In the present world of retail, the last mile and same-day delivery have become vital factors in customer satisfaction and the growth of the company. Customers now want their products to be delivered faster, and research shows that many will shift to other retailers if their goods do not get to them within the expected time. To meet these challenges, organizations are now developing new technologies and changing their supply chain systems to improve the speed and effectiveness of delivery.
The last-mile delivery phase is an important phase of the shipping process. This entails taking products from nearby distribution centers and delivering them to consumer’s homes, which has an impact on the customer experience. Even though last-mile delivery is the most complicated and expensive part of the shipping process, efficient last-mile delivery enhances customer satisfaction. It improves revenue and operational performance among retailers. Given that many different types of firms – from big-box retailers to parcel delivery intermediaries and even new entrants focusing on the quick-commerce model – are active in this space, it is important to have a clear understanding of the last-mile delivery model in order to make sense of the current and future state of retail.
What retail, logistics, post, and parcel companies need to know about the future of last-mile delivery
Defining the last-mile challenge
The last-mile problem is the problem that happens when packages are said to be “out for delivery” but take a long time to get delivered. This delay is often due to a number of reasons that may crop up during the last leg of the delivery process. In more remote areas, the problem is exacerbated by the fact that there are fewer points between which the packages have to be delivered. Hence, fewer packages are delivered at each point. Some problems are unique to urban areas, such as traffic jams, which may also slow down delivery times.
The growth of e-business in the United States has compounded these concerns, consequently increasing the number of packages delivered each day. Therefore, customers are now demanding not only faster but also, in many cases, free shipping and delivery options, creating new challenges to logistics.
Financial implications of last-mile delivery
Last-mile delivery incurs additional costs that would not be incurred when handling shipments through standard fulfillment processes. Thanks to numerous retailers providing free delivery, customers no longer want to pay delivery charges, and thus, retailers have to cover these costs.
For instance, Amazon partially offsets these costs by charging a $2.99 delivery fee on orders that fall below a specified minimum of $35. This example illustrates how businesses navigate the challenging financial landscape of last-mile logistics.
Crowdsourcing as a solution for last-mile logistics
Crowdsourced delivery addresses last-mile delivery problems by employing local people to handle the delivery of the parcel from the point of dispatch to the final delivery point. This way increases order fulfillment speed and makes the customers more happy.
Crowdsourced delivery is based on technology and minimal assets, which means it can be cheaper than traditional delivery. Similar to ride-sharing services, contract carriers carry out deliveries using their own vehicles, often starting from retail locations rather than central distribution centers. Most couriers are paid based on the number of deliveries made or the period in service.
By implementing this model, firms can reduce the complexity of the delivery process and the related costs. Amazon has adopted this strategy through a program it offers known as Amazon Flex. This way, you meet the digital customer who wants instant gratification and convenient delivery options for the consumer and their schedule. This minimizes the chances of delivering the same package several times.
