The Evolution of Last-Mile Delivery: From Traditional to Unconventional Methods

Sep 30, 2022

Last-mile delivery – the last leg of the supply chain – has never been more significant. Customers today want fast, accurate and reliable order fulfillment without compromising on product quality. Many of them also demand transparency and regular updates about their parcel's whereabouts without having to pay an additional shipping fee.

Moreover, there is a growing number of startups specializing in last-mile operations. By leveraging emerging technologies and data capabilities, the new entrants are demonstrating what is feasible out there; and their methods, more often than not, are beneficial to the environment. 

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With this in mind, we have taken a closer look at the evolution of last-mile delivery, touching on how traditional methods are gradually being replaced by more unconventional ones from collection points and curbside pickups to drones and robots. Read on to find out more!

Defining the Last-Mile

The last mile of the e-commerce supply chain is where the order is physically delivered, establishing a tangible connection between businesses and customers. Products are delivered to a customer's home, place of work, or parcel locker after being transported from a warehouse or distribution center. When done well, last-mile delivery ensures that every package arrives safely at its destination on schedule, accurately, efficiently, and sustainably.

The Changing Landscape of Last-Mile Delivery

In a world that is becoming more e-commerce-driven, getting the delivery experience right is crucial for shippers and carriers. Today, it takes more than just competitive pricing and quality products to win over customers and keep them coming back. Consumers now prioritize last-mile logistics as a crucial consideration when choosing where to buy their online goods. A superb delivery experience gives brands a significant competitive edge. 

As such, last-mile delivery is becoming more crucial than ever for customers and more complicated for shippers due to the ongoing expansion of e-commerce. Typically, the last mile of the supply chain is the most expensive part, costing 53% more than other shipping charges. It is also important to note how the last mile can get unpredictable because delivery locations and schedules are not known until a customer places an order. The procedure becomes considerably more complicated when you add in the different fulfillment options and fleet kinds that shippers can select from. With that, the last-mile delivery plan needs to be periodically reviewed by supply chain leaders, including e-commerce retailers, grocery chains, dining establishments, and manufacturers.

Challenges in Last-Mile Delivery Logistics

The last mile presents several challenges to businesses, including the pressure to provide same-day delivery, the limitations of outdated IT infrastructure, a lack of logistics insight, and inefficient routing. Let's take a closer look at some of the obstacles businesses face with last-mile delivery.

Carrying Out Same-Day Delivery

According to statistics, more than 80% of customers are willing to pay more for speedier delivery, and last-mile deliveries struggle to meet this demand. It is exceedingly challenging to reduce delivery turnaround times, risking the entire shipping process with ineffective routing procedures, manual dependencies concerning task allocation, and inadequate management of third-party logistics providers. 

Ensuring optimal vehicle capacity use is another difficulty. Due to the nature of same-day delivery, wherein typically only small amounts of parcels are involved, it becomes difficult to maximize vehicle use. Businesses do not have the luxury of waiting for enough orders to come in so that their capacity is fully used.

Insufficient Real-Time Visibility

Every party involved in delivering an item, be it a carrier, a merchant, or a delivery, can benefit from knowing exactly where an order stands and when it will be delivered if given access to the order's status in real-time. This information can decrease calls to customer support departments inquiring about their  order (WISMO), saving the company time and money. A corporation may also predict disruptions thanks to real-time visibility.This allows companies to instantly fix issues and alert customers in advance. 

Increasing Carbon Emissions 

The exponential growth of e-commerce logistics is being matched by an increase in carbon emissions. By 2030, there will be an estimated 78% more parcel deliveries made worldwide, increasing emissions by up to 30%. Simultaneously, carbon emissions from urban delivery traffic are likely to increase by 32% by 2030 if no action is taken, putting massive pressure on companies to significantly reduce their carbon footprints. 

Delivery efficiency and sustainability require a delicate balance. A survey by the Onfleet 2022 poll has shown that nearly 50% of Americans would be willing to pay extra delivery costs for online purchases if a company took steps to reduce its carbon footprint. To provide consumers with the best experience while also attempting to lower carbon emissions, brands must deliver goods more efficiently than ever. Making the last mile more sustainable can be achieved in several ways, including route optimization and delivery fleet optimization. Additionally, carbon emissions can be reduced by using greener, more energy-efficient delivery fleets, such as electric vehicles, and alternative delivery methods like drones. 

The Traditional Route: Doorstep Delivery

According to our research, customers still prefer the traditional option of doorstep deliveries in most regions, with Latin America and Africa seeing the highest percentages of 99.4% and 98.3% respectively. Since e-commerce is a relatively new venture in these markets and cash being the most common form of payment, it makes more sense that businesses are choosing to stick to the proven method.

Our findings also indicated high preference for home delivery services in Asia as well as North America. This is no surprise since these places are known for their shorter transit times to first-attempt delivery attempts. In Singapore, for example, the average transit time to the first parcel delivery attempt was as low as 1.5 days post-COVID.

The Rise of Unconventional Delivery Methods

Companies are increasingly looking towards alternative and unconventional modes of package delivery to keep prices low and service levels high. This is in tandem with the growing e-commerce space that propels package deliveries toward an anticipated $665 billion in market value by 2030. As such, businesses may start using unusual delivery techniques in the upcoming years, such as bikes, skateboards, and even drones.

Click-and-Collect Options

Click-and-collect is a popular innovation in the retail industry. Under this method, customer orders are placed online and collected in-store or from parcel lockers situated across the country. This delivery method is growing in popularity amongst customers as it offers flexibility, convenience and speed in delivering the goods to the final destination – the hands of the shopper.

Drones and Courier Robots

In the autonomous last-mile delivery business, which is predicted to develop at a remarkable CAGR of around 19% over the next ten years, drones already hold a market share of over 61%. In recent years, e-commerce orders, food deliveries, and even medical supplies have all been made using drones all over the world. 

The costs of a traditional ground-based fleet might be avoided by using a fleet of these unmanned aerial vehicles to deliver packages from hubs to surrounding addresses. When coupled with track-and-trace capabilities, it will enhance the delivery’s effectiveness, speed and success and hence, improve customer’s overall satisfaction.  

Additionally, autonomous courier robots, whether wheeled, bipedal or otherwise, are an effective substitute for conventional delivery vehicles like trucks and vans. These machines may operate around the clock, just like their aerial drone counterparts, taking orders whenever they come in and even waiting for customers if necessary. This eliminates the cost of manpower and logistics.Furthermore, electric vehicles, both drones and delivery robots are much more eco-friendly than their fossil fuel-powered counterparts. According to recent studies, short-distance operations using drones can result in up to 54% fewer emissions than those using trucks.

The Future of Last-Mile Delivery

Last-mile delivery is an integral component of the order fulfillment process but is often the most challenging to coordinate. Businesses are racing to develop new technologies and experimental supply chain models to increase parcel volume, expedite deliveries, and satisfy customers. As we look further into the future, we expect the continued growth of the e-commerce market and thus, ever-changing trends and preferences for delivery services. 

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