If you’re a small business or mid-sized enterprise in the ever-growing e-commerce space, you face both operational and logistics challenges. Your company has undoubtedly invested a massive amount of time on key tasks like product evaluation and sourcing, sales, marketing, employee recruitment, and customer engagement. You’ve also worked to develop a sound shipping strategy. But how much energy have you truly devoted to understanding what may be the make-or-break moment in the quest for success – namely, the last mile of delivery?
That’s right: all of your efforts to build a great e-commerce business will amount to very little if you can’t actually get your products quickly, safely, and securely into the hands of waiting customers. The fact is that increasingly global, mobile, and urban consumers demand new kinds of delivery solutions, and you need to keep up with them to get ahead of the competition.
That’s where a new report from DHL and Euromonitor can help. The study, Shortening the Last Mile: Winning Logistics Strategies in the Race to the Urban Consumer, analyzes the path forward for online retailers and their logistics partners in the face of changing demographics and the rise of both assistive and disruptive technologies. According to the report, the battle for last mile success will revolve around the following issues: localized delivery, flexi-delivery networks, seasonal logistics, and evolving technologies. Here’s a closer look:
Euromonitor International estimates that by 2030 there will be an additional 1 billion people on the planet. Sixty percent of those people will live in an urban environment, and the significant majority will come from today’s emerging markets. These facts point to a continuing shift in the way that people obtain the goods they need: with space limited and convenience essential, consumers will favor online purchases and expedited delivery.
Urban consumers want faster and more flexible delivery options. They not only want their products quickly, they want them delivered in a certain way and at a specific time. To shorten the last mile and allow for customized solutions, delivery networks are becoming more localized, shifting the supply chain strategy to focus on regional fulfillment. This regional move is also becoming micro-focused. Instead of a country-level localization, fulfillment hubs are getting closer to consumers, and are often integrated within major urban centers. The ideal system of today and the future might be described as decentralized but pegged, with large warehouses that feed into smaller regional warehouses closer to urban centers. Achieving this model on a global scale will require significant investment, since creating more inventory storage and management in locations closer to the last mile represents a fundamental logistics shift.
Consumers want to have a degree of control over when, where, and how their e-commerce purchases are delivered. The bottom line is that they want to minimize the time spent waiting for a package – especially if a signature is required. Flexi-delivery options, like the DHL On Demand Delivery service, are changing the way transport operators approach the last mile. Some examples include service pick-up points, parcel lockers, bicycle delivery, and electric vehicle drop-off. The goal of these solutions is to expand urban localization and meet consumer demand. Some new “out-of-the-box” approaches include crowd sourced and ride share deliveries, as same-day, one-day, and two-day deliveries are growing in popularity.
Holidays that were once regional and local are expanding their reach, thanks to the internet. Chinese New Year and Diwali, for instance, have joined Christmas and Valentine’s Day as important, global holidays that see a significant spike in online shopping — and of course corresponding delivery needs. Consumers are looking across borders and finding opportunities to buy in seasonal holiday times that were once confined; consider that Alibaba’s Singles’ Day for Chinese shoppers now reaches the Philippines, Thailand, Malaysia, Singapore, and Vietnam. Cyber Monday and Amazon’s Prime Day have also expanded to new global regions.
The rise in global holidays has put significant stress on supply chains and logistics strategies. Delivery networks need to adapt to these instances of sporadically high orders, especially given that consumers expect fast and on-time delivery regardless of whether they are seeking a holiday present or a deeply-discounted item for personal use.
Technology will be key in order to meet the needs of the last mile in the future. Advanced platforms and tools have already transformed the way products are moved and tracked across the globe today, and new, updated approaches promise important strides down the last mile. While futuristic ideas like automated delivery vehicles and aerial drone delivery are important, core technology progress is having an immense and immediate impact. Cloud computing, AI, data collection through the connectivity of the Internet of Things, and blockchain technology promise to streamline delivery through automation.
How, specifically, can advances in technology improve last mile delivery? Programs and platforms that are perfecting the collection and analysis of real-time data around delivery are perhaps most important today, since they are helping to boost machine learning. Ultimately, improved automation through machine learning can expand the use of robotics in warehousing, while refining inventory management and peak planning processes.
How is your business preparing for the future of logistics? Let us know on Twitter @DHLUS.