The ever complicated last-mile delivery got even more challenging owing to the ongoing pandemic. Now that nations are gradually opening up their economy to restore normalcy, retailers, online delivery providers and eCommerce brands must step out from the damage control mode and rethink their last-mile delivery strategy to address the evolving challenges.
Shrinking margins, scaling delivery operations, social distancing norms, changes in customer behaviour to evolving delivery practices, are some of the major challenges introduced by the ongoing pandemic. Things will get better once a solution to the pandemic is found, but certain aspects like growing need to sell online, skyrocketing demands and changes in customer behaviour will persist even after the pandemic is over. Let us quickly glance through some of the major problems that are making last-mile delivery a daunting task.
New COVID-19 related investments have been putting serious amounts of pressure on already thin delivery margins. Even before the pandemic, businesses had to bear the cost of free delivery and returns. To save margins from collapsing businesses will need to better negotiate rates and costs with carriers. Some might also consider changing their carriers based on the needs of their supply chain and service levels.
Changes in Customer Behavior
During intensifying lockdowns retailers across geographies were facing immense challenges with managing inventory and scaling deliveries. Amazon highlighted that it was experiencing Prime delivery delays and was running out of stock of popular household items. In a similar case, online shopping delivery service Ocado, a British online supermarket, suspended its online food delivery service, blaming higher demand than it can meet. In Australia, Coles’ delivery windows were closed for a week in many areas of Melbourne and Sydney, with its website automatically prompting consumers to elect the “click and collect” option if they wanted their groceries sooner.
Now with lockdowns loosening and the challenge of moving packages from point A to point B will reduce considerably. So, that’s one pain point out of our way. But the challenges with changing customer behaviour are something that needs to be addressed immediately. This is the first time the retail industry is witnessing a global behavior shift in such a short period of time. There is a 52% increase in online orders, 14% increase in online orders for store-based retailers and 26% increase in first-time online grocery orders. These behavior shifts will have high degree of stickiness because of two reasons, one, the solution to the pandemic is still unknown and two, people are quickly realizing the benefits of ordering online like saving time, money, ensuring safety and gaining convenience. Hence, things like contactless deliveries, contactless payment, being transparent about the health of store staff, kitchen staff and delivery executives, ensuring quick turn-around-time of essential items and more will become the new normal going ahead. On the brother side, these changes have the potential to drive double digit growth for the eCommerce sector moving ahead.
Scaling Deliveries Economically
There has been a 300% growth in digital ordering and delivery in the US. The ongoing pandemic has exposed businesses to a situation where they are not able to respond to demand-shocks. Inability to scale deliveries, deliver on same-day delivery expectations, and increasing operational costs are rapidly feeding into the bottom lines of businesses.
To manage the situation efficiently savvy businesses are leveraging advanced crowdsourcing tools. In simple terms, crowdsourcing logistics can be referred to as a process that empowers shippers, retailers, and grocery stores to dodge the middlemen and directly reach out to temporary or part-time delivery executives. To keep things in perspective, one can imagine this to a ride-hailing service. The difference is that instead of commuters, goods and packages are being transported through this process.
Now, especially with the ongoing pandemic and nationwide lockdowns, crowdsourcing is not just a 'good to have' it's rapidly rising to the ranks of being a necessity for online retailers and even for brick-mortar stores. An interesting survey back in 2018 accurately captured the growing phenomenon of crowdsourcing in the world of online delivery. It highlighted that the need to compete with Amazon has resulted in nearly 10% of retailers making use of crowdsourced delivery, with an additional 26% planning to do so in the future.
Evolving Delivery Practices
Last-mile delivery is one of the most costly in terms of logistics expenses. To reduce this cost is of immense significance for retailers. The last-mile is changing fast. Today, we have things like curb-side pickups, locker deliveries and fulfilments going on within stores. Then there are large enterprises like UPS, FedEx and even post offices doing last-mile delivery. This has resulted in a situation where businesses need to bring their disparate logistics functions onto a single digital platform to ensure seamless management of inventory, transportation, last-mile execution and delivery to end-customers.
Certainly these challenges cannot be addressed overnight. Business and logistics stakeholders need to revisit their supply chain strategies and implement modern delivery tools to respond to the evolving needs of the online delivery ecosystem. FarEye has been working closely with global brands across the globe to empower them to navigate through the ongoing pandemic. To know more you can sign up for a quick demo here.