The continued growth of e-commerce is fueling the parcel delivery market. Millions of parcels are delivered daily in the U.S. alone. E-commerce and delivery companies have optimized most of the supply chain to deal with the higher workload. For example, businesses have started to process orders in minutes instead of hours. However, many companies fail to optimize their last mile deliveries, which can result in unnecessary expenditure.
Last mile delivery is the final link in the supply chain. It is the delivery of parcels from the carrier facility (hub) to the requested destination, or the last leg of the journey.
A successful last mile delivery strategy can help reduce costs and deliver goods faster. In this article, we discuss the best practices to form a winning last mile delivery strategy.
The Importance of Last Mile Delivery
Last Mile delivery is the most crucial step in the supply chain, as the shipment is completed once the goods are delivered. Customers form opinions about a carrier and e-commerce businesses based on the quality of the service they receive at the delivery stage.
E-commerce businesses rely on shipping services to deliver their products to end-users. The bigger these companies are, the more users they serve, often at a national or global scale. Thus, they require a delivery service that can handle their workload and delivery standards.
The e-commerce market is estimated at $3.3 billion and some predict that the market will grow to $4.5 billion in 2021. Around 22% of the world’s population purchases online, and studies indicate that by 2040, e-commerce will account for 95% of all purchases.
Retailers and e-commerce companies compete to offer faster and more flexible shipping options to attract consumers. Consumer expectations and demands are rising, with about 25% of consumers willing to pay extra for same-day delivery. For example, Amazon offers its U.S. Prime service members same-day delivery for over 10 million items.
The Need For a Successful Last Mile Delivery Strategy
Last mile delivery might seem straightforward, but last mile delivery presents many challenges, such as inefficient delivery routes and other end-user issues like inaccurate data and order cancellations.
Last mile delivery also swallows up a significant portion (around 30%) of the shipping fee. When companies commit to same-day deliveries, it can lead to excessive fuel and labor costs for the transportation of just a few items along a specific route.
Many shipping services choose to outsource last mile delivery services to local carriers. While companies usually benefit from better cost efficiency, these carriers often don’t deliver the same level of customer service provided by a retailer or online store.
Best Practices for Successful Last Mile Delivery
Incorporate this list of best practices into your last mile delivery strategy to ensure that it is both cost-efficient, well optimized and successful.
Practice #1: Increase Visibility and Provide Real-Time Tracking
Consumers are often anxious to receive their orders, but carriers tend to give a wide delivery window that can leave their customers frustrated and impatient. A smart last mile tracking system that allows consumers to view the current location of their parcel, and provides notifications on its Estimated Time of Arrival, can help alleviate the stress and uncertainty of waiting in the dark.
Practice #2: Smart Outsourcing
Companies can outsource the last mile delivery to local third-party carriers with operation centers closer to the residence or workplace of their customers. Outsourcing to local providers can cut costs and improve delivery speeds. However, the provider you choose will be the face of your operation, so choose wisely.
Study the local providers to see what services they offer, if it is the best fit and ensure they can manage your workload. Establish efficient means of communication and create a behavior code for couriers to ensure that your reputation remains intact.
Consider employing multiple carriers. It can be challenging to find multiple carriers that you can trust with your deliveries and spreading the workload between them, but you can use a centralized Transport Management System (TMS) to help you.
Practice #3: Use Local Stores as Distribution Centers
Many local shop owners have transformed their stores into delivery distribution centers. You can use these shops as distribution centers to increase the number of same-day delivery items you offer.
Practice #4: Data Analytics
Use a smart tracking system to track deliveries and provide customers with more accurate data transparency. You can use data analytics to analyze the best delivery routes and to optimize your delivery strategy.
Practice #5: Update Customers on Delivery Status
Provide frequent notifications on current delivery status to keep your customers informed. You can make the notifications interactive by including functions that let your customers tweak the time and place of delivery.
Practice #6: Automation
Companies can use autonomous vehicles or drones to provide last mile deliveries. For example, Amazon is offering Prime Air, a futuristic drone delivery service that’s designed to get parcels to customers in under 30 minutes. Using drones to deliver goods has many benefits: they are faster than cars; they can save on operational costs, and they can reduce the amount of fuel needed. Also, drones do not require parking spaces.
You can get your drone workforce to complete complex delivery tasks as soon as they receive the order, and they can operate 24/7. If there is a single delivery to be made, sending a drone can be much cheaper than sending a driver.
Consumer demand is a driving force behind the development of the e-commerce industry. The growth of e-commerce is, in turn, shaping the parcel delivery industry. Additionally, e-commerce businesses are offering fast processing and shipping speeds to attract consumers. To help meet consumer demands and optimize company operations, you should incorporate the right practices to build a winning last mile delivery strategy.