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claudia_mandelli
Explorer

As our homes are still the epicenter of our world, businesses have shifted their approach to first and last mile


 

It’s been now several months since the first shelter-in-place order, some of the most extraordinary and difficult of our lives. Like many others, when the order came into effect, I started building up reserves of my favorite food. This includes very tasty breakfast sausages from a small specialty store in town, which brightened my mornings in the early days as I adjusted to the “new normal”. Every time, my stash dwindles, and I am faced with the question: how do I get more?

Expectations have shifted: building trust is now about the “what”

My thoughts are so different now than they were prior to the pandemic, or even in the early stages of it.

Last year, my shopping decisions were all about “when”: I need this NOW. Now my focus is on “where”: should I get this delivered or go to the store? And on the “what”: do they even have it?

Shopping used to be all about convenience, now it has become about trust. I trust that companies providing my essentials (yes, that includes breakfast sausages) can procure them, and can get them to me safely in a reasonable timeframe.

Opportunities to build trust lie in the first and last mile

How do companies provide a trustworthy experience when they are struggling to survive and adapt? The economic toll of this pandemic has been devastating. From restaurants to airlines to hotels, businesses were forced to make difficult decisions. The US unemployment rate peaked to over 14% in April. Since then, it is gradually declining but still far from pre-pandemic levels.

But along with these challenges there are also opportunities, especially for companies rethinking their approach to first mile (aka supply chain) and last mile (delivery services).

Let me explain, starting with the first mile. Grocery stores have seen their revenue spike; yet, they are constrained by their supply chain. Initially, these constraints were exposed due to the sudden consumer demand increase (35% in March). Remember the empty shelves of toilet papers? The extreme and sudden need to ramp production capacity was a whole new world for manufactures. After that, the constraints shifted to finding new sources quickly. As plants shut down operations periodically to prevent the disease spread, supplies like meat become scarce. Buyers and assortment managers are still working with suppliers to restock shelves.

Now let’s talk about the last mile. Online grocery shopping has exploded. Many people who previously didn’t trust “personal shoppers” to handpick their groceries are pleased with their first online order and are now likely to use the digital channel again. This is happening on a massive scale, with ecommerce revenues up by 33% from last year.

The sudden rise of digital shoppers caught many traditional grocers by surprise. Unable to fulfill online orders with their staff, they started leveraging companies like Instacart, Doordash, Postmates, fueling their growth.

In the early weeks of the pandemic, ridesharing companies like Uber and Lyft also saw their revenue drop overnight, and pivoted from moving people to moving things. As reopening remains uncertain and fleeting, this continues to be a lifeline for restaurants and small retail shops in our communities.

Delivery is also a big opportunity for the unemployed, who can shore up their livelihood by becoming gig workers. For example, Instacart shoppers increased from 200,000 in March to over 500,000 in April, and are targeted to grow to 750,000.

Net net, all the above companies (Uber, Lyft, Instacart, etc.) are succeeding because they are adapting quickly, tackling new opportunities and challenges rapidly.

Practicing resilience to survive and thrive

I have come to savor the word “resilience”, as much as I savor my sausages. McKinsey connects resilience to the kernel of advantage during crisis which brings tenfold benefits during recovery. But where to start?

  1. Build trust by listening to the customers: what’s really important to them? Is it safety? Is it continuity? Convenience? What moved someone to buy your product a few months ago may not be the same now. There are a number of resources to get started on this, including a free pulse survey on customer’s confidence and expectations.

  2. Build new supply chain paths. Buyers are looking for new ways to expand their network of potential suppliers to respond to current and future shortages. To help, SAP has been offering free access to a B2B portal (SAP Ariba Discovery).


In the end, we don’t know when this crisis will pass; all we know is that it’s leading us to a new future, different than what we expected. My hope is that in this future, the seeds of trust and resilience will continue to bloom. #Allwillbewell

This blog is part of a continued conversation on our current life and work experience with COVID and beyond. The first blog by Gina Nodar covered how gig work means so much more in the new normal. Future blog post in this series will cover established talent in the now of work, and the rising relevance of empathy in our common experience of increased remote work.

For more information on current supply chain disruption, please see this blog by Randy Evins
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