How The Home Depot and Walmart are Nailing the Last Mile
In an effort to combat rising transportation costs and third-party courier rates ecommerce brands are desperately searching for innovative ways to better facilitate last mile delivery.
The Last Mile Problem
When viewed as a proportion of total shipping costs, last mile delivery accounts for more than half [53%] of the expenditure. Because the last mile accounts for everything which follows the "out for delivery" notification on your app or in your inbox, it is made up of small drops spread out over a prolonged period of time – which is why estimated delivery times are often so broad and constantly updating – a fact which increases inefficiency and drives up costs – from fuel, for example.
And it’s not just a simple matter of passing those costs onto the customer either. With a growing number of ecommerce brands offering free shipping options, customers are becoming increasingly less willing to pay for delivery. According to ecommerce platform providers, Bolt, additional costs such as shipping added at checkout are the number one reason online shoppers abandon carts – with limited shipping options coming in at number six.
Last mile delivery is therefore a major concern for ecommerce and omnichannel brands looking to compete in the modern arena.
The Home Depot
As the nation’s largest home improvements retailer, The Home Depot is all too familiar with the challenges of last mile delivery and needed a partner to help it better manage this element of its ecommerce operation.
It makes sense that the largest DIY brand would join with America’s biggest retailer to achieve this and has partnered with Walmart to overcome the hurdles associated with last mile delivery.
The Home Depot will now use Walmart’s proprietary GoLocal service to offer same- and next-day delivery on a range of products in an effort to provide 90% of the country’s population – 90% of the population live within ten miles of a Walmart store – with these expediated and expanded shipping options. GoLocal was launched by Walmart in August 2021 and sought to leverage the retailer’s existing logistical expertise and its nationwide brick-and-mortar store footprint to offer customers a more competitive level of customer service than purely online brands such as Amazon.
"We’ve worked hard to develop a reliable last mile delivery program for our customers," said Senior Vice President, last mile, Walmart US, Tom Ward. "Now, we’re pleased to be able to use these capabilities to serve another set of customers, local merchants. Be it delivering goods from a local bakery to auto supplies from a national retailer, we’ve designed Walmart GoLocal to be customizable for merchants of all sizes and categories so they can focus on doing what they do best, leaving delivery speed and efficiency to us."
The Home Depot deliveries using the Walmart GoLocal network began with selected stores in New Mexico, Arkansas, and Texas, with plans to expand out to other territories as things progress. This partnership is the latest step in an ongoing omnichannel reconfiguration which was driven by the increased in online sales The Home Depot saw during the worst days of the COVID-19 crisis as locked down Americans turned to DIY projects to alleviate the boredom.
"The Home Depot is continuously working to give customers the most convenient shopping experience in home improvement, and that includes providing a wide range of fast and reliable delivery options," said Senior Vice President of Supply Chain for The Home Depot, Stephanie Smith. "This partnership brings us even closer to our goal of offering same-day or next-day delivery to 90% of the US population."
"At the end of the day, when we have the supply chain build-out, we'll be in a position to be able to serve our customers with any type of product that we sell whether that's big and bulky, or parcel delivery same day, next day," added CEO, Craig Menear.
Final Thoughts
The last mile of ecommerce delivery is going to continue to offer a significant challenge as we move through 2022 and beyond. With the effects of the COVID-19 crisis on supply chains still very much with us and new challenges such as the Russian invasion of Ukraine driving fuel prices up, brands in the ecommerce and omnichannel spaces need to effectively manage shipping costs if they want to compete.
Innovative partnerships are one way to achieve this. A brand such as Walmart which already has the expertise and infrastructure in place to facilitate last mile delivery more efficiently and effectively makes an ideal teammate for retailers like The Home Depot.
Last mile delivery is sure to be a hot topic at eTail Connect West 2022, taking place in September at the Hilton La Jolla Torrey Pines, CA.
Download the agenda today for more information and insights.