Last-Mile Delivery and Other Trends in Order Fulfillment
It's easy to see why eCommerce has grown in popularity: Nothing beats pressing a button to order a product and have it delivered straight to your door when it comes to convenience. Add in the fact that the current COVID-19 pandemic has produced a new housebound environment, and eCommerce is likely to remain potent for years to come.
Modern technology has altered the way companies operate, primarily for the better. Sadly, it has also resulted in several novel challenges. The same innovation that allows consumers to buy goods with the click of a button often assumes that this will deliver the product on time.
Fast, effective, and dependable order fulfillment is critical to maintaining customer loyalty, but it is also one of the most challenging challenges every company faces. When a customer purchases, the order fulfillment process starts and ends when they arrive securely on their doorstep. The final stage of the distribution process is known as last-mile delivery. It poses the most critical obstacle and cost for many distributors or logistics firms (aka final mile delivery).
Improvements in the last mile distribution process of eCommerce delivery have become a central focus for companies and the third-party logistics providers (3PLs) that support them, fueled by customer demand for quicker delivery times and greater visibility. Before the COVID-19 pandemic, there was considerable momentum; however, the effort to boost last-mile delivery intensified in 2020.
Because of quarantines, stay-at-home orders, and health issues about in-person purchasing, the pandemic flipped the supply chain segment on its head. In achieving a competitive edge in last-mile delivery, the businesses must consider the top trends, adjust to an ever-changing environment, and enhance the customer experience.
Continue reading to find out more about last-mile delivery and how you can use that to improve order fulfillment.
Last-Mile Delivery- Definition & Top Trends Impacting Order Fulfillment
What is Last-Mile Delivery?
The transportation of goods from a transit hub or warehouse to their ultimate delivery destination is referred to as the last mile delivery method. Most of the time, the final destination is the customer's front door. Last-mile distribution strives to distribute goods to customers as soon as possible while keeping company costs to a minimum. Customers can quickly find an alternate product or retailer if shipping options do not meet their needs, so last-mile delivery is an essential cog in the eCommerce system.
It puts retailers and third-party logistics suppliers uncomfortable because last-mile logistics costs can be high – accounting for more than half of overall costs. Labor, route planning, fleet costs, and warehousing all add up. To provide free shipping to their customers, they can cover the costs themselves or look for ways to offset the cost by establishing strict order requirements.
Last-Mile Delivery During the COVID-19 Pandemic
Despite the initial market changes, the COVID-19 pandemic has only intensified eCommerce development. According to Adobe Analytics numbers, eCommerce revenues were up 55% yearly for the first seven months of the year, culminating in $434.5 billion in online sales. Adobe Analytics also projected that by October 5, 2020, total internet sales in 2020 would exceed total online sales in 2019. Much of this purchasing can be explained by the fact that many consumers sought retail therapy to relieve pandemic-induced distress, particularly during initial stay-at-home orders.
Because non-essential shops were closed for an extended period, making in-person buying impossible, and it's easy to see why eCommerce became so popular. While the volume of eCommerce purchases has decreased as more stores have reopened, COVID-19 has established a new normal in customer buying patterns and last-mile delivery standards.
Top Trends in Last-Mile Delivery
Here are some trends that businesses are actively researching and introducing to improve the last-mile delivery process and meet growing customer demands to receive their orders on time and monitor every move along the way.
Intelligent Technology to Improve Supply Chain Visibility
eCommerce companies, as well as their consumers, are concerned with visibility and monitoring. Informing consumers of the present status of orders and where a shipment is on its way to its final destination is just the beginning of what is to come in the future. Shippers and logistics firms are looking at ways to pinpoint the precise position of orders.
Innovative technology has allowed businesses to provide their customers with the transparency and accountability they want, from using GPS and RFID tags to monitor the position of shipments in real-time to implanting sensors in packages to control their humidity and temperature.
Analytics Reduces Costs
When combined with analytics and forecasting, the amount of knowledge generated by the intelligent technologies described above can also help to reduce overall fulfillment costs. Analytics enables businesses to track and identify cost-cutting opportunities across their entire supply chain.
Minor improvements do not seem to have a significant effect on initial costs. Still, when implemented to economies of scale, data analytics offer insights that help reduce costs while maintaining service consumers' quality. As a result, the total costs of last-mile delivery can be reduced, allowing more businesses to provide expedited shipping solutions such as two-day and even same-day delivery.
