reliable, direct and community-oriented relationship with fresh food purveyors.
At Trimble, our software products are designed to support the future of final mile logistics, enabling our customers to “get it right” from the start – the right products to the right places, in the right condition at the right time. Getting it right minimizes costly credits and returns, streamlines driver activities to make the process faster and more efficient, and allows drivers to focus on safe vehicle operation without being distracted by record-keeping or mapping delivery locations. Ultimately, in this age of delivering products on-demand directly to consumers, companies must now innovate and replace outdated logistics technology and processes or they will become irrelevant.
Learn more about Trimble's ongoing commitment to improving last-mile efficiency through telematics, multi-layer mapping and automated workflows.