Last Mile Delivery: Demands, Trends and Future Of E-Commerce Logistic

December 07, 2021

At tio, we love tech-supported solutions. This is why recent debates on the last mile delivery concept gives us such excitement. Even though we don’t believe there is not such a thing as “one size fits all solution”, we believe that you can find the right mindset and tools by examining existing solutions and trends in order to create unique solutions for your unique case. In this article, the goal is reaching that mindset together. In order to do it, we will answer the following questions:

  1. What is last mile delivery?
  2. Why does the last mile matter? What changes have affected the last mile delivery?
  3. What are the challenges of last mile delivery?
  4. What are tech-supported solutions?

What is the last mile delivery? 

The direct flow of goods from a transportation hub or production facility to the final destination is expressed as last mile delivery. The aim of all efforts on last mile delivery is simply a cost-effective yet quick delivery. There are different approaches to last mile delivery. Some organizations define it as a problem to solve or an opportunity to make logistic efforts visible, some define it just as a last step of the supply chain. 

It has become more and more popular as e-commerce businesses grow rapidly. The popularity can be seen as a result of interest for e-commerce businesses due to the growing demand for integrated omnichannel fulfillment.

Efforts on this delivery option eliminates inconveniences shoppers experience due to long shipping periods and poor shipment services. Offering specialized last mile delivery options for your customers will provide your brand a competitive edge. 

Why does the last mile matter? What changes have affected the last mile delivery?

First of all, last mile delivery is not a new phenomenon, however in the last few years there have been some changes both in problems and answers. They can be summarized as technological improvements on the logistic industry, changes in consumer habits, and aggressive actions of big competitors.

The evolution of technology is changing supply chains and logistics. Delivery tracking, trucking transportation, international transportation, supply chain management, shipment strategies, route optimization are just a few of the affected areas. Businesses should benefit from technologies not only to create fulfillment experience to the customers, but also reaching an efficient delivery flow. The last mile delivery problems are the most visible ones of these. 

You already know the customer side of this story. Demands and behaviors of an average consumer have changed a lot due to technological changes. In the last few years,especially with the coronavirus pandemic, a growing number of customers adapted to use e-commerce as the first shopping choice. According to Statista, global retail e-commerce sales are expected to reach 5427 billion dollars in 2022. 

In these conditions, businesses have no other choice than to create delivery fulfillment in order to stay alive in this competitive field. It’s also especially important for some products that require different shipping; food delivery companies, supermarkets, florists, restaurants, pharmacies are facing this too in the last mile delivery.

Online shoppers expect from a business, especially an e-commerce store, to have simple ordering experience, necessary communication options from several channels, to be able to schedule delivery time, free shipment, satisfying campaigns and so on. These are almost the basic standards for many e-commerce platforms. According to an Internet Retailer’s survey, %43 of participants who are at the age of 18 to 26, said that they complained about delivery at least once in their social media. Thus, it is crucial to have a smooth production to delivery process for customer satisfaction. 

In this competitive field, companies should focus on delivery fulfillment as one of their top priorities to ensure customer satisfaction. Which is why more companies are investing in their own delivery organizations. Companies who see shipment as an important step, are now searching for innovations to enhance efficiency, reduce expenses, maximize profits and increase customer satisfaction with the last mile delivery.

Finally, there are big companies changing the rules of e-commerce logistics by serving great options to its customers. There is too much to learn from Amazon when it comes to creating delivery experiences that are both satisfied for customers and businesses. Amazon’s actions directly affected several sector’s last mile delivery strategies; including e-commerce businesses, direct-to-consumer retail companies… Even though it’s challenging  in the planning step, Amazon taught us that the last mile delivery has still a great potential to become a competitive advantage. 

What are the challenges and solutions of last mile delivery?

What makes the last mile delivery different from all of the other parts of the supply chain, is the number of destinations. That’s what existing solutions are focusing on and that’s why last mile delivery is more than delivering a package to the final destination. In addition to that there are several factors to consider like costs, fastness, and the product’s special requirements, unique expectations.

Before the e-commerce boom, when customers had to go and purchase in-store that was not an issue but now, retailers had to improve their delivery experience for end-consumers. This improvement is important for not only to serve better, but to stay in the game. There are too many challenges to accomplish it like time pressure, growing costs, unbalanced efficiency due to the customer’s locations and competitors, hard-to-follow trends and technological improvements, and so on. But it’s not that hard. The key is planning coordinated steps to accomplish a fulfillment delivery experience for both businesses and customers. Here are some foremost problems. 

Lack Of Trackability

Even though lack of trackabilityis an easy-to-solve problem with digital solutions and tools, too many businesses still don’t track their delivery via live data. In the last mile delivery, visibility should be a foremost goal not only for business but also for gaining customer loyalty and creating a fulfillment delivery experience. It’s possible to create a delivery process that can be tracked live, providing information to the end customer which includes the location of the package. 

Uber and Lyft is one of the first examples that uses 3d maps to track last mile delivery and inform their customers with live data. Even though you will not copy their strategy, there is always opportunities that can apply from any business via digital tools and solutions. 

Cost of last mile deliveries

Last mile delivery is expensive. Average of  $10.1 is a single package’s last-mile delivery cost worldwide according to Statista. For larger packages like fridges, televisions, it can be up to $50 per package. According to SOTI research, the last mile delivery is the most inefficient process of the entire supply chain. 

With the right optimization depending on your business’ needs, these numbers can decrease. For example, if you have a bakery with same day delivery via e-commerce option, it’s crucial to optimize your last mile delivery for cold supply chains. 

Failed deliveries

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Failed delivery problem is one of the other challenges that increase cost of the last mile delivery. There are several situations that cause failed deliveries. 

  • The customer may don’t expect a delivery. It happens because of the lack of proper communication.
  • The customer isn’t at the destination because of the late delivery. This is because of inefficient planning.
  • There are no options for scheduling delivery. There should be time windows for delivering. 
  • False customer address. It can easily be prevented with right coordination solutions.   

Unpredictability in transit

Predictability is another important concept when it comes to optimizing last mile delivery. It’s possible to predict arriving time or cost per package if you have your business’ earlier data. When you track your data and analyze them properly, your last mile processes can easily become predictable and transparent. 

Outdated delivery tools and technologies

Without digital solutions and tools, it’s almost impossible to create a proper customer experience that can satisfy customers and keep the company profitable. 

What are the trends on last mile delivery?

  • Same Day and Next Day Delivery Options

Because of the thriving e-commerce industry, there is a rapidly growing trend for both next day and same day delivery. Even traditional relatiler try to follow the trend to take benefit from the positive effect in order to meet customers’ expectations. It’s a great competitive opportunity because according to a research only %15 of retailers can offer same day delivery options globally and customers willing to pay more for this option up to 10$. 

  • Home Delivery

Home delivery has risen dramatically in recent years, and the pandemic has speeded up that trend far more. Despite the fact that retailers and logistics service providers provide a variety of last mile delivery options, the number of businesses offering home delivery is still not enough for meeting demands.

  • White Glove Delivery

The phrase “white glove” refers to exceptional care, service, or attention in the last mile delivery processes. White glove delivery is a strategy for goods that needs special attention due to their size, value or fragility. 

Final Thoughts

Companies like Amazon, Getir promise customers easiness and the fastest delivery. Apps like Uber and Lyft make 3D maps and visual tracking common. There were game changers in the industry in the last few years. However, with the help of technological and digital opportunities, it’s really possible to increase the time and expenses of such an order fulfillment by preparing the last mile delivery stage before the process begins.

But, how small and medium companies could organize these for 400 orders everyday and still profit? Even though it’s typically the shortest step of a product’s journey, it is what customers notice and value the most. And trends are changing rapidly. Today, we see too many moto couriers everyday, soon we will see delivery robots, drones, self-driving vehicles in the streets.

For an optimized last mile delivery strategy İt’s not necessary to build delivery robots or using expensive drones, working with premium third party logistic companies, or create a system like Amazon Prime. You just need a know-how for your existing or affordable technology.

By using a software like 7islem, you can turn all of these challenges and trends into opportunities, create competitive value with your fluent delivery flow and design a smart delivery experience without any preventable mistakes.

Kübra Oğurtanı

Kübra Oğurtanı Growth And Digital Marketing Specialist

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