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The Last Mile

Mar 10, 2020
Ray daSilva, President, Mobility Exchange, looks at what might be an opportunity for the moving industry, given the right leadership

The last mile

The professional moving industry may be maturing with shipment counts and volumes on a bit of a declining trend but there is still great demand for high quality, professional moving services.  Constantly faced with seasonality-related issues that compress about 60% of the moving volume into about 40% of the year, professional movers have always been interested in diversifying their business mix. 

Some of these diversifications have spun off into businesses that rival and surpass the moving industry itself, in size.  Records Management and Self-Storage services are two examples.  For some movers, these diversifications have turned into their main business.  Others who could not adapt and innovate have been unable to compete in such a rapidly changing business environment.

Ray daSilvaWhat is Last Mile Logistics?

There’s been a lot of buzz recently about Last Mile Logistics and much of it relates to package delivery.  Simply put, transport systems are efficient and fine-tuned for getting goods from the manufacturer to a local store or warehouse but when it comes to delivery to the customer’s door or providing delivery and setup in the customer’s home; that is another matter.

Growth in online retail sales driven by giants like Amazon and Walmart has created a new shopping paradigm.  It was only a few years ago when online shopping that started with books and spread logically to smaller household articles, electronics and appliances, became a thing. Today, with the total market share of online retail sales higher than department stores, online shopping has become the way to shop.

I want it now.

Amazon Prime proved the power of one-day delivery in driving retail sales online but what about furniture and major appliances that not only require rapid delivery but also placement and installation in the home or office?  According to furnituretoday.com, a website focussing on furniture industry trends, online sales of furniture and bedding totaled US$15 billion in 2018, up 6.4% from 2017.  The same trends are affecting major appliance sales.  Stores are finding out that they can avoid the cost of carrying large inventory stocks by having a showroom instead of a retail store. This setup allows customers to choose colors, styles and options for custom-made furniture, delivery of which is fulfilled directly by the manufacturer.

E-commerce is also moving the purchasing of office and institutional furniture and fixtures (think hospitals, schools, etc.), online.  New online retailers unencumbered by rental, store staffing and related expenses are cutting out the middleman and offering new competition to brick-and-mortar establishments.  What they are discovering though is how important that last mile and in-home service skills are, in delivering total customer satisfaction. 

But wait, isn’t this that the core competency of professional movers?

The Opportunity

Movers have been providing furniture, fixture and equipment (FF&E) installation services for many years.  So, how is this a new opportunity? 

Many astute movers who have early on recognised the opportunity now have growing businesses offering final mile services in partnership with retailers and major logistics firms.  Opportunities are also forming for companies utilising a van line agency-type network to offer nationwide final mile services.

While the territory seems like familiar turf to most movers, there are distinct differences for those that are serious about carving out a niche in this competitive market.  The first one is cost efficiency.  Traditional time, material and asset costing mechanisms employed by movers may not work.  The consumer is now conditioned to free or near-free shipping.  While the costs may be embedded in the product, the point is clear that there is not a lot of margin for error or unnecessary fat in the costing.

This means understanding how to make the process as streamlined, efficient and error-free as possible. This is where leveraging technology comes in.  A paper-based system just doesn’t cut it anymore.

Interoperability

There’s that word again.  In order to compete in this new world defined by Amazon Prime, systems must integrate and connect so that data can seamlessly flow between the disparate parts of the logistics chain including and perhaps especially for the final mile service provider.  A number of software and logistics solutions providers are offering systems that enable this connectivity, but none have enough traction and market share to establish a standard. 

Yes, Amazon is an online retailer, but its core competencies are technology and logistics.  If we want to compete in this world and not become relegated to being interchangeable parts in the supply chains of Amazon and Walmart, we must address the issues surrounding industry data standards and interoperability.  Unfortunately, the moving industry is in the same boat as the shipping and trucking industries.  We remain fragmented because of concerns about competitive advantage.  We look to our industry associations for leadership, but their actions understandably mirror and represent the fears of their own constituent members, resulting in gradual and very little forward momentum.

The Urgency

We need to recognise that the physical assets and services represented by the professional moving industry are in no danger of being displaced any time soon.  That is not the urgency.  What we need to recognise is that the control of our business will flow to the companies that implement and operate the near flawless technology that customers have begun to take for granted from companies with closed systems like Amazon, FedEx and UPS. 

We can choose to form or join a closed network capable of making the technology and process investments to compete in this new environment but this is not a model that is familiar or comfortable to the moving, transport and logistics industries which are primarily made up of small to medium-sized entrepreneurial companies. 

Or we can recognise the urgency and benefits of forming an industry alliance to tackle the issues of interoperability. 

Technology is not the barrier … the challenge is leadership.

Photo: Ray daSilva.

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