A giant pulling sound
THE GIANT SUCKING SOUND H. ROSS PEROT ONCE WARNED
us about is back. Only this time it’s not Mexico siphoning off U.S.
jobs in a post-NAFTA market. In fact, it has nothing to do with
jobs or Mexico. Rather, it’s the sound of end users—businesses and
consumers—sucking away control from the producers and retailers that, for generations, called the shots on order fulfillment and
shipping.
The shift to a “demand-pull” model has been the subject of
much debate ever since the Internet became a sustainable commercial conduit. But as e-commerce explodes, the influence of
tech-savvy end users is growing stronger. These folks have very definite expectations when it comes to how and
when their items are delivered.
At forward-thinking companies, debate is giving way to action. Various news outlets, including DC VELOCITY, have reported that
Amazon.com is poised to dramatically broaden
its DC footprint so it can launch a same-day
delivery service. Within a few days in mid-October, it was reported that Wal-Mart Stores
and online auctioneer e-Bay were testing same-day deliveries. We wouldn’t be surprised to see
other retailers go the same route.
On the provider front, UPS Inc. 14 months
ago unveiled a service called “My Choice” that
gave consumers the flexibility to choose when
and where they wanted their packages delivered.
The rollout was UPS’s acknowledgment that for the first time in
its 105-year history, control over its small-package supply chain
had shifted. “Our customers had always been the shippers,” Alan
Amling, a UPS vice president, told us at the recent Council of
Supply Chain Management Professionals (CSCMP) Annual
Global Conference.
Wal-Mart, Amazon, and UPS are different kinds of companies
following different paths. But their destinations are the same: the
wallets of end users. Many of these end users are under the age of
35 who want their goods how, when, and where they want them,
and, by the way, with free shipping.
In a presentation at the CSCMP conference, regional parcel car-
rier On Trac used the phrase “My Way, Right Away, Why Pay?” to
describe the attitude of the 18–34 age group. The mindset may
smack of arrogance, but companies ignore it at their peril. Despite
a sluggish economy, Generation Y-ers and Millennials increased
their spending by 31 percent in the past year,
according to data from Forrester Research
cited in the On Trac presentation.
