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What you need to know about last mile in e-commerce

Last mile logistics is a terminology used to define the movement of goods from a transportation hub to the final delivery destination.

It is the last leg of a supply chain management which ensures that goods brought into a warehouse are adequately packaged and sent directly to the customer.

The critical part of all transportation and delivery companies is the Last-mile logistics. According to ATKearney, in 2016 most companies spent close to $65 billion on picking, packing, and last mile delivery. McKinsey and Co beamed that 50% of UPS’ $35 billion U.S. domestic parcel deliveries came from e-commerce direct-to-customer orders.

The last mile is faced with two main challenges: price and speed. Consumers want their goods to be delivered to their home within the short possible timeframe while minimizing cost. As a result of this, last-mile logistics tend to work hard to ensure these essential factors are balanced to meet the clients’ needs.

McKinsey & Company found that 25% of Americans, Germans, and Chinese are eager to pay splendidly for same-day delivery; 5% would gladly pay some extra fee to ensure timely and fast delivery, while 70% prefer opting for the cheapest home delivery option, irrespective of the delivery timeframe. 

How are companies dealing with it?

Over the years, logistics centers have moved from the cities to rural areas, in a bid to lower real estate costs. With the increase in shipments in urban areas, more multi-tier distribution systems are being developed, in which hubs are intensified with smaller logistic centers.

Companies are currently conducting experiments with on-demand fleet services using crowd-sourced delivery services such as UberRUSH. Using these on-demand services, tend to create a flexible logistics service for retailers and providers by enabling them to expand their delivery capacity temporarily.

They can make use of their fleets to cover the base-load, after which they make use of the on-demand services and urgent delivery requests to wrap up peak periods. This is usually cheaper than owning a more massive less utilized fleet.

Experts are of the opinion that we are currently on the age of automated delivery. Last-mile, door2door deliveries often require one to navigate through crowded streets and multi-story office buildings, creating an avenue for small autonomous vehicles to provide peerless productivity.

The cities of Hamburg, London, and Washington, DC, are already testing the use of modern, self-driving delivery robots, with smart navigation capabilities. There is a good chance that in a few years, late hour deliveries will be made with these automated machines.

Summary

With the increase in the use of technology, there is a more significant opportunity for delivery companies to meet the needs of their customers. It is expected that in the next 10 to 15 years, there will be some huge changes in the industry.

Delivery companies should focus on ways to enhance their delivery alternatives, in order to administer and guarantee exceptional service levels to their customers.