Last Mile Delivery Service Options: How to Productize Delivery

In most people’s minds, even a decade ago, the customer experience would probably have been confined to the four walls of a brick-and-mortar store. But today, the delivery experience is just as important as any other brand interaction. According to McKinsey & Co, 39% of millennials and Gen Z shoppers changed their brand preferences during the pandemic. They were looking for two things: companies that reflected their values and convenience.

Companies can capitalize on this disruption by offering multiple last mile delivery options. By letting consumers choose when and how they would like to receive their orders, shippers can turn delivery into an additional product to offer to their customer base. They just need the right tools to do it.

What Are the Various Last Mile Delivery Service Options?

There are two types of last mile delivery services — scheduled and on-demand. Each comes with its own set of challenges.

Scheduled Delivery vs. On-Demand Delivery

Scheduled deliveries are generally booked a few days or a week before the delivery time — customers reserve a specific time slot for when they want the shipment delivered. From there, the carrier or logistics service provider will determine a route for the next day’s deliveries, often with the help of route optimization software. Depending on the product, shippers must consider many variables, such as transit time, vehicle capacity, inventory availability, driver ratings, and any required driver certifications (cable installation for television, for example). 

On-demand delivery is a different beast. In this case, delivery gets initiated once an order is received. For example, on-demand delivery applies to restaurant orders. However, as demand for two-hour delivery expands, this category has come to encompass other types of products.

With on-demand delivery, it’s impossible to plan ahead of time, since the delivery process must start immediately after the order arrives. You can’t even plan routes manually because it would be impossible to optimize transit time.

Cost is another concern. There isn’t time to manually plan what orders go into which vehicle and how to reach each consumer as quickly as possible. But individually delivering each package would shred a shipper’s bottom line.

Types of Last Mile Delivery Options

There are a few different means to get products into the hands of consumers. Some retailers fulfill orders out of a brick-and-mortar location. In contrast, others might have the order sent directly from a warehouse to the consumer’s doorstep, or give them the option to pick up the item themselves. By offering customers multiple delivery options, shippers can transform the delivery experience into their own product as well.

  • Buy Online, Ship to Home – This is what most people envision when they hear the term last mile delivery service. In ship-to-home, shoppers place an order on a shipper’s website, and the shipper delivers it to the consumer’s doorstep. While a popular option among consumers, ship-to-home can lead to ballooning costs and exceptions without the right technology behind it.
  • Buy Online, Ship to Store – Shipping to a store could be a hybrid between ship to home and pick up in-store. This fulfillment method sends online purchases from a distribution center to a brick-and-mortar location for shoppers to pick up. This strategy minimizes vehicle unloading times by delivering all items to one destination, instead of making multiple stops.
  • Buy Online, Ship from StoreIn this last mile strategy, consumers place an order online, which gets fulfilled at a nearby brick-and-mortar location. Products are delivered directly from the store, as opposed to a distribution center, and it utilizes the shipper’s existing distribution network.
  • Buy Online, Pick up In-StoreAs the name implies, this strategy involves consumers placing an order online and then scheduling a time to collect it from a store location. It can benefit shippers by reducing final mile delivery costs and creating opportunities for shoppers to make additional purchases.
  • Buy Online, Pick up CurbsideBuy online, pick up curbside is a similar concept to its pick-up-in-store cousin. The primary difference is that shoppers don’t have to get out of their cars with curbside pickup. This eliminates the opportunity for impulse buys, and it can be hard to maintain efficiency when the store is busy. But some consumers prefer the convenience of curbside pickup or may not feel comfortable shopping in a store.
  • Buy Online, Pick Up in LockerOf all consumer pickup options, buy online, pick up in locker is truly contactless. Once employees receive an order, they fulfill it and deliver it to a smart locker on-site or nearby. An automated notification with a barcode is then sent to the consumer, informing them that their order is ready. The consumer then scans the barcode to retrieve the order. There are no lines and no contact, and it reduces the steps needed to fulfill an order.

What is the Productization of Delivery?

Delivery services have existed since the advent of the milkman. However, over the past decade, they’ve evolved from an afterthought to a critical business pillar. From grocery delivery to white glove service, the delivery experience has become as much a product offered to consumers as the items they’ve ordered online. Treating delivery as its own product is what OneRail calls the “productization of delivery.” 

Offering a strong delivery product has only grown in importance over the past three years. Offering a solid delivery product has only grown in importance over the past three years. Statista research shows e-commerce purchases accounted for nearly 18% of worldwide sales in 2020, up from 13.8% in 2019. Statista predicts that trend to continue, even as consumers return to their pre-pandemic lifestyles — e-commerce is expected to reach 20.8% of total retail purchases in 2023 and accelerate to 24% by 2026. Forward-thinking executives can take advantage of these trends by aligning their final mile delivery options to match their customer’s expectations. 

Take Amazon, for example. Even someone who doesn’t rely on the e-commerce giant could most likely describe Amazon’s delivery service options. And Amazon Prime hit 100 million subscribers in 2019 — this was 14 years after it debuted. These consumers are all paying for a delivery product that is fast, has high visibility and is reliable. In other words, delivery became productized.

Consumers now expect all businesses to offer Amazon-quality delivery. In a Go People survey, 88% of respondents said they would pay extra for same-day delivery. And Ware2Go’s 2022 State of Commerce report found that 77% of consumers are more likely to buy a product if it can get delivered within two days.

Delivery has become a means of keeping consumers in touch with a brand outside of a physical store. For the end-consumer, getting to choose how they want an item delivered (free shipping, same-day delivery, eco-friendly, etc.) is part of the brand experience. It builds customer loyalty, and consumers will happily open their wallets for it.

How to Pull Off Productization of Delivery and Offer Last Mile Delivery Service Options

Last mile delivery options are no longer a luxury but a must-have to compete in today’s market. The Retail Industry Leaders Association finds that for 62% of consumers, delivery speed impacts a purchasing decision, and 30% of shoppers expect same-day delivery. 85% of e-shoppers will look for a product elsewhere if delivery speeds are too long. In other words, giving consumers fast, flexible delivery options is imperative.

The Must-Have Last Mile Delivery Orchestration Technology to Pull It Off

But pulling off last mile delivery orchestration isn’t easy. It may typically be the shortest leg of delivery, but last mile costs can reach up to 53% of total shipping expenses. Fortunately, rapid advancements in supply chain technology are helping to tame this unwieldy transportation leg.

To successfully pull off last mile delivery service, it’s crucial to have a high level of visibility. Real-time shipping visibility is a vital component of this. Being able to view deliveries (or delivery exceptions) in real time is what helps shippers see if products get delivered on time.

But tracking is only one aspect of the technology needed to ensure that deliveries arrive on time, undamaged and to the consumer’s liking. A solid last mile delivery orchestration solution should use analytics to find and correct bottlenecks. It should utilize automation to allocate resources in a way that maximizes efficiency. Finally, an effective last mile tool will facilitate real-time communication between shippers and transportation providers to ensure that everyone stays informed of schedules, delays or transportation hiccups.

Partner with OneRail to Master Delivery As a Product

The need to productize delivery will only grow with the introduction and adoption of new shopping channels. Everybody desires their orders to arrive through the means they want, whether a pleasant curbside experience at the grocery store or furniture delivered within a narrow window. Offering this experience is a means to gain a competitive edge over other industry players.

OneRail can orchestrate these omnichannel deliveries. The cloud-based and API services afforded through OneRail’s platform make it possible to offer any number of delivery products to a customer base. If you’re ready to offer delivery as a product and see the benefits it yields, contact OneRail today.

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