As eCommerce sales continue to rise, so has consumer expectations of delivery transparency, accuracy, and speed. With pressure from Amazon and Walmart, most retailers are scrambling to find innovative ways to lower costs and increase shipping speeds of packages.
It’s no surprise then that last-mile delivery has become top of mind for most retailers. Those willing to invest in optimizing their processes could turn their logistics into their differentiator. In a time when customers no longer buy based on price alone, retailers must meet expectations on all other aspects of the customer experience.
If you want to improve your last-mile delivery this year, check out our overview of it that includes its challenges, innovative ways brands are tackling the issue, and what you can start doing today to improve your logistics.
What is Last-Mile Delivery?
First, last-mile delivery is the movement of goods from a transportation hub to the final delivery destination, which is usually a personal residence. The focus then is to deliver items to an end user as quickly as possible.
Because of changing consumer demands, last-mile delivery has been a crucial topic among retailers. Just over the past 18 months, there has been a 50% increase in last mile services, with most of the demand coming from B2C eCommerce. Both increased online shopping and rising consumer demands have put pressure on retailers to provide:
- Greater flexibility in delivery options
- Faster delivery times
- Real-time visibility into status of customer orders
On top of that, customers also want minimum (read free) costs. According to the 2018 AlixPartners Home-Delivery Shopping Survey, the maximum number of days people are willing to way for an item to be delivered in exchange for free shipping has decreased from 5.5 days in 2012 to 4.1 in 2018. In response to these demands, a December 2017 survey by L2 said that 77% of brands are offering free shipping. It’s now become the norm.
If you haven’t started considering how you can improve your last-mile delivery times, now is the time!
Challenges of Last-Mile Delivery
Retailers face many challenges on their way to offer fast, free, accurate, and transparent shipping services.
Retail TouchPoints “Last Mile Benchmark Report” stated these are the biggest last-mile challenges for retailers.
- Expectations on delivery times, cited by 49%
- Rising shipping costs, 47%
- Expectations of free/lost-cost shipping, 44%
This indicates that the biggest challenge around last-mile delivery is managing the customer experience. However, retailers also must balance providing the best experience at a cost that they can afford and still be profitable.
Handling last-mile complexities means juggling the right processes, personnel and technology to get it done right.
Innovative Approaches to Improve Last-Mile Logistics
For some inspiration, see what others in the retail industry are doing to solve last-mile delivery challenges. In the coming months, we expect to see more ways that retailers are disrupting the industry.
Amazon Flex lets consumers order and receive items from Prime Now within an hour. Amazon has been hiring drivers, like Uber, to pick up packages at the nearest Amazon location and deliver them to people in their local area.
Walmart Employee Delivery
In a similar fashion, Walmart has been experimenting with having employees deliver packages on their way home from work. The program has been rolled out to three cities with no announcements of expansion yet.
Many tech companies have experimented with using drones, or other robotics for eCommerce fulfillment. Amazon, Alphabet, and even Domino’s Pizza have tested the concept.
Shipping by Amazon (SWA)
In the latest news this year, Amazon has hinted at their own shipping service called SWA that would compete directly with UPS and FedEx. Amazon would pick up packages from businesses and ship them to consumers, relying entirely on their own shipping infrastructure. To start, they would focus on third-party merchants that already sell on Amazon.
Focus on Delivering On-Time
Despite innovative approaches to last-mile delivery coming from retail giants, all merchants face the undeniable challenge of offering accurate, transparent shipping processes for little or no cost. In many ways, it seems consumers have unrealistic demands for merchants. We haven’t even talked about returns yet – and the stifling costs they cause for merchants.
However, there is hope!
Experts like Oracle and Convey say that more important than anything else – merchants should first focus on delivering dates that they can guarantee. If a consumer is confident that their order will arrive when the retailer says it will, they might be more willing to wait a few days. Not every order has to be delivered same-day or next-day.
Improve Your Last-Mile Delivery Today
So, as a retailer, what can you do today to improve your last-mile delivery experience?
Start with guaranteeing a delivery date and always making good on your promise. Building trust with your customers goes a long way. Here are some action items to start working towards that goal.
1. Talk to Your Customers
First, survey your customers and see what shipping options, times, and prices they’re looking for. Use their feedback to guide your decisions going forward.
2. Analyze Your Current Processes
Where are you currently falling short? Where are your highest costs associated? Start thinking about the specific areas in your last-mile that need attention.
3. Invest in a Back-end System
Invest in a back-end system like an ERP to help you make good on your delivery date promises. ERPs can drastically help you with your fulfillment and order management. If you’re not sure which ERP is right for you, check out our buyer’s guide that evaluates some of the top systems in the industry.
4. Integrate your eCommerce Platform and Back-end Systems
If you use multiple systems to run your business, then you need to integrate them using a multichannel management platform like nChannel. Through integrate of your eCommerce platform and back-end systems like an ERP, you can:
- Speed up order processing to ensure faster fulfillment
- Eliminate manual data entry that can cause data errors and slow down processes
- Provide customers with order status as items are shipped
- Improve customer experience
Check out what systems that nChannel integrates and see what benefits we can provide for your business.