Three Currencies Smart Retailers Are Managing to Win Today’s Consumer Delivery Wars

Logistics is having its moment in the limelight.

What was once an invisible force is now becoming an essential, and increasingly visible, pillar of global commerce. It’s a silent but powerful backbone that few consumers think about, but every successful company depends upon it.

“Whether it’s speed, whether it’s service levels, whether it’s having 13 seasons in a year; every four weeks, a new season; all of that gets enabled by logistics,” Radial CEO Tom Schmitt told PYMNTS CEO Karen Webster.

“There are entire companies and brands that exist only because of the way they leverage logistics,” he said.

The conversation around bringing logistics to the forefront of operations is urgent for merchants and retailers. Consumer behavior post-COVID has made fast, reliable delivery non-negotiable. Putting an exclamation point on this operational reality, Walmart announced last month it is planning to deliver to 95% of consumers in the United States within three hours by the end of the year, a milestone that would have been unimaginable even five years ago.

Schmitt said success in today’s logistics arms race hinges on mastering three currencies: money, time and carbon footprint.

Retailers must find their “sweet spot” across these competing demands, he said. Amazon and Walmart, for example, have built near-ubiquitous networks, allowing them to lean heavily on the currency of time. Smaller players, lacking a nationwide footprint, are forced to be more creative.

The role of brick-and-mortar stores in the logistics equation is also evolving. Walmart’s three-hour delivery promise, for instance, is fueled by using store shelves as micro-fulfillment centers. Delivery aggregators pick products off the shelves rather than traditional fulfillment centers, enabling hyperlocal distribution.

“If I’m a retailer that actually wants an effective physical footprint but also home deliveries, logistics providers have figured out how to accommodate both extremely effectively,” Schmitt said. “The logistics enablement of both of these — it’s different. Delivery to one person is much more expensive than sending hundreds of items to a store. But it’s doable.”

At the same time, the rise of services like click-and-collect, once popular, is losing steam because consumers increasingly value the certainty of online delivery over the hassle of in-store pickup.

The bigger challenge for retailers isn’t logistics — it’s relevance.

“The retailers that have been extremely successful have figured out how to use the store differently,” Schmitt said. “It could be about creating an experience.”

Canadian bookstore chain Indigo, for example, transformed physical spaces into experiential hubs, he said.

“You go there because you want a different experience,” Schmitt said.

In other words, logistics can solve the “how,” but retailers must solve the “why.”

Radial itself competes against traditional third-party logistics (3PL) firms, payment providers like PayPal and, in many cases, retailers’ in-house efforts. While giants like Amazon, Walmart and Costco have the scale to build proprietary logistics networks, however, emerging and mid-sized brands often need partners like Radial to stay competitive.

“Our aspiration was: Can we come up with something that’s so easy to plug into that between signing and going live, it’s a week or less? And the answer is yes,” Schmitt said, adding that Radial, which evolved from the early eCommerce pioneer GSI Commerce, has radically shortened its integration times for clients through a new offering called Fast Track.

“We just launched our first set of customers, and one of them signed on a Thursday and went live the following Tuesday…,” he said. “If we did business exclusively the way we did it in 1996, with three-month implementations, you would not be talking with me today.”

Looking ahead to the future of logistics reveals a veritable sandbox of innovation. Autonomous vehicles are poised to reshape logistics — but maybe not exactly how Hollywood envisioned.

Schmitt, for his part, likened the future of self-driving trucks to the way airplanes operate today.

“A plane flies itself 96% of the time, but there are two people in the cockpit,” he said.

Similarly, autonomous trucks may handle the bulk of driving duties while human drivers remain responsible for oversight and complex tasks.

“Change is happening faster than we thought,” Schmitt said, citing artificial intelligence as the next frontier.

“AI is the new lean,” he said, invoking the manufacturing revolution that swept through industry decades ago. “This race has no finish line. We have to leverage the heck out of technology to keep winning.”

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