In the cutthroat world of retail and e-commerce, final mile and last mile delivery truly sets you apart. It’s not just about the route to your customer’s doorstep; it’s the make-or-break moment that decides if your customers end up delighted or disappointed. In other words, the secret sauce behind the scenes. However, achieving this is easier said than done as we begin 2024. The market demands not only speed, but also a commitment to sustainable practices. Consumers are becoming increasingly demanding, and technology continues to evolve at a breakneck pace. So, how can you stay on top of things and adapt effectively? We’ll answer that in this article.
The Current State of Last Mile Delivery
Last mile delivery has become a critical aspect of the e-commerce experience, and you can understand why when further examining its current state.
The Definition
Final mile and last mile delivery, the vital last steps in getting products from distribution centers to doorsteps, play pivotal roles in today’s supply chain, retail world and delivery ecosystem. These synonymous terms describe the final leg of a product’s journey, whether light goods like parcels under 150 pounds delivered by familiar names like USPS, DHL, FedEx, or UPS, or heavy goods needing specialized handling, like furniture, appliances, or even fitness equipment.
There’s an art to this delivery stage, which can be as simple as a Ring & Run for lighter items — a quick drop-off at your doorstep, no appointment needed. Or it can be a sophisticated White Glove service for heavier items, where professionals not only deliver, but also unpack, assemble/install and even remove old products.
Last Mile Delivery Importance and Growing Relevance
Last mile delivery transcends mere logistics; it is the lifeblood of the thriving e-commerce world. Consider, for instance, Amazon Prime Day in 2023, which sold an astonishing 375 million items, each needing swift doorstep delivery. After all, speed in delivery decisively influences 62% of consumers’ purchasing decisions. However, a deeper dive into the industry’s statistics reveals an even more intriguing narrative. The e-commerce market is on the brink of a massive surge, poised to hit $8.1 trillion by 2026. By that time, nearly a quarter of all shopping could occur online. So, if mastering the nuances of last mile delivery is crucial now, imagine how much more it will be before we know it.
Challenges and Innovations
Despite its importance, last mile delivery presents significant challenges. It accounts for more than half (53%) of the total shipping costs, representing a major financial burden for retailers and delivery partners. Additionally, with the expected increase of 78% in last mile deliveries in urban areas by 2030, companies face the dual challenge of managing rising volumes and maintaining operational efficiency. Urban congestion and varying customer schedules further add complexity to the delivery process.
Yet there’s a silver lining. Emerging innovations and technological advancements are at the forefront of overcoming these challenges to reduce costs, increase efficiency and meet the growing consumer demands for faster, more reliable deliveries.
Emerging Technologies Reshaping Last Mile Delivery
Let’s take a look at those emerging technologies; namely, robotics with a touch of artificial intelligence (AI) and automation, blockchain and predictive analytics with real-time tracking.
Robotics, Automation and AI
Robotics, automation and AI are not just changing the last mile delivery game; they’re completely reinventing it. Consider AI-driven optimizations carving out the most efficient delivery routes, slashing delivery costs by 10% to 40% in cities, and making every delivery a smooth, trackable journey for the customer. Also, think of autonomous vehicles, from road-roaming delivery bots to food delivery robots on college campuses, stepping out of sci-fi into our streets. And let’s not forget the drones and small autonomous robots deployed, bringing a new dimension to doorstep deliveries. More integral to this innovation is the Internet of Things (IoT) and machine learning (ML)-driven Autonomous Mobile Robots (AMRs), equipped with advanced sensors that play a part everywhere, from busy city corners to quieter rural roads.
Blockchain and Smart Contracts
Increasingly, experts recognize blockchain technology’s potential to revolutionize last mile delivery, particularly in addressing Proof-of-Delivery (POD) challenges. Delays and errors in POD can significantly impact customer satisfaction and financial processes. Yet, blockchain offers a solution by enabling transparent and immutable record-keeping, reducing processing costs and minimizing the risk of disputes.
For instance, in markets like Korea, many startups creatively use blockchain with AI and smart contracts to build smarter last mile delivery platforms. Together, these systems not only slash delivery commissions but also refine order-messenger coordination, real-time shipment tracking, transparency and payment processes.
Predictive Analytics and Real-Time Tracking
Predictive analytics is revolutionizing last mile delivery, turning route optimization and customer experience into a precise science. By analyzing past “scan events” from deliveries, companies can now forecast a package’s arrival with near-perfect accuracy, providing updates to eagerly waiting customers even 15 minutes before it lands at their doorstep. Further, predictive analytics has introduced “tour sequencing,” an ingenious method that plots the most efficient delivery route.
Meanwhile, real-time tracking of deliveries has evolved from a nice-to-have feature to a consumer expectation, with 80% of customers now expecting to track their orders in real time. This feature empowers them with information and control, enhancing their satisfaction, as they know exactly when and where their eagerly awaited package is at all times. (Your customer service team will also thank you for the relief it provides.)
Market Growth and Consumer Expectations
As we near the end of 2023, the last mile delivery market is witnessing significant growth and transformation, fueled by evolving consumer expectations and market expansion.
Demand for Speedy and Sustainable Options
Today’s consumers are charting a new course for the delivery world, where speed meets sustainability. A whopping 77% are now deeply concerned about the environmental impact of their purchases, with 44% leaning towards brands that champion sustainability. This eco-awareness is driving a significant shift in last mile logistics, heralded by the rise of electric vehicles in delivery fleets, offering a greener way to get packages from A to B.
And it’s not just about being green for the sake of being green; 40% of consumers are actively seeking more eco-friendly delivery options like electric trucks, and over half would wait longer for a shipment if it meant a smaller carbon footprint. 