Three Ways in Which Customer Demand is Reshaping Last Mile Deliveries

last mile

Conquering the last mile has quickly become one of the biggest challenges for any retailer. As e-commerce grows and the retail landscape shifts to a much faster and more dynamic environment, led by speed and convenience, the entire industry is looking for solutions to delight customers. Retailers are facing the challenge of offering an array of delivery alternatives while keeping healthy margins by implementing an efficient supply chain operation.

Most revolutions, which are often triggered by a specific event or technology, are followed by action from the mass-market. People will demand the implementation of these new and improved standards. The rise of e-commerce, alongside the evolution of on-demand deliveries and the technologies surrounding both of them, has lead to shoppers becoming tougher to please than ever before. In fact, for many retailers the delivery experience is becoming just as important as the product itself – especially when customers have multiple alternatives to buy the same product.

The landscape may be tough, but any new challenge brings with it numerous opportunities, and companies are now able to leverage their last mile processes to differentiate themselves from the competition. Establishing operational excellence throughout the supply chain can give retailers an edge with their customers – and the last mile is fast becoming a battlefield to earn customers’ loyalty.

These are the three key factors that are completely redefining customers expectations about the last mile:

Speed
A decade ago, next-day delivery seemed like a luxury reserved for urgent business couriers. Today, companies like Amazon are offering free 2-hour deliveries for certain products in some cities and other e-commerce companies such as Farfetch offer 90 minute deliveries from the boutique to the customer’s door for certain brands in key capitals around the world including London, Paris and New York. This is pushing the rest of the industry to keep up with such an unprecedented pace. These levels of speed and urgency come at a cost. While this might be feasible for high fashion retailers selling higher-value products who traditionally have higher margins, they can prove extremely challenging for small orders or for businesses that need to creatively batch orders and orchestrate their delivery logistics in order to ensure that their transactions remain profitable.

Choice
A wide range of delivery alternatives is one of the most decisive factors for an e-commerce operation to succeed. Convenience and flexibility are at the heart of what makes online shopping more appealing to many customers compared to visiting a store. Imperial College’s Consumer Shopping Survey shows that 74% of UK online shoppers think delivery convenience is the most important factor in deciding where to purchase. What’s more, 47% of respondents said they’re willing to spend more with a retailer that offers them the flexibility they need when it comes to delivery, pick up, or return alternatives. Surprisingly, only half of retailers offer express delivery option. Choice is what today’s customer craves, and when a shopper needs something urgently, they want it asap – even if it means paying a premium for the delivery. Radial’s research identifies that offering a minimum of three delivery options is key to catering to most purchase decisions: a standard delivery option when cost is the deciding factor, an express option when time is of the essence for the customer, and an alternative delivery destination when home collection is an issue (i.e. pick-up locker, click and collect).

Visibility
Today, whether an order is loaded on a bike for last-mile delivery, sitting in a warehouse ready for pick up, or still on a container ship somewhere in the Atlantic, companies and customers have unprecedented real-time visibility regarding the status and location of their orders. According to Gartner’s Research Director Bart De Muynck “visibility has exploded over the last 12 months” which signals that we may be very close to reaching full real-time visibility for both the sender and the recipient. The vendor/supplier can then leverage this knowledge to optimize and streamline their operations.

In a way, it is actually customers who are indirectly demanding and defining the creation of next generation supply chains. Efficient logistics are impossible without efficient communications. They’re two sides of the same coin. Besides having the ability to track a delivery and to connect with whomever is holding the package at any stage of the supply chain, communication through technology is also about bringing a new layer of transparency and visibility. This empowers each and every stakeholder to find out what they need to know, exactly when they need to know it.

Raanan Cohen

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