Last-Mile Delivery Would Allow for Faster Fulfillment
Because of the Amazon Effect, customers expect their goods to be shipped within two days at the very least, and businesses must fulfill orders at an ever-increasing rate. Shipments that used to take days to process now being pushed into hourly, if not faster, time frames. Last-mile delivery is rapidly poised to join the trend for more rapid fulfillment. In fulfilling the short window of requirements, the order must be processed and ready to ship by the time it arrives at an eCommerce website.
Companies must adjust to this model or risk being eaten up by larger rivals that can provide it. It would be best if you made every effort to reduce your last-mile distribution window. One method is to collaborate with a 3PL provider with a sophisticated warehouse and inventory management system that allows you to optimize any aspect of the delivery process.
Centers for Urban Fulfillment
Increasing the number of warehouses or distribution centers is another way to improve delivery speed and provide benefits such as same-day delivery. It works well in big cities where the distribution centers are close to the most significant customers.
Amazon has fueled this trend with its two-hour delivery choice, especially with its Amazon Fresh offering. Other businesses have begun to employ this approach, which provides them with convenient access to their consumers and enables them to offer same-day or next-day delivery.
Related article: Different Ways to Fulfill Shopify Orders
Another way last-mile distribution will boost order fulfillment activities is to rent additional commercial space and use it for your company's fulfillment operations. It is because a rise in order volume necessitates a broader footprint to achieve the surge in orders.
You can devote different micro warehouses for various deliveries and allocate the inventory accordingly if you have more facilities committed to fulfilling orders. You may have one area stocked with the most common items for next-day and same-day delivery and another with a relatively slow shipping period.
Autonomous Vehicles, Drones, and Robotic Delivery are Becoming Increasingly Important
It may not occur in 2021, but with more businesses experimenting and disturbing the space, self-driving vehicles or trucks would affect last-mile delivery shortly. Any eCommerce business should be aware of this trend, even if it is many years away.
Self-driving cars, drones, and robotics will all play a role in improving last-mile distribution solutions. Once automation has advanced to the extent where it can provide good durability and same-day delivery, its adoption would be highly prevalent across the fulfillment landscape.
Crowdsourcing and the Gig Economy
In the last mile distribution market, technology-based solutions that use crowdsourcing and the gig economy to deliver goods to the end-user have begun to emerge. It has been dubbed the "Uberification of the Fulfillment Vacuum." technology may link individual delivery vehicle owners with businesses that need their orders to be distributed in particular areas. Since the technology enabling this does not necessitate the upfront capital investment required in conventional fulfillment, there are fewer trade barriers. In essence, if you own a car or truck, you can be the last mile link in a company's supply chain.
Crowdsourcing last-mile delivery is not without difficulties. Since crowdsourcing necessitates a network of independent contractors on which you must rely upon, there is some concern that you may have less exposure than you'd get from conventional fulfillment methods. If something wrong happens with a delivery, you always have to fix the issue.
Rather than outsourcing last-mile distribution to a 3PL, some eCommerce companies manage fulfillment in-house, using their number of cars or a hybrid fleet to deliver their items.
Outsourcing is now the most popular practice for handling last-mile deliveries; this is a development worth watching as businesses strive to manage their supply chain end-to-end in-house. Some 3PL providers have enhanced their own, more efficient last-mile distribution operations to cope with insourcing.
Hybrid Fleet Model
Some retailers have implemented a hybrid fleet model, which combines their in-house fleet with third-party suppliers and gig and crowdsourced delivery drivers. It enables them to further scale their last-mile operations in response to changes in demand.
A transportation management system capable of integrating all of the different aspects under the last mile distribution umbrella is required for a hybrid fleet process. This transportation management system must include a centralized dashboard to optimize routing, track vehicle position, and receive delivery updates. It should also include comprehensive analytics, including historical reports and other features. Provided that it is properly implemented, a hybrid fleet model can combine scalability and power, making it one of the latest innovations in last-mile delivery today.
The technology being used to push the limits of last-mile distribution is increasingly becoming more nuanced and broad in scope. It is anticipated to remain as eCommerce grows, as does the increased demand for quick and reliable last-mile delivery. There is no one-size-fits-all approach to last-mile delivery issues. Outsourcing to a third-party logistics supplier could be the best option for some companies, combining technological improvements and analytics to manage rising last-mile distribution difficulty while still reducing total fulfillment costs.
Irrespective of your fulfillment plan, the value of maximizing last-mile delivery cannot be overstated. It's essential to remain on top of the developments we discussed and figure out how they fit your overall fulfillment plan.
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