In recent years, we’ve seen a tremendous increase in last-mile deliveries. This expansion can be attributed to the rapid growth of same-day deliveries and e-commerce.
With the epidemic, this effect was amplified, and we are now witnessing a transformation in how logistics and our entire society function. This issue affects a wide range of institutions, from public to private, large and small. This is mentioned in a number of studies, including this one, which discusses eCommerce’s rise since 2017.
Many of these businesses must be aware of the enormous costs associated with these deliveries and know what to do about it.
As a result, we produced this post to address some of the most common questions individuals have about topics like:
- What is the significance of last-mile delivery?
- The expense of last-mile delivery and why it is so expensive; the problem of last-mile delivery and trends in various industries; and
- Choosing a software for last-mile deliveries and logistics.
Table of Contents
- What is Last Mile Delivery?
- Why Is Last-Mile Delivery Important?
- What are the Costs of Logistics for the Last Mile?
- What Role does Technology Play in Last-mile Delivery?
- 7 Major Last-Mile Delivery Trends to Watch for in 2021
- Choosing the Right Last-Mile Delivery Technology for You
What is Last Mile Delivery?
The final phase in the shipping process is last-mile delivery. It is the date on which customers will receive their goods. Businesses that can achieve on-time delivery in the final leg can simply improve the delivery experience.
One of the most critical elements in the supply chain process is last-mile delivery. It gives the delivery provider a competitive advantage over the competition if it is done correctly.
Why Is Last-Mile Delivery Important?
The last-mile delivery step impacts how quickly you reach your customer. The value of last-mile delivery is linked to revenue, customer satisfaction, and overall growth.
Retail’s Shifting Profile
Sears, for example, was omnipresent and powerful twenty years ago. Every home has its own inventory of sales. The decades of huge brick-and-mortar retailers were the 1990s and 2000s. These businesses were dominant because they provided convenience: you could acquire everything you needed in one place!
Access and convenience have radically changed in recent years, with the tendency strongly favoring online orders and home delivery. This tendency indicates that the last-mile delivery process flow, as well as the last-mile logistics sector as a whole, is becoming increasingly complex.
Fulfilling Customer Expectations
The stakes are getting higher. In the United States, 99 percent of consumers believe fast delivery or order fulfillment to be vital. When having things delivered, many customers are upset by the lack of openness, professionalism, and accuracy.
These figures hint to a huge possibility to increase brand loyalty if the distribution is done correctly. In this case, the statistics is clear: 74 percent of customers are more likely to buy from you again if you provide same-day delivery. Furthermore, roughly 25% of consumers are willing to pay a premium for this service.
As a result, merchants are exploring for new ways to meet customer needs for speedy order fulfillment.
The threat of Amazon Prime gaining market share hovers large over all logistics companies, and meeting customer expectations is critical to survival.
Scalability of Operations
Last-mile delivery is critical for increasing the business’ operational scalability, especially during peak periods such as holidays or weekends when orders pile up. With the addition of technical tools, autonomous cars, and delivery drivers, operational scalability may be effectively managed.
Businesses frequently use third-party logistics to meet their final mile delivery expectations in order to scale operations. It eventually aids them in growing more quickly and remaining competitive.
Customer satisfaction has improved.
The products have been assembled and are ready to be picked up from the distribution center. However, without last-mile delivery, things will not be able to be moved from the transportation hub to the customer’s personal dwelling.
Customer expectations will not be met if these products are not delivered. A terrible customer experience will happen if the final destination is not reached or if it is arrived late. Drop-offs can be performed and customer satisfaction can be improved with the correct last-mile delivery service.
Technological Change Adaptation
New technologies are altering the sector, and the final mile is causing new technologies to emerge. Venture capital investments in supply chain management and logistics start-ups have skyrocketed.
Artificial intelligence, automation, delivery robots, robot drones, and self-driving cars are among the technologies being investigated. These are future developments (discussed below), and there is also a lot of money being invested in route optimization software and other cost-effective delivery options.
What are the Costs of Logistics for the Last mile?
Customers are less likely to pay a delivery price as “free shipping” becomes more common, pushing retailers and logistics partners to bear the cost. As a result, it’s become the first place people go when it comes to implementing new technology and improving processes.
The graph below, courtesy of Statista, clearly illustrates this tendency. According to their data, the average cost spent by organizations is $10.10, while the average price to charge is $8.08, resulting in a $2.02 shortfall per delivery (ouch!).
The cost of final mile delivery appears to be still too expensive for a substantial proportion of consumers.
However, things are about to get a whole lot worse. The average price that customers are ready to pay for a delivery is $1.40. These data points explain why this is such a hot topic that fulfillment centers, shipping businesses, and supply chain professionals are all paying attention.
What Role Does Technology Play in Last-mile Delivery?
The following are some examples of how technology can aid and support last-mile delivery planning:
Route optimization and planning reduce delivery times
A final delivery that isn’t well-planned and optimized will never arrive on time. The vehicle will be circling the same neighbourhood without any direction for the unscheduled deliveries.
Final mile deliveries can be completed faster than usual with a competent route optimization solution and a robust last mile delivery algorithm. Traffic, road conditions, distance, and vehicle type are all taken into account when planning delivery routes. It assists in reducing the amount of time spent on deliveries.
It can easily solve the last-mile problem by improving the delivery experience while simultaneously lowering costs.
Labour costs and service time are reduced
When delivery routes are established in real-time, taking into account real-time aspects in the final mile delivery, firms can reduce the number of drivers needed each day to complete a particular number of deliveries.
Drivers might be assigned delivery routes automatically by managers or dispatchers depending on their location or availability. It may also be useful in limiting the amount of tasks assigned to the driver. This can help reduce primary last-mile delivery costs like as labor and gasoline while maintaining last-mile profitability.
