In recent years, industry trends indicate that the demand for last-mile delivery has increased significantly, based on how much easier it made life for the customer. As online shopping has become more and more popular, online retailers and third-party logistics providers alike have been looking into new delivery options to meet customer expectations.
Fulfilling an order has always been the foundation stone of any retail business. But in today’s day and age, fast delivery is the new norm. As such, companies in the transportation industry are faced with two challenges. On the one hand, they need to expedite same-day deliveries for their customers while, at the same time, keep their operating and expedited delivery costs low. This is where last-mile logistics come into play.
What Is Last-Mile Delivery?
Originally used in the telecommunications industry to refer to the final leg of the network that delivers telecommunication services to end-users, last-mile has also been applied in the supply-chain management system.
The bulk of transporting goods happens via container ships, freight rail networks, and airplanes. These are also considered to be the most cost-effective shipping methods that we know of today. But when the goods arrive at a high-capacity port or distribution center, they will also need to be shipped to their final delivery destination. This final portion of the delivery system represents the so-called last mile.
Last-mile logistics promises to send out these goods to their respective consumers as fast as possible. This will make for a quick and hassle-free transaction for everyone. But with every passing year, customer expectations in terms of how quick, easy, and hassle-free the movement of goods can be, is increasing.
One of the primary catalysts for this change has been the proliferation of eCommerce sites. As such, online purchasing enables customers to make an order over the internet and have goods delivered at their very doorstep. When customers are catered to in this manner, they will be more satisfied, as a result. This, in turn, will raise their loyalty to your brand and will work toward your bottom line. As consumers increasingly turn to eCommerce, online purchasing and last-mile delivery work to make every person’s life a little bit easier.
The Last-Mile Problem
There is, however, a major issue. Anyone who’s ever tracked packages online has, at one point or another, noticed the “out for delivery” tag lasting for what seems like an eternity. This is as true for the United States as it is for the rest of the world. The fact of the matter is that shipping goods from warehouse spaces and fulfillment centers to the customer is the least efficient part of the entire supply chain.
Even though some goods travel half-way across the globe, it’s the last mile part that makes up a whopping 28% of the total cost to move those goods. This is what’s known in the industry as the “last mile problem.”The biggest challenges of last-mile logistics that lead to this problem typically involve multiple stops with low drop zones.
In rural areas, delivery points on any given route can be several miles apart, with only a handful of packages being dropped off at each one. The outlook in urban areas isn’t that much better either. Even though cities may make up with stop proximity, they lose time on regular traffic congestion issues. Deliveries to restaurants, retail stores, and other companies in central business districts will often lead to congestion and various other safety problems.
Another related last mile problem is driving delivery vehicles to remote areas in need of humanitarian aid. Suppliers will usually be able to reach a central transportation hub but will have a much harder time making it to the affected area, itself. This is often due to damage caused by a natural disaster or a lack of proper infrastructure.
Solving the last mile problem and lowering the total cost of last mile delivery should be top-of-mind for any transportation company.
The Importance of Last-Mile Delivery
Fast and seamless delivery is important for most US customers whenever they make an online purchase. Around 25% of consumers are willing to pay significant premiums for same-day or fast delivery. This number is also expected to rise in the foreseeable future as 30% of younger generations are willing to pay extra for the privilege.
At the same time, more and more customers become frustrated with a lack of professionalism or accuracy in terms of delivery times. As their online shopping experiences are declining, transportation companies are feeling the pressure of this increased last-mile demand and rising final mile delivery costs. However, for those with a more open mindset who are looking to exceed customer expectations, this situation opens up a huge opportunity to capture consumer loyalty.
Keep in mind that the on-demand industry has grown and continues to do so at an unprecedented rate. Real-time tracking is no longer a premium feature but an industry standard. Drones and robots are not far behind. The online consumer does not like waiting and expects nothing less than a timely delivery at their doorstep.
When everything is perceived as just a simple click away, the need for instant gratification will be unlikely to change in today’s ever-increasing digital world. This is regardless of the fact that the convenience of on-demand services is in stark contrast to the planning and effort to make it possible.
So, why is last-mile delivery so important, again?
Improving last-mile delivery is the most critical step in the journey of getting goods to the customer. Why? Because the customers’ experience, be it good or bad, will be directly influenced by it. In other words, the efficacy with which you handle your last-mile logistics will determine whether that client will work with you again or go with one of your competitors.
At CRST STI, we are prepared to provide you with the best guidance for you to cut costs, improve customer satisfaction, as well as with your final mile and reverse logistics strategy optimization. We know all the ins and outs of the supply chain and transportation management and are always one step ahead of any hurdles that may come your way.