22 FEATURE
and two-hour deliveries through Amazon Flex . Right now , that means they are giving you more business to meet those needs , but what does the future hold ? They are buying their own planes and tractor trailers . They think they can do it better and cheaper than you in the future . If they think they can do it , they will do it . Consider how that will impact your value proposition . What will you do in the face of that competition ? How will you adapt ? What will you offer that they can ’ t or won ’ t ?
Amazon ’ s concepts aren ’ t new . Some logistics service providers have eight or ten fulfillment centers and can lower the cost of delivery by being closer to the markets . But here ’ s the good news for you : retailers are beginning to understand that they have to take drastic action in the face of Amazon ’ s continue rise . And that they will need to work with last-mile delivery companies to do that . With the help of third-party providers like you , retailers will engage in fulfillment- sharing and pooling business models with local delivery . YOU are the key to helping them store and quickly deliver more volume to their local delivery markets .
MacKrell : How does a carrier decide whether these and other business opportunities are right for them ?
Surber : Right now demand exceeds supply in our space and I forecast that trend will continue for the near term . However , not all business is good business for every provider . So , how do you guide yourself ? What acts as your compass to ensure you create a mutually beneficial relationship with the shipper ? It ’ s taking the time to reflect and create a strategy that ’ s founded on the motto “ Know thyself .” Look , this space is confusing by default . The last-mile space acts as a liaison to a variety of transportation genres . You need to gain clarity on your core competencies . You ’ re going to have to understand what niche in this industry is your strength . Review your revenue stream . Break it out by service verticals . What drives your profitability ? What ’ s next ? Where will you grow based upon the results of your review and what the market is telling you ? Be absolutely intense and disciplined on direction once defined . Let your strategy guide you .
Berluti : I agree with Brian . When I was the CEO of Eastern Connection I knew we had to continually reinvent ourselves . At one time , we focused our attention on the B-to-B end of our business . But when we looked at revenue per stop , it turned out B-to-C was actually more productive due to the focus on the medical home delivery market segment . For us , that was where the opportunities were . The Affordable Care Act presented us with one of them . The numbers were staggering : 10,000 people per day will be turning 65 for the next 15 years . And the Affordable Care Act is designed to have patients cared for at home . That opportunity was right in front of us . We were already doing home delivery of medical products . So we asked ourselves , “ What can we do to add value to those deliveries ? “ So we began offering to set up the equipment and show people how to use it . That business was very good for us . It was recurring and included multiple stops .
That “ Know Thyself ” motto guided us when we looked for ways to grow our business and was the reason we welcomed the acquisition by Dicom . What they brought to the party was expertise and support so that helped us build up our facilities to make them into distribution centers . As Brian mentioned , it ’ s allowed us to offer pool distribution to retailers . You have to know yourself and where you can make money . There ’ s so much out there and it ’ s so dynamic that it ’ s hard to figure out .
The acquisition by Dicom also meant a capital infusion to help us grow our footprint . That capital helped us compete in this market place . Their investment helped us bring on the technology to better integrate with the supply chain of customers . Package visibility is what customers expect and that means a tremendous investment in IT resources . What The Dicom Group provided us was that IT backbone and infrastructure .
MacKrell : What are the long-term implications for this industry from what Alibaba ’ s doing ? Do you think it will affect the supply chain in this country ?:
Wilson : The world is a small place . We can learn from China . There ’ s a lot of innovation coming from Asia . There ’ s no question that Alibaba is a model retailers will need to respond to . Amazon could respond or Alibaba could come over here and play a leadership role . I think it ’ s important that we understand how they evolved . It was never in Alibaba ’ s plans to do deliveries . They wanted to remain a market place and leave the delivery assets to others . But the logistics infrastructure wasn ’ t keeping up . They didn ’ t have the technology infrastructure that tied together logistics providers and warehouses . They saw a void and they felt they had to create something to fill it . Someone ’ s going to see that opportunity and do something similar here in the U . S .
Customized Logistics and Delivery Association | Fall 2016