The growth of eCommerce has transformed the last mile of the parcel delivery journey into the star of the supply chain. This last leg of the shipping process has seen the entry of a raft of new technologies and trends, all of which are disrupting the market.
From crowdsourced delivery to robots, here’s what tech develops and investors need to know about last mile delivery ttracting technology developers and investors to meet the demands for faster, smoother delivery right now.
What Is Last Mile Delivery?
When people say ‘last mile,’ what they are really talking about is that last stretch of the supply chain. That’s when the goods are delivered to the final destination, typically the customer’s residence or place of business.
Because it is the final contact with the client — and let’s face it, in the age of eCommerce, it may be the only contact — what we are talking about here is the moment of truth when the brand meets the client. These short moments when the delivery is fulfilled determine much of the customers’ buying experience.
To keep up with a growing eCommerce market, companies are striving to deliver goods faster and with better service. In this race for speedy delivery, same day and next day delivery are becoming a standard, driven by giants like Amazon.
Many companies are increasingly investing in last mile delivery solutions, whether in-house or third-party. Needless to say, incorporating a delivery fleet comes with a set of challenges, such as:
- Fast fulfillment demand—from customers who require increasingly shorter delivery times.
- Tight competition—by giants like Amazon.
- Costs—fleet vehicles, inefficient routes, delays, all contribute to making the last mile account for at least 30% of the total transport cost.
- Efficiency—this is affected by the volume of orders, their frequency, the proximity of delivery points to the warehouse and the number of routes.
Therefore, companies nowadays are looking to outsource their last-mile delivery, to ensure fast and smoother service to consumers.
Characteristics of a Successful Last Mile Delivery Solution
What makes a successful last mile delivery service? Consumers nowadays require fast, seamless service, with transparent tracking. Some of the characteristics that comprise a successful last mile delivery service include:
In the competition to achieve the fastest service, immediacy has turned into an expected value since, according to a study by McKinsey & Company,customers are willing to pay extra to get the fastest delivery.
Traditional courier services provide a general indication of where the goods are. However, real-time tracking provides benefits such as preventing delays, improving the estimated time of arrival. Companies using a real-time order tracking solution can offer their customers the flexibility to organize their time around the time of delivery, which results in a better buying experience.
Consumers want the convenience to receive or pick up their parcels wherever they are, and technology is helping companies to bring the parcels even closer to the customer. One example is Amazon Hub lockers, centrally located code-secured lockers that allow consumers to receive the packages at secure locations.
Companies are turning to last-mile delivery solutions such as smart tracking, fleet management, and route optimization software to improve services and meet customer demands.
Last Mile Delivery Trends
The advances in robotics technology are making possible to add consumer delivery models including autonomous ground vehicles with parcel lockers, delivery robots, drones and bike couriers. These delivery models are likely to dominate in the next decade.
Here are a few of the rising trends in last mile delivery.
1. Gig economy and crowdsourcing
Many companies such as UberRUSH, Postmates, and even Amazon Flex provide deliveries by independent deliveries. Companies publish the upcoming jobs in their applications to alert drivers, which apply according to their convenience and proximity. Basically, any person with a car or bike can register as an independent deliverer and earn extra money.
Crowdsourcing is becoming increasingly popular in dense urban areas, which have an abundance of potential contributors. Companies use tracking apps and route optimization software to ensure the quality of delivery.I
2. Drivers as merchants
Upselling is a known technique for retailers, but the incorporation of upselling into the delivery process is a new trend. Companies can enlist the help of artificial intelligence tools, such as predictive intelligence technology to anticipate what other products a customer might want.
Nowadays, these products are suggested at checkout, but a trend has started in which delivery drivers stock their trucks with suggested products, with the ability to process an additional order when the parcel is delivered.
3. Smart technology tools to help reduce last-mile logistics costs
The use of route-optimization and smart tracking software helps companies reduce the time wasted on delays and inefficient routing. Data analytic tools provide a means to track process and isolate the factors impacting the costs across shipments.
4. City warehouses
Companies are increasing the number of warehouses strategically located within the city to enable rapid fulfillment through services such as next day or same-day delivery. We can see this trend in major cities, where the urban warehouse space gives customers easy access to popular products in a short time.
5. Autonomous delivery vehicles
Delivery robots and drones are not a fantasy anymore. Companies such as Starship Robots are delivering food and parcels through the San Francisco area in the USA. Self-driving vehicles and drones eliminate the need for delivery drivers, making possible to deliver 24/7. Drones are most suited for rural areas delivery of single packages, thus reducing the high costs associated with this kind of service.
For suburban areas, companies such as Anybotics are pairing with autonomous vehicles to deliver small courier robots. Once in the destination street, the robots descend from the autonomous vehicle, delivering their parcels at the destination (they even ring the doorbell), before returning to the autonomous shuttle to recharge and continue to the next delivery.
6. Anticipatory Shopping
While autonomous vehicle delivery is turning into a reality, there is still the challenge of supplying the robots with the parcel efficiently. Companies are changing their inventory management with the help of smart technology solutions. One of such is pre-stocking city warehouses with best sellers items. Therefore, companies such as Amazon are using artificial intelligence to define when a large number of orders are coming from certain regions and pre-ship those items to local warehouses.
The Bottom Line
There is no one-size-fits-all solution for the challenges of last mile delivery. However, the advance of new technologies such as route optimization or third-party deliveries can help companies find the right solution for their customers. There is no doubt that optimizing the last mile delivery is critical for any eCommerce company nowadays.
For aNewDomain, I’m Gilad David Maayan.
Cover image: Flickr