Provides proof of delivery in the form of a digital file
A feature like proof of delivery is critical in an industry where openness and accountability are continuously demanded. Businesses can be held accountable for each last-mile package delivery by using signature capture, photo capture, or driver notes as proof of delivery.
Proof of delivery is a useful tool for ensuring that a delivery was completed successfully. Drivers may easily complete the proof of delivery process and add it to their daily delivery report. It clears up any misunderstandings or incorrect assertions.
Using a platform that allows dispatchers and drivers to communicate readily aids in the delivery process flowing more smoothly. The channels of communication are clearly reinforced when consumers are additionally given alerts regarding their upcoming deliveries as well as the contact details of the driver carrying their goods.
It can automatically increase communication among drivers, dispatchers, and customers when you have clear lines for passing on a message through simple technologies like a mobile app, tracking number, or in-app instant messaging.
Accountability is boosted by reporting
Deliveries should be reported on a daily basis to discover flaws. It may also open up possibilities for improvement. Dispatchers and supervisors can use reports to figure out why a certain stop was missed or why a delivery took longer than intended.
It enables the company to keep track of its last-mile delivery supply chain. When it comes to employing third-party logistics, it can be really beneficial. Businesses can ask for statistics and analytics to assist them better understand how deliveries are made. It can help you keep track of important metrics while filtering data by drivers, date, or route.
7 Major Last-Mile Delivery Trends to Watch for in 2021
The world is evolving at a breakneck pace. The last-mile delivery paradigm and its functions are also in flux. Knowing and studying trends will help you maintain an edge in your market and make the necessary changes to become a leader in your sector.
The following are some of the most important hot topics right now:
#1 Improved Traceability
The modern end-user needs to know where their goods is at all times, in all stages of delivery. Traceability is the term for this occurrence.
We are fortunate to have the ability to provide users with step-by-step tracking information thanks to smartphone technology. Bar codes, scanners, and other gadgets can help drivers do this. Finally, evidence of delivery is possible with this last-mile technology, which is an important step in the process.
#2 In-House Delivery Service
Amazon and other e-commerce behemoths are opting to launch their own in-home delivery service. Any company that provides in-house delivery and uses its own delivery vehicles and drivers to transport shipments from distribution facilities to clients is considered an in-house delivery company.
E-commerce businesses can benefit from this by expanding their offerings, improving customer experience, controlling expenses, and opting to deliver throughout the clock or even on weekends.
It is not necessary for businesses to sell their items on their own. They invite vendors to join them as partners, selling and distributing their goods to customers via their own platform.
#3 Fast Order Fulfillment
With rising demand for on-demand and same-day deliveries, logistics and the last-mile consumer experience have been put under even more strain.
Due to swift order fulfillment expectations and same-day deliveries, retail establishments and online stores are obliged to turn in orders more faster than they are currently capable of.
These kinds of expectations can make planning and organization difficult. It is necessary for a company to broaden its reach and increase doorstep delivery in all sections of the country. When it comes to speedy order fulfillment, Amazon has had a lot of success
#4 Smart Technology and Sensors
Consumer need for real-time order tracking information at every step has increased. They want to know about the shipping process from last-mile distribution facilities, as well as the transit and delivery destination updates.
This is distinctly achievable because to today’s last-mile delivery technology. Sensors can now be added to packages to detect the inventory’s humidity or temperature levels. Other in-transit technology can forecast weather patterns in order to keep cargo safe, especially perishable commodities.
#5 The Gig Economy and Crowdsourcing
The rise of supply chain management and logistics start-ups, particularly in the “gig economy” or “crowdsourcing” arena, is another major trend. Venture capitalists in San Francisco and other cities are lining up to make significant investments in this industry.
To construct these transportation networks, venture capitalists are funding technology and information-based firms rather than assets.
Uber, which is currently the gold standard for this type of business model, comes to mind in this regard. Many of these models follow a “job post to task complete” paradigm, in which the platform helps delivery by incorporating user input at every stage.
#6 Autonomous Delivery Vehicles
As previously stated, the expenses of completing consumer orders for last-mile delivery are extremely expensive. Reduce labour expenses by having fleets of autonomous last-mile delivery vehicles is one area where there is a lot of interest.
Trucks, autos, drones, and any delivery robot capable of delivering a package to a receiver are examples of vehicles. Not only would this save money, but it would also allow for round-the-clock delivery because the robot carrier does not need to sleep.
According to most estimations, it will be some time before all of this technology’s limits are resolved and regulations are implemented. This technology’s capabilities make it one of the most viable alternatives to the present delivery approach. One thing to keep in mind is that huge firms like Tesla and Amazon are heavily investing in these skills. Amazon, in particular, has put $530 million into its Aurora self-driving car startup.
The final trend to be aware of is upselling. The importance of upselling is paramount. According to Oberlo, the probability of selling to existing customers is 60-70%, while the probability of selling to a new prospect is 5-20%.
More and more delivery service companies are studying psychology and the user journey points to leverage extra online sales. This job is dramatically more comfortable with mobile and smart technology, data analytics, and predictive intelligence technology.
Gentle nudges, or suggestions, can be made at critical times to increase sales. This trend is already apparent and is likely to continue to grow.
Choosing the Right Last-Mile Delivery Technology for You
- The tool should be able to handle several drivers and their schedules at the same time.
- A powerful route optimization algorithm is required in the technology.
- Route schedule planning and optimization must be straightforward.
- Last-mile delivery systems must examine all aspects (driver shift times, number of drivers, and priorities), then optimize delivery times.
- With each optimized route, a route planning and optimization program should save you time and money.
- It must include methods for capturing verification of delivery.
- Daily reports and analyses must be provided by the tool.