Today’s retail supply chains have evolved into complex global webs of infrastructure, vehicles and people that move products from raw material to end consumer. And amazingly, the most complicated and costly leg of these extensive logistics networks is the last mile — that final leg of the retail supply chain that physically connects retail brands with consumers. It is a crucial step that can make or break the consumer experience and therefore a company’s reputation and future sales.
Getting last-mile delivery right is important for companies in a world quickly becoming consumed with online shopping. The delivery experience has become an extension of a retailer’s brand. Whether delivery is fast, free, flexible and sustainable are all key factors that consumers evaluate when they decide to make an online purchase. Retailers and carriers that are better able to provide and act upon these factors stand to gain competitive advantages, increased sales and enhanced consumer loyalty.
Why’d You Have to go and Make Things so Complicated?
Logistics in the last mile is a decentralized process, moving products from an ordered state to a disordered state. Products are typically housed in centralized distribution centers, waiting to be deployed rapidly at a moment’s notice to potentially any address in the world. And unlike the first and middle miles of the supply chain, each product on every delivery vehicle in the last mile has a unique destination. To orchestrate all of these moving parts, companies must tackle complicated fulfillment and routing processes as well as navigate murky carrier partnerships to add capacity and flexibility when needed.
These challenges must not only be accounted for but solved quickly and cheaply. Today’s consumers expect fast, free deliveries. This in turn requires retailers to optimize last-mile delivery for speed and efficiency, which is not as easy as it sounds.
For many retailers, the entire last-mile delivery process is inefficient. Manual routing and scheduling, poor logistics visibility during delivery and limited information regarding carrier integrations cost retailers both time and money. Couple these inefficiencies with a growing abundance of fulfillment, fleet and destination types and the result is a complex set of variables that is difficult and costly to optimize. However, these inefficiencies can be overcome and should be viewed as an opportunity, rather than a problem.
The Importance of a Positive Delivery Experience
Last-mile delivery has gained significance in recent years as ecommerce has taken hold of global shopping habits. Retailers of all sizes worldwide that may have originated as pure brick-and-mortar sellers now must include online shopping channels to stay competitive, and that means last-mile delivery is a crucial consideration.
Global ecommerce sales are set to top $5 billion this year and parcel volumes are expected to swell to 175 million parcels shipped. This growth in ecommerce and parcel volumes has put pressure on retail supply chains and their carrier partners. Good news for business overall, but a cause for concern for logistics managers.
Online shopping was born out of consumer convenience, but consumers are generally unaware of the logistical complexities involved in last-mile delivery. Luckily for them, they don’t have to be. A superior online delivery experience is a bit like magic: place an order from a convenient device and within days, or even minutes, their delivery appears at their doorstep. Deliveries that are fast, free and easy create superior experiences that will keep consumers satisfied, boost brand loyalty and keep them coming back for more.
For that reason, the consequences of a poor, complicated last-mile delivery experience can’t be underestimated. Before consumers even click the “buy now” button, they are evaluating the shipping terms that foreshadow the delivery experience they expect to have. In a recent survey, 88% of ecommerce consumers claimed that they abandon online shopping carts due to poor shipping terms like slow delivery times and high fees. Once consumers decide to make the purchase, they expect the delivery to be made as promised. If not, the costs are dear as 85% percent of consumers will not shop with a retailer again after having a poor delivery experience.
The flip side of this is that positive shipping terms and positive delivery experiences will reduce online cart abandonment and encourage repeat business. Offering free next-day delivery with transparent, accurate communications on delivery status can create great delivery experiences. Including sustainable delivery options and offering free, easy returns can take that even farther.
Last-mile delivery technology platforms today are already helping companies achieve those superior delivery experiences. By simplifying complex last-mile orchestration and bringing visibility and transparency to all parties involved, technology is making deliveries cheaper, faster, more flexible and more sustainable, and passing these benefits on to end consumers.
Gaining the Upper Hand
Creating a positive sales experience is no longer enough for retailers. As an extension of the consumer experience and their brand image, retailers must ensure successful and satisfying delivery experiences. The internet and rise of online shopping have convinced consumers that they can have anything they want delivered to them almost instantaneously.
To comply with this consumer sentiment, retailers must simplify the complex last-mile delivery process. Not only does this benefit consumers with a more seamless, cost-efficient delivery experience, but it also positively affects retailers’ bottom lines in both the short and long term.
Kushal Nahata is the Co-founder and CEO of FarEye, responsible for driving the company’s vision, strategy and growth. A dynamic leader, Nahata drives the culture of “customer-first” at FarEye, which enables the team to deliver value to its 150+ clients globally. He is an effervescent thinker who is passionate about enabling digital transformation in the logistics industry and making it customer-centric. He is constantly working toward empowering companies to champion operational efficiency and customer experience. Under his leadership, FarEye has achieved an impressive growth rate with rapid geographical expansion. Nahata enjoys training budding entrepreneurs and guiding them through their journey. He has been mentioned in the 40under40 list by Business World and The Top 25 Software CEOs of Asia for 2020 by The Software Report.