15 Feb Figuring out the Elusive Last-Mile of Delivery
Ever since Amazon started delivering at lightening-speed, improving the efficiency of last-mile of delivery has been on the mind of every other online retailer and business.
While e-commerce shopping expectations have risen in general, delivery expectations have skyrocketed. The delivery experience, which includes an on-time delivery, real-time tracking, and correct invoicing, has become almost as important as the products a company is selling. The strain on logistics companies, carriers, and truck drivers has only worsened. To meet the e-commerce demand, companies will need to find new ways to become more efficient in the final mile of delivery.
The unpredictability in the e-commerce delivery is partially to blame for the inefficiencies in the final mile. Situations such as customer not being home, package theft, and urban congestion have slowed the delivery process during a time when customers are expecting even faster delivery times.
B2B vs. B2C
The need for delivery speed has trickled from the B2C (business to consumer) market to B2B (business to business) as well. While B2C remains the most difficult to deliver on, B2B sales are an important market for many carriers, too. Since not all deliveries are the same, businesses who service both sectors must figure out how to keep both happy.
Coupled with the need for a fast, accurate delivery is the visibility that the customer wants for what is happening with their order and products. It has become equally important for the retailer, who needs to monitor not only the correct delivery of their products but their fast-turning inventory.
Real-time tracking is no longer a luxury, but a must that retailers need to provide in order to compete. In fact, 87% of online shoppers state delivery time is one of the most important factors in deciding to buy from a retailer, which means customers are now viewing the delivery date as an important factor in the purchasing decision. The closer a retailer delivers to the estimated delivery date, the more a consumer trusts in the brand.
Is Technology the Answer?
The technology to speed up the process and make the last-mile more efficient is there, but the regulations are not. For example, self-driving vehicles are capable of making deliveries, however, less than half of the U.S. states have passed autonomous vehicle legislation. So while technology is being developed to replace current delivery methods, the legislation and infrastructure have yet to catch up. As one more example, delivery kiosks in urban areas will become a central location to pick up orders, however, local government must dictate where they are located to minimize traffic.
Matthias Winkenbach of MIT’s Center for Transportation and Logistics states the problem: “We can build fancy models (for optimized city deliveries) but if policymakers and companies don’t understand them, they have no impact.” Still, technology gives the best chance to solve the last-mile conundrum so those organizations that are investing in it will come out ahead.
New Delivery Methods
In an effort to become more efficient, e-commerce retailers have been exploring other options for delivery. Amazon has been in the news for testing air and land drone delivery. The retailer is also trying delivery lockers in urban areas for customer pickup.
Retailers such as Walmart and Kohl’s are using their brick and mortar stores as distribution centers and pickup locations for online purchases. This allows many orders to be delivered directly to a store, cutting down on the number of individual stops a truck needs to make. In some Walmarts, employees are being paid extra to make deliveries on their way home, significantly reducing the amount of shipping to the store or directly to the customer. Employee delivery is potentially more efficient than having a third-party do it, as two-thirds of the U.S. populations lives within five miles of a Walmart. As Amazon builds more distribution centers, unique solutions such as this will be important for other retailers to maintain Amazon’s level of speed of delivery to compete.
Those companies that want to survive in the online marketplace will need to get creative to figure out exactly how to make the last-mile work. Improving on the final mile has become imperative to the future for all type of businesses.