By Jamie Gottlieb / www.parcelindustry.com / March 29th, 2018
Imagine ordering a new computer or buying a set of golf clubs in the morning, and the shipment arrives at your house two hours later. That’s same-day delivery, and it has the power to shift the last-mile delivery landscape.
Retailers are now faced with customer demand for faster delivery times, and that has highlighted the growing impact of last-mile logistics on the supply chain. While e-commerce created a new marketplace, it has also forced retailers to rethink operations.
Last-mile logistics goes beyond offering customers same-day delivery. As a result, retail giants are examining their fulfillment operations across markets and service lines. That includes warehouse distribution, hotshot deliveries, store returns, and even their “buy online deliver from store” (BODFS) model.
So, where to start? Before launching last-mile delivery, retailers will need to overcome these four challenges.
Build Demand in High- and Low-Volume Markets
Studies have shown that consumers will pay a premium for faster delivery. Researchers also expect same-day service revenue to hit $987 million by 2019. And the opportunity to address that change has never been better. But what people say and what they do can be different things. That’s why drop density is a significant factor in launching a last-mile delivery service.
The number of drops in a delivery route feed into the costs of a retailer’s last-mile delivery service. Without high density, costs rise exponentially. Customers in one ZIP Code have a high demand for same-day delivery. But the customers in the neighboring ZIP Code couldn’t care less. Do retailers eat the costs to cover an entire market or forego the market altogether?
Most say the former. And nothing hikes costs quicker than unused delivery trucks or unnecessary hiring. Retailers will need to find demand in both markets or rely on a solution that gives them the ability to flex up and down based on volume.
Transform Brick-And-Mortar into Distribution Centers
With record-setting store closures, retailers are shifting focus toward their omnichannel strategies. It’s a seamless integration between store, website, and fulfillment — and most are looking at transforming their brick-and-mortar storefronts to do it.
Yet retailers aren’t thinking about the size of store footprint. They’re thinking about their ability to hold enough inventory at once.
A customer could buy bedding online from Bed, Bath, and Beyond. Another could purchase from Williams Sonoma, which advertises same-day delivery for a new mixer. But if those items aren’t in stock at a local store, the last-mile shipping costs to make sure it gets there same-day would be astronomically high — or just downright impossible.
To balance online demand with in-store supply, most retailers are currently renting 3PL trucks just to send a few boxes of inventory. And the cost and complexities of that solution make it unsustainable; retailers will need to find a new way to win in last-mile logistics.
Reduce Click-To-Deliver Times
It wasn’t long ago that a one-week delivery window was lightning fast. But now, that same window would be enough to stop you from buying something in the first place.
E-commerce retailers are constantly fighting an uphill battle of reducing click-to-deliver times — the amount of time from when you purchase an item online to when it arrives at your doorstep. Amazon keeps setting the bar higher with no signs of slowing down.
Outside of a delivery workforce, retailers are looking to technology and standardization to trim time on every delivery. From route optimization to omnichannel management, every piece of the supply chain needs to transform. That way, it can support an efficient last-mile delivery service.
Find A Scalable Last-Mile Delivery Workforce
The sharing economy has shifted the delivery landscape. Most retailers find that the emerging field of alternative delivery providers isn’t sustainably meeting business needs. Many label them as on-demand couriers — essentially “Uber-for-packages.” And they have strict size limitations, limited flexibility, and poor unit economics.
Retailers need to find a last-mile delivery workforce that flexes based on customer demand. It also needs to offer a national footprint. And it shouldn’t require businesses to spend millions in headcount or infrastructure.
That’s why many are solving last-mile logistics with collaborative delivery. The model that leverages existing resources — employees, customers, and people in the local community within close proximity to stores or warehouse — as a flexible and more cost-effective workforce option versus other delivery options.
Not only are they closing more sales and improving customer satisfaction, but they’re also increasing speed-to-market for last-mile shipping.
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