Drop Off and Pick Up: eCommerce as Fulfillment's Newest Frontier

Blog Post
July 13, 2018


Delivery options for ecommerce fulfillment are proliferating. The choice of same-day delivery or next-day or two-day shipping are table stakes. Now, consumers have the choice to go to a physical location to pick up their package themselves, saving time and money.

Here are compelling examples of how this trend is evolving:

FedEx to add 8,000 points of pickup and delivery

FedEx signed a deal with Walgreens in January 2017 to make pickup and delivery available in 8,000 Walgreens stores as points of service delivery by fall 2018.

UPS is testing a similar program

UPS is testing UPS Access Point at 300 locations in Chicago and New York. They recruit local businesses with evening and weekend hours within a short distance of customers to serve as additional pickup spots. By January, they plan to roll out Access Point to over 4,400 stores.

Amazon has six delivery innovations in the works

Amazon has announced Hub by Amazon, a delivery solution for apartments that brings convenience and consistency to the delivery experience. It’s available for installation across the United States. Over 500,000 residents—from New York City to San Francisco, among others—already have access to the Hub by Amazon with thousands more gaining access each month. The Hub works for deliveries from any sender, not just Amazon. 

Amazon is also testing in-car delivery in dozens of cities across the United States. Customers who install the proper technology can start getting their Amazon orders delivered to a parked car. With a few taps on a smartphone screen, the courier can unlock the car and drop the box inside the trunk or on the back seat. The new service is aimed at anyone who doesn’t want to risk having their package swiped from their front porch or who can’t receive an Amazon order at work, perhaps because an employer doesn’t allow it or because the company mailroom is not secure.

Amazon Instant Pickup provides same-hour delivery to Boston residents—two-minute pickups on select popular essentials. It is competing with traditional convenience stores and with Targets and Walgreens. Amazon spokesperson Carly Golden points out the unique benefits of the Instant Pickup location: “At Amazon, we are laser focused on our customers and giving them the best experience … [offering] all Amazon customers the convenience and security of a pickup location and will enable Prime members to take advantage of Free Same-Day Pickup, order by noon, pick up later that day, as well as Instant Pickup.”

Amazon is rolling out a program that lets entrepreneurs start businesses to deliver orders in an Amazon-branded truck.

Amazon Flex pays individuals up to $25 per hour to deliver packages in their own vehicles.

Amazon envisions Prime Air, a service where drones drop packages off in a customer’s yard.

And don’t forget drone start-ups.

The drone delivery startup Matternet has announced that it will soon be launching a drone delivery network in urban areas of Switzerland to ferry medical samples between labs and hospitals. The company has also announced the Matternet Station, which is an answer to one of the big questions facing drone delivery companies: how to handle the beginning and end of a delivery—that is, how the lab that wants to send a medical sample can bring the sample to a place to start the delivery and how the receiving hospital can pick it up.

What’s in it for the consumer?

These drop off and pickup options offer speed (sometimes in minutes, or certainly hours). For apartment dwellers without doormen, these options solve the delivery problem. Also, the consumer saves the cost of delivery. And if the Post Office increases its prices for package pickup and delivery to cover more of their costs, the consumer’s incentive to pick up and drop off will become even greater.

The rebirth of brick and mortar

The last mile of delivery is so expensive that more of this cost must inevitably be passed on to the consumer. And when it is passed on, when consumers begin to think in terms of the trade-off between speed and cost, the attractiveness of the physical location pickup will create a new/old function for brick-and-mortar retail to play.

These new drop-off and delivery options will give consumers a new reason to “go to the store,” rather than wait for home delivery. We probably won’t see the full recovery of the lost role of brick and mortar for all purchases, but we can expect an equilibrium share of pickup and delivery to be achieved.

What’s in it for you?

The last mile of delivery is expensive. Shipping revenue is being cut by free two-day shipping. What’s more, if the package needs a signature and the receiver is not at home, making the return trip doubles the cost.

These last mile innovations work the fulfillment miracle: improved customer experience and increased manufacturer profitability.

Delivery innovations are easier said than done

While it’s easy to see the advantages of these delivery innovations, executing them is a challenge. Delivery fulfillment involves:

  • Interface with ecommerce
  • Inventory management
  • Picking, packing and shipping
  • Process control and continuous improvement
  • Tracking and measurement of each aspect of the fulfillment process
  • Transparency levels of communication 
  • People with relevant technology and logistical experience
  • …and ever lowering cost

So, take advantage of these fulfillment delivery innovations—but make sure your execution team has the chops to pull them off.