Ecommerce increase in B2B, B2C and C2C markets is one of the top contributors causing urban freight challenges. Such are pollution levels, noise, increasing the use of public space, safety and road congestion. Consumer expectations and demands are on the rise and today, around 25% of them are willing to spend more for same-day delivery.
In fact, the same day delivery is expected to reach a 25% market share by 2025. In 2018 alone, the same day delivery plus last-mile logistics was valued at more than $1 billion. A better policy is something the entrepreneur Richard Alden has been pushing in regards to last-mile delivery.
Below are the top three trends in last-mile logistics that shippers need to understand for them to gain a competitive advantage.
Analytics Will Drive Last Mile Logistics Costs Down
The information that comes from smart technology and automated systems can be used in other ways when applied through analytics. Analytics is instrumental in allowing supply chain units to isolate the cost-impacting factors across all shipments. Even if some of the changes may not have an impact on initial costs, data analytics provide a means of pushing the costs to insignificant limits.
As a result, the whole costs of last-mile delivery can further be pushed down, to encourage more consumers to utilize same-day delivery and faster delivery options.
Last Mile Logistics Gets Faster Fulfillment
Many changes for fulfillment timetables are happening. Today, shippers need to move more products at a faster pace while consumers want speedier fulfillment. When you look at previous shipments, they required only one hour to process are currently pushed to do it within 3 minutes intervals, if not faster times.
Subsequently, the last mile logistics is lastly in a position to become part of the new change toward faster fulfillment. For millennial consumers, they are willing to pay a thirty per cent more for the same day delivery. Others are ready to part with extra-pay for guaranteed delivery.
According to McKinsey Company, 5 per cent of consumers are ready to pay more for reliable and timed delivery. About 2 per cent of consumers would pay more for instant delivery, while 70 per cent of consumers are content with a cheap form of home delivery.
Drivers Become Merchants
To reach more shoppers, shippers need to find ways that easily convert them to consumers. Reports show that around 65 per cent of all purchases first use the internet for research before making any decision to purchase. Consumers respond to the product’s information placed in front of them online and remain the most reliable way to encourage conversion.
In conjunction with better and faster technology, including driverless trucks, the role of the driver will in future evolve. Drivers will become merchants, where they will be selling items from trucks, although this new resource is faced with several challenges. Some of the new challenges are highlighted here below.
- The process drivers will use to process the payments and handle their accounting
- Is there going to be a charge per transaction to the original shipper?
- Who will assume the burden of risk for merchandise that has not been paid for?
- What will happen in case the consumer decides to return merchandise purchased from drivers?
- For interstate or international shipping regulations, who will be listed as the official owner of merchandise sold by the drivers?
There are great things to happen in future in last-mile logistics. The level of technology leveraged to push the frontiers of the last mile delivery and same-day delivery is slowly growing in scope and complexity. Shippers need to be aware of the trends in the last-mile logistics, or they will lose their competitive advantage to e-commerce giants like Walmart, Amazon and others. The big question is whether your organization is prepared enough to handle the growing complexity and the demand for more last-mile logistics deliveries by consumers.