Last-mile delivery — or the final stage of the delivery process — involves transporting goods from a warehouse or hub to their final destination, such as a residence or business. Its goal? Providing a seamless, satisfying customer experience (CX) while minimizing costs and maximizing efficiency for the logistics provider.
It’s the final leg of the delivery chain and often considered the most critical and challenging part of the delivery process because it requires the following:
- Navigating complex urban environments
- Dealing with traffic congestion and other logistical challenges
- Ensuring accurate and timely delivery to the correct address
In today’s instant-gratification society, consumers expect even faster delivery times, which has pressured companies to invest in new technologies and processes — and build more warehouses — to meet those expectations. Logistics companies and brands themselves are investing in new vehicles, warehouses, and other infrastructure to support last-mile delivery.
Last-mile Delivery and the Environment
With a greater emphasis on sustainability, some worry this step in the supply chain will become a significant source of carbon emissions or have other negative environmental impacts. Companies must focus on reducing their carbon footprint and finding more sustainable solutions to deliver goods to customers. Sustainability has become a competitive differentiator for companies whose leadership recognizes it’s not a luxury anymore but a requirement to win and keep customers.
The first step? Identifying the carbon and other environmental ‘culprits’ in the logistics activities to determine where it makes sense to substitute traditional services or products (like packaging) for greener practices. Other strategies include:
- Choosing leaner and greener modes of freight transportation. Electric and hybrid vehicles emit less carbon dioxide and other pollutants than traditional gasoline- and diesel-powered vehicles. While costs are higher initially, you can take advantage of tax breaks while saving on fuel costs and carbon taxes.
- Logistics providers can reroute inbound delivery vehicles to offsite locations — consolidation centers where cargo is unloaded and consolidated before delivery to the endpoint. This strategy reduces the volume of supply chain traffic onto the delivery site and shrinks congestion and pollution. Whether they’re designated as dedicated spaces or shared among several users, consolidation centers can link to smaller inner-city hubs as well. An Accenture report found that leveraging micro-fulfillment centers can shrink carbon emissions 26% by 2025.
- Improving packaging by using biodegradable or recyclable materials and reducing the overall amount.
Improving last-mile delivery
Big box stores like Walmart and Amazon have set the gold standard for delivering customer orders quickly and efficiently. To compete, smaller stores must level up their last-mile delivery strategies to meet (or better yet, exceed) customer expectations. Want to improve your last-mile delivery process? Follow these suggestions.
- Centralize logistics data in one dashboard to display all last-mile logistics data, like deadlines and inventory availability, in real-time to facilitate faster decision-making. Desiloing this information provides faster insights while also making it much easier for someone to identify — and address — delays, cost overruns and more.
- Give customers access to real-time driver tracking — a feature often included in delivery management software. When customers have a link they can use to track driver locations in real-time, they can follow their package and know when to expect delivery.
- Automate delivery status changes to update customers quickly about potential delayed or early deliveries. Keeping customers in the loop helps meet customer expectations and maintain customer loyalty. After all, if packages constantly arrive later than the predicted delivery date, customers will shop elsewhere.
- Monitor driver performance and driving to ensure they conduct their routes efficiently — and safely. Because customers have become accustomed to faster deliveries, drivers are pressured to deliver packages on time. Speeding drivers become a hazard to other cars and pedestrians, and aggressive driving also increases fuel consumption. Help relieve some of that pressure by prioritizing driver communication, providing updates about changing weather or traffic conditions so drivers can adjust routes if necessary.
- Offer more convenience and choice with creative delivery options. Some pharmacies and grocery stores have outsourced deliveries to Instacart, for example. Partner with e-commerce retailers to help them fulfill online orders from a store more local to the customers — a neat solution that turns stores into “new” warehouses serving local and online customers.
- Embrace automated route planning and drive dispatch to improve driver allocation and optimize delivery routes. Technology and data analytics can help minimize distances traveled and reduce carbon emissions, fuel consumption, and costs. Automation also reduces mistakes generated by human error.
Trends Shaping 2023 — and Beyond
Last year brought incredible inflationary pressure requiring many industries, including the shipping and logistics sector, to do the same (or more) with less. With global last-mile delivery expected to grow over $165 billion over the next four years, at a CAGR of over 15%, driven in part by an e-commerce industry showing no signs of slowing, brands can’t neglect their approach to last-mile delivery. The following trends will continue to shape and define last-mile delivery this year and beyond.
All About Omnichannel
A 2022 NielsenIQ survey found 86% of U.S. shoppers buying products online and in person expect a unified CX. No longer is retail black and white, requiring consumers to choose whether to shop in a brick-and-mortar store or online. Now, they can order online and pick up in-store (BOPIS) or find something in the store and request it be shipped home.
To remain competitive requires businesses to invest in omnichannel capabilities enabling them to control delivery speed, flexibility, and cost. An omnichannel strategy also shrinks the time needed for a product to travel through various intermediaries and increases the efficiency of last-mile logistics.
Leveraging Predictive Analytics
With the global health crisis in the rearview mirror, supply chain and logistics companies have pivoted from “survival mode” to a growth mindset. A Gartner study found at least half of supply chain organizations will have invested in apps supporting advanced analytics and AI capabilities by 2024.
If logistics companies truly embrace continuous improvement, they’ll need predictive models to inform decision-making. And predictive analytics doesn’t just highlight current problems — it also identifies potential future issues, enabling mitigation before they escalate.
Consumers value convenience, customization, competitive prices, and substantive product choices. Companies operating under a direct-to-consumer (D2C) e-commerce model gain more control and management over distribution, marketing, and CX. This model uses data insights to give businesses a holistic picture of customer preferences.
A 2022 survey found that the leading factors motivating shoppers to buy directly from brands include free delivery, returns, and lower prices. To avoid losing market share to competitors, D2C brands must prioritize and improve their last-mile capabilities to avoid losing market share to competitors. Software-as-a-Service (SaaS) products help D2C businesses strengthen last-mile delivery and expand their presence.
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