Last mile delivery explained
- 27 Jun 2019
- Best Practice & Strategies
What is the last mile delivery problem?
The ‘last mile’ logistics problem relates to the disproportionate costs incurred during the final miles of a products journey from the warehouse to the consumers’ doorstep; compared to the relatively cost-effective transportation of the goods over long distances, usually from overseas. Why? It’s just a matter of scale. It’s because of the low volumes of goods being delivered in the last mile or so of a delivery, factoring in the difficulty of navigating directly to each customer, both in rural and urban areas
In this blog post, we’ll explain the challenges faced by logistics and eCommerce companies in overcoming the last mile problem and the technologies which are at the forefront of this issue.
Why is efficient last mile delivery so important?
With more consumers choosing to shop online and next/same day deliveries becoming the norm, businesses are under increasing pressure to deliver their goods faster. Firms which fail to deliver on time risk damaging their reputation and can lead their customers to shop elsewhere – with 55% of consumers stating that they won’t reorder from a website where they had a bad delivery experience.
It’s also important for retailers to provide consumers with multiple delivery options which they can choose from, as they can select the option which is convenient for them. By providing customers with various delivery options, they’re more likely to reorder from the same company.
To meet growing consumer expectations, retailers are developing new technologies to fulfil deliveries. Things like driverless vehicles and autonomous drones. We’ve detailed some of the most prominent below.
#1 – Driverless vehicles
Autonomous ground vehicles (AGV) have been around for several years now; with many technology and car manufacturers working to perfect driverless vehicles. Several delivery firms have also started testing AGV’s for commercial use, using them as mobile locker and storage units to deliver goods.
The use of autonomous vehicles will drastically reduce the costs of delivery for retailers as it removes the need for labor, which accounts for 60% of the overall delivery cost. However, the technology is still in its infancy and human intervention is often required in the vehicles, in case they need to take over control.
Earlier this year in March 2019, US-based retailer Kroger announced that they will launch a fleet of autonomous delivery vehicles in Houston, Texas, later this year. After teaming up with robotics company Nuro, Kroger’s customers in Texas will be given the option to have their shopping delivered by an AGV, which will be available seven days a week, with options for both same day and next day delivery. Customers will then receive a text message informing them when their delivery is outside and will be supplied with a code to access the package in the vehicle.
#2 – Drone deliveries
I’m sure by now we have all seen drones flying around, especially small toy versions at Christmas time that cause chaos for an afternoon and are then forgot forever. But as fun as they are, many retailers are looking to use flying drones to make deliveries.
However, designing drone technology to work within the modern world is proving quite difficult, as the journeys made by drones will change drastically depending on their location. Most prominently, the difference between rural and urban deliveries, as it is much easier to deliver to a home in a rural location which has acres of land to drop the parcel – compared to making a delivery to an inner-city flat on the twentieth floor.
Another issue facing drone deliveries is developing a dedicated air traffic control system for drones navigating the skies. This system is essential to avoid collisions with other drones and aircraft, which could be dangerous for the public and cause damages to the surroundings. However, NASA are developing a system to manage drone flight paths and schedules, to ensure that they are safe for the public.
DHL have been testing drone deliveries in China, loading drones with parcels weighing up to 5.4kg and traveling a maximum distance of eight kilometers. Their testing has been successful, cutting costs by 80% and slashing their carbon output. Due to their success, many firms are following suit - such as Amazon’s Prime Air, which is set to launch within months.
#3 – Gig economy/crowdsourcing apps
The rise of crowdsourcing and ‘gig economy’ applications, which allows organizations to outsource services using short-term contracts, has revolutionized the delivery industry; by allowing smaller retailers and restaurants to source couriers through crowdsourcing applications, using them to make their deliveries. Meaning that they can provide next and same day delivery which has, in turn, diversified the catalogue of restaurants and stores that consumers can choose from.
Businesses such as Just Eats, Courier Portal, UberEats and Amazon Flex are some of the biggest courier services which businesses can use. However, small to medium-sized firms benefit most from using these services, as they can compete with larger retailer’s rapid delivery times; without having an army of employees to make deliveries around the clock.
The importance of visibility
With so much focus being paid by the eCommerce industry to provide faster delivery times, consumers are now expecting full visibility of the entire delivery journey.
Delivery tracking systems have received a lot of investment over the past years, now allowing consumers to see exactly where their orders are, but many of these tracking systems are problematic and unreliable. So, there is a lot of work needed to be done to improve the reputation of these services.
More firms are investing heavily in new delivery technologies, meaning that self-driving cars and drones making delivery’s may soon be the norm. Which will likely turn our attention away from the ‘last-mile’ problem and to the efficiency of the ‘last 30 feet’.
Join the conversation
What do you think about these new delivery technologies? Do you have any ideas for how we can deal with the last mile problem? Let us know on Twitter and LinkedIn.