Last mile delivery refers to the last leg of the supply chain i.e. the movement of materials from the distribution center to its final destination (customer or business entity). It is a crucial step in the delivery process.
In today’s market, last mile delivery has immense potential due to its significance in the e-commerce industry. Retailers are realizing that delivery options are one of the major factors in the customer’s decision-making process.
Thus the need to focus on innovative logistics solutions to optimize the delivery of their goods. However, last mile delivery poses many challenges that must be tackled to keep pace with increasing demand.
Last Mile Delivery Challenge
Last mile delivery has always been greatly associated with shipping costs. Almost 53% of shipping costs are reserved for the last mile delivery. When deliveries are incomplete or delivery routes are uncertain, a significant loss can be suffered.
E-commerce has transformed the traditional shopping experience. As more customers prefer online shopping, the expectations have also risen. Most customers demand quick delivery. The increasing popularity of same-day delivery option is a game changer.
Studies have shown that customers are willing to pay an extra charge for quick delivery. Despite this, it has been observed that the majority of users still prefer the cheapest mode of delivery.
This has pushed logistics services and startups to tackle the challenge in order to offer faster modes of delivery at a cheaper price. The same-day delivery market is expected to reach $987 million by 2019.
Delayed and Incomplete Delivery
Other customer-related issues such as incorrect addresses, urban congestion, remote locations and customers not available at the location, require repeat delivery attempts. This makes the estimation of last mile delivery costs difficult as such nuances cannot be accounted for accurately.
Solving the Challenge
Many established logistics services (UPS, DHL, etc.) and new startups are innovating new ways to meet the demands of customers, as well as, optimize last mile delivery. Supply chain visibility, tracking and agile delivery are becoming the industry standard.
The crowdsourcing model allows retailers and logistics partners to connect with local couriers who use their own transportation to make deliveries. In this gig economy, crowdsourcing is a great way to ensure customers get faster delivery. It also eliminates the possibility of repeat attempt deliveries by providing the option of on-demand and scheduled deliveries to customers.
2. Route Mapping Software
Route mapping software optimizes the ‘pick-and-pack’ routes. Deliveries are made more efficient through these softwares as they help drivers plan their route. Good route planning can eliminate most of the obstacles that contribute to lost time (and hence, money).
3. Brick-and-Mortar Distribution Centers
Brick-and-mortar stores have been shutting since the rise of online retail. In 2017, as many as 6,985 stores have announced the closure of their physical locations. However, some retailers are using their storefront as a solution to the quick delivery problem. They have transformed their stores into distribution centers so that options such as same-day delivery are available to the customers.
4. Smart Technology
The advancements in technology have inspired solutions that are cost-effective and convenient for both the retailer, as well as the customer. They make use of smart technology like sensors to provide retailers information regarding temperature variation in packaging, weather conditions for route planning, etc.
5. Data Analytics
Advanced analytics (such as machine learning) help retailers optimize their last mile delivery operations. Data analytics can inform the company (or logistics partners) regarding customer-specific delivery constraints. Studying GPS traces along with relevant insights into the availability of local infrastructures such as roads and parking spaces can help make the entire process more efficient.
6. Futuristic Delivery
Many startups, retailers and logistics services, are discovering new ways to tackle last mile delivery. Drone delivery, for instance, can not only shorten the time spent on delivery but also reduce the expensive human workforce. This workforce can then be directed towards more complex tasks. Autonomous self-driving vehicles with lockers are predicted to be the most dominant form of last mile delivery in the future.
So far, emerging technologies have proven to be the game-changer in logistics services. They promise to have a huge impact on optimizing last mile delivery. New innovations such as automated technology, vehicles, blockchain technology, robots, etc. are already being tested to make way for a more efficient model of delivery in the future.
In addition to this, transparent last mile delivery practices (such as GPS-enabled vehicles) give real-time data to customers, which can minimize customer concern and inquiries.