New Retail Business Model Needed: Technology Takes-out TruckLoad
I hope that title caught your attention. For over ten years now, people have scoffed at the idea of eCommerce changing the way things are done. Not too long ago, at one of our trade shows, a speaker joked about some people thinking they don’t need trucks at all, because all they have to do is order on-line and it appears at the door. Of course it needed a truck, but what kind?
My son lives in Seattle, the home of ABC—Amazon Behemoth Corporation. He orders dog food and other essentials with his Prime account and they are delivered to his door quickly—sometimes the same day. No wasting minutes or hours in traffic. No time waiting in line at the checkout. No wasted time roaming the aisles to find what he wants. No temptation to buy more than he needs.
He is also anticipating his first child, and begun the search for all the accoutrements required by an infant. Like many others, he goes to a brick and mortar store to check out the latest in strollers and car seats. He wants to check how heavy they are; how easy they are to carry; how they attach one to the other. Another friend in his 30’s did the same thing earlier this year. But, will they buy at the brick and mortar store? No.
It’s much cheaper to order it on-line and have it delivered direct to the home. If brick and mortar stores don’t come up with a new business model, and soon, we are going to have a city landscape of more and more vacant stores. We are also seeing the trend in the types of vehicles that are being sold, as Class 3-5 vehicles grow in numbers for all those smaller deliveries. It will probably move up to Class 6 as well. Why go to an appliance store to buy a refrigerator and have it delivered from their own warehouse, when you can window shop in the brick and mortar, then order it on-line and have it delivered quickly. I’m sure someone will offer to install and take away the old refrigerator, cutting out the local appliance store.
One potential business model was used when I was a kid. In Detroit, we had a company called Service Merchandise. They had a very small showroom in the front of the building, and checkout stands that resembled something I see today at a FedEx shipping location. Examine the merchandise, then go to the checkout and have it brought to the front of the store in a box. It was an attempt, even 50 years ago, to minimize the overhead and inventory in a retail business.
It is obviously still of some value to be able to touch and feel the merchandise. But it is not of enough value for people to pay for the current overhead and profits of the brick and mortar stores. Perhaps the brick and mortar stores need to become eCommerce agents with a few samples and take a commission on the online sales they enable. Their “value add” could be the level of information they are able to provide in person, as well as the typical skills of relationship of a good sales person.
Now, bringing this back to the potential demise of truckload. If we have much less product being delivered to local retail stores such as Kmart, Lowe’s, and Target, then it will be going to much larger regional distribution centers, much like, say, a Sysco Foods, does. A large number of truckloads will take items to the large warehouses, but much smaller vehicles will span out from their. It won’t need to be Class 6/7/8 tractors, but Class 3-5 vehicles and the occasional Class 6 straight truck with a loading platform. We won’t even talk about the technology and future potential of drones and autonomous vehicle deliveries and home grocery deliveries. If we all get groceries delivered directly to our home, why would we have a brick and mortar grocery store in neighborhoods rather than a large warehouse on the outskirts? Go ahead and scoff if you want to work in the mature part of the trucking industry. Embrace these things if you want to work in the exciting, challenging, and risky part of the industry.
Just beware of Technology Taking-out TruckLoad!