OnTrac study looks at retailers’ needs for quicker deliveries as a competitive advantage

A recently-issued study by Vienna, Va.-based e-commerce parcel carrier OnTrac examines how retailers are making targeted investments focused on faster deliveries as a competitive advantage.

The findings of the study, entitled “How Retailers Can Build Supply Chains That Thrive in the Post-Pandemic World,” were based on a partnership between OnTrac and Hanover Research through a survey of more than 150 C-Suite, VP, and director level supply chain professionals at large retailers, focusing on the challenges they are facing and how they plan to respond to those challenges, as well as key investment areas for them.

OnTrac Chief Commercial Officer Josh Dinneen told LM that one main factor driving consumers’’ needs for faster delivery is related to the digital era we live in, in which instant gratification has become the expectation.

“The demand for immediate results is seeping into every corner of our lives, particularly e-commerce, as consumers continue to choose retailers who can deliver their items faster,” he said. “As such, retailers that capitalize on these demands early and adapt their supply chains to provide faster delivery options will position themselves to win more customers and build brand loyalty.”

Dinneen addressed some of the key investments cited in the survey that are being made by retailers geared towards faster delivery.

These included how 72% of retailers surveyed plan to invest in two-day delivery over the next 24 months, and 59% of retailers aim to leverage faster delivery as their primary differentiating strategy. And he also observed how carrier diversity has become a key tactic for retailers over the last few years, with 60% of surveyed retailers choosing to use alternative carriers for faster delivery than the national carriers. 

From an OnTrac perspective, he explained that the company has been investing in its infrastructure and expanding its network to areas where customers need OnTrac the most. 

As an example, he pointed to the company’s launch in Texas next month in the urban megaregion of Dallas, Austin, Houston, and San Antonio to reach an additional 19 million consumers. He said this Texas expansion will grow OnTrac’s delivery network to reach 80% of the U.S. population across 31 states and Washington, D.C., adding that OnTrac is also planning further geographic expansion in the years to come.

When asked about the key reasons for retailers to use alternative carriers, Dinneen noted that alternative carriers empower retailers to differentiate competitively through faster delivery times, greater flexibility, and lower costs than national carriers.

“Retailers have felt the positive impacts of diversifying their carrier mixes and alternative carriers have become a fundamental part of a successful supply chain strategy, with 89% of large retailers we surveyed currently using alternative carriers and three-quarters sending 16-50% of their volume to alternative carriers,” he said.

The study provided myriad key findings related to surcharges and rate increases, with 68% of the top online retailers experiencing an off-schedule price increase on top of general rate increases (GRI) over the last 12 months. And in order to compensate for higher shipping prices, the study found that 87% of retailers are turning to slower shipping, even though consumers have what OnTrac called “clear demands for faster delivery,” which, in turn, puts them at risk, in terms of an increased competitive disadvantage and also face the risk of losing customers.

As for what retailers need to do to retain customers that want, or need, faster shipping, Dinneen said it is imperative for them to build faster shipping into their supply chains by diversifying their carrier mixes with a proven alternative that will empower them to build brand loyalty and increase share of wallet with their customers.

“Faster delivery is a competitive differentiator and an increasingly important part of the value chain,” he said. “Retailers that fail to follow through on this demand will fall behind. Instead of compromising speed, retailers looking for ways to offset price hikes from FedEx and UPS should look to proven, cost-effective solutions like diversifying their carrier bases, which can help them lower their costs, while increasing their delivery speed.”

Please click here to read the complete OnTrac study.