What is Going on in Last Mile Delivery, Omnichannel Retail and Transportation and Logistics?

2019 Trends in Last Mile Delivery, Omnichannel Retail, Transportation and Logistics

Fast, low cost home delivery is no longer a “nice to have”, but rather a business essential.  Today’s retailer needs to have excellent distribution, a solid online presence and the ability to execute same day delivery. Across the United States, the delivery network is fragmented and often somewhat disorganized.  Direct to consumer deliveries as well as same delivery of automotive parts, legal documents, pharmaceutical and medical products as well as other goods formerly had been handled by messenger and courier services.  With the tremendous uptick in need for direct to consumer deliveries from online stores, the distribution pattern and delivery network has continued to evolve in multiple directions.  From industry leaders such as Amazon and Walmart to Uber drivers and gig economy workers, last mile delivery seems to have changed its nature forever.

Several years ago, the trend towards use of independent transportation and logistics providers started to take hold.  Couriers with fleets of employees began to examine new ways to provide last mile delivery service in more cost-effective ways.  Moving from full time, permanent employees to independent couriers seems to have increased the volume of available labor, but it is not without its problems.

According to PwC’s Global Consumer Insights Survey conducted in 2018, in order to meet consumer expectations, transportation and delivery companies to concentrate on meeting the standards of “digital fitness”.  This includes making sure that innovation, asset productivity and cost efficiency are core capabilities, critical to scale across the enterprise.

Today, approximately 12% of total retail sales worldwide are B2B e-commerce.  The continual increase has turned out to be one of the most challenging issues that retailers and consumer goods companies are facing.  Returns are another major challenge for online retailers.  With approximately 30% of online goods returned each year, many online retailers cannot keep pace with the processing. 

 

Speed of delivery is a major challenge.  Whether the delivery customer is in an urban environment or sparsely populated rural zone, delivery time can be problematic due to numerous factors, including traffic congestion, lack of transportation and logistics providers and other challenges.  Younger consumers tend to have the highest expectations for immediate delivery.  Studies have indicated that 57% of North American Internet users in the 23-27 age range reported that same day delivery increases their loyalty to a retail brand.  56% of consumers aged 16-22 reported the same impact of same day delivery on brand loyalty.  Despite the fact that consumers desire fast delivery service, cost remains an issue.  After all, Amazon Prime has spoiled us with fast, free delivery within two days!

Here are a few examples of how the supply chain industry is trying to solve the last mile delivery puzzle:

  • Using hyperlocal delivery services. Uber is a pioneer in this field.
  • Retailers dropshipping goods to consumers
  • Acquiring logistics providers. Example:  Target purchasing Shipt and Grand Junction
  • Acquisition of e-commerce companies by retailers: Example Walmart acquisition of Jet and Bonobos

Last Mile Logistics:  Hopelessly Complex?

It’s a complicated world out there and last mile delivery companies are confronting a world filled with steps, stoops, doormen, balconies and deadweight, heavy packages every day.  To complicate matters even further, consumers regularly leave instructions to deliver parcels to neighbors, put in a covered area out of sight or otherwise customize the final mile delivery.  Congestion, construction and other factors bog down the last mile delivery system even further.  What is the status of last mile delivery today, is it a speed bump or a road block?

Innovation in technology has provided some hope.  Here are a few of the latest trends helping last mile logistics providers to meet consumer expectations:

1. Crowdsourced Mobile Apps for Last Mile Delivery

How does crowdsourced delivery work?  Local nonprofessional delivery service providers transport packages to customers’ doors, often the same day or in even a more restricted time frame.  Crowdsourcing has demonstrated great potential in dramatically speeding up deliveries in urban areas.  This is largely due to the fact that the high density of deliveries can more easily be matched with potential couriers within the given area.

Popular crowdsourced last mile delivery options include:

2. Cargo Drones.

Today cargo movement via drones is already possible and Amazon, Google, Uber and Airbus have initiated R&D programs.  Cargo drones are in use today in areas with harsh environments such as Africa and Canada.  These cargo drones transport medication to remote areas. 

With an eye towards sustainability, cargo drones may play a vital role in the future of e-commerce fulfillment and last mile delivery.  Package delivery is essential to the success of online retailing and the overall economy.  In urban areas, more parcels=more vehicles, more traffic congestion and more emissions.  Designed to be electric or hybrid-electric vehicles with four or more rotors, cargo drones may eventually be instrumental in replacing some delivery trucks and vans.

3. Autonomous Vehicles and Delivery Robots.

From pizza and restaurant food to e-commerce parcels, autonomous guided vehicles (AGVs) are projected to boom in coming years.  Whether used in combination with parcel lockers or for delivery direct to consumers, AGVs may prove to be the market disruptor the world needs to help solve the last mile delivery challenge. 

Some calculations indicate that AGVs with parcel lockers may eventually replace existing forms of regular parcel delivery, resulting in up to a 40 percent reduction in delivery costs.  This is critical as 70% of customers in a 2018 survey reported that they preferred the cheapest home delivery option.

 

Conclusion

Would you ever have dreamed that the world would use drones and robots to deliver packages?  Because of the boom in online shopping, the supply chain industry is turning to autonomous vehicles, crowdsourced delivery apps and independent delivery drivers and other innovations for parcel delivery. Not all home delivery relies on Amazon Prime.  Consumers expect fast, cost-effective delivery options and is now looking to technology for help.  Are delivery robots the wave of the future?  Maybe soon. 

Let’s face it.  Amazon prime has spoiled us!  Consumers want white glove delivery and an amazing customer experience for next to nothing and they want it now! 

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