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Last-Mile eCommerce Significance and Challenges in Modern Delivery Operations

Over a decade or so, the retail sector witnessed a paradigm shift in its operation when most of the players switched from a conventional brick-n-mortar store to an online eCommerce platform. Hence, surfaces the need to improve last-mile eCommerce operations. The COVID 19 pandemic too further strengthened the online business scenario globally. While B2B space was gearing up for an online transformation, the B2C had got into the mould long back with customers’ preferring online shopping over offline.

What is last mile eCommerce?

In eCommerce, last-mile delivery refers to the last phase of any shipment’s traversed path from a warehouse to the final delivery destination. Last-mile eCommerce is a critical part of supply chain management that ensures goods brought into a warehouse are adequately packaged and forwarded to the customer address directly. In today’s highly competitive marketplace, last-mile eCommerce plays a vital role in keeping two main challenges of price and speed in control. 

With growing demand from customers and the phenomenon of “same day” delivery, last-mile delivery can make or break a company’s reputation. Well focused last mile in eCommerce can boost profitability too and is a win-win situation for both shipping companies and their clients.

Significance of Last Mile Delivery eCommerce in the 21st Century

The rule of the game is simple – fulfilling delivery promises. And the ones who do it diligently will rule the eCommerce space in the 21st century. Whether the delivery commitment made is one-day or same-day or one-hour, online retailers are in a race to reach their customers and create their brand identity by virtue of the fastest delivery. And only last mile eCommerce companies who get it right will exist.

With growing transactions of online shopping, faster deliveries aren’t any added facility but a customer expectation for the enhanced shopping experience. Prioritising faster delivery can help retailers and their logistics partners to grab a greater share of the pie.

Mastering the art of last mile delivery has yielded great results for companies like Amazon, FedEx and UPS. Whilst consumer expectations around delivery are rapidly growing, their delivery experiences are not so rosy, leaving them frustrated due to a lack of professionalism, transparency and accuracy. For last mile eCommerce carriers , this last leg of supply chain cycle is important due to the following reasons.

i) Rapid change in Retail dynamics 

Earlier the retail space was dominated by players like Sears, JC Penny and all, who offered the convenience of getting everything you need under one roof. But today the definition of convenience and accessibility has changed dramatically. With the dominance of eCommerce players and easy home delivery, retail dynamics have changed globally. And this translates into a sheer focus on last mile delivery eCommerce. Players who have leveraged on last mile delivery solution are the one shinning. 

ii) Exceeding Customer expectations 

Today customers are more into online shopping while everything is available at the tip of their fingers. The “good to have” list quickly transforms into “must-haves”, and with such rapid change in shopping, the behaviour comes in customer expectation of faster delivery. Online retailers thus have to keep up with the delivery pace and not only meet customer expectations but exceed them to convert them into a loyalist. As much as 99% of US customers expect faster delivery and with Amazon Prime’s next day delivery, the competition has heated up with a greater focus on last mile eCommerce. It is also observed that customers won’t mind paying a premium for a same-day delivery service.

iii) Adapting new technologies 

Last mile eCommerce companies are leveraging new technologies to optimise last mile delivery. Loads of investments were also made to bring in new technology in play for supply chain and logistics domain. AI, automation, delivery drones, self-driven delivery vans etc are now being widely used. Ecommerce companies are now adopting and adapting these new technologies. To optimise the last mile delivery process investment in different software like route planning suite are also widely practised. Smart technologies were adopted during this COVID19 period too – contactless delivery within a committed timeline in the last mile must have been a loyalty booster among customers.

7 Key Challenges in Last Mile eCommerce

Understanding the bottlenecks in the final leg of delivery is critical in achieving high efficiency among last mile eCommerce companies. All those elements that cause hindrance should be dealt with and eliminated. Some of the key challenges in last mile delivery are as follows.

Poor customer experience 

With the increase in customer expectations, their dissatisfaction with last mile experience is also surging. As per Capgemini Research Institute’s report, on an average, across all geographies, delivery services received a Net Promoter Score (NPS) of -9.

Increasing delivery costs 

Even though customers are willing to pay a premium for the fastest delivery, there’s a larger chunk out there who is budget-conscious yet looking for quick delivery. And hence one of the major challenges is to keep the high cost in control. Almost 28% of the total cost constitutes of last mile logistics. Certain other factors like penalties for late deliveries, adhering to guaranteed ETAs, demand volatility, and managing a temporary workforce makes it further difficult to control cost.

Damage to packages

While the focus is on faster delivery, improper handling of shipment causing damages can be a big challenge that’s hard to overcome. Damaged packages not only incur an additional cost but also triggers dissatisfaction among customers. Thus, the last mile eCommerce companies should be careful while handling consignments.

Inefficient returns management

Ineffective product returns can lead to a decline in revenues, higher operational costs, and rise in customer dissatisfaction. A dramatic increase in returns these days poses a challenge to last mile eCommerce.

Rigid delivery workflows

With changing shopping pattern and dynamic consumer behaviour, there’s no place for rigid delivery processes. Conventional last mile processes are mostly dependent on a manual intervention that often fails to meet up customer expectations. For instance, modern customers would prefer brands that allow them to alter delivery location and schedule as per convenience, which gets difficult if the dynamic workflow is not in place.

Lack of ground-level logistics visibility

This is a major challenge in last mile eCommerce where more dynamism is required. Poor visibility leads to delays, route diversions, unnecessary fuel consumption, vehicle idling etc. which collectively frustrates the customers.

High volumes of first-attempt delivery failures

Every unsuccessful first time delivery incurs extra costs that become a challenge for last mile delivery. Rescheduling the delivery, loss of man-hours, more miles travelled, and other overheads narrow downs the margin. 

How Last Mile eCommerce Companies can improve delivery operations?

While companies realise the importance of last mile efficiency, how to improve the same is all about marrying customer expectations with operational excellence. Few parameters which are critical in improving delivery operations are as follows.

1) Use of smart technologies

Operation excellence can be achieved by using GPS, RFID, through which companies can locate their fleet and communicate accordingly. Real-time tracking integrated with SMS and email notification can enhance efficiency. Advanced data analytics also helps to predict and forecast. Apart from these robot and drone deliveries can make last mile B2B deliveries seamlessly. 

2) Streamlining resources

At times due to a surge in demand, the company’s in-house resources fall sort of expected output. A hybrid model comes in handy during these hours of crisis when third party service providers and freelancers can be partnered for better results. This also controls the cost of operation and increases profit.

3) Faster order fulfilment

Meeting customer expectations of same-day delivery has become the latest trend. Fulfilling such demands by proper planning and strategies can enhance last mile delivery.

4) Maintain transparency and flexibility

Present-day customers are always online and they would like to track their order at every stage of the delivery process. Letting the customers know about the exact coordinates of the package builds faith in the brand. Informing customers of any adversities also helps in maintaining healthy customer relationship. 

FarEye closely works with its clients to help them achieve seamless deliveries across the globe. With advanced technologies, reduced carbon footprint and quick TAT, we have been consistently achieving operation Excellency by overpowering all challenges and thereby empowering enterprises of all sizes.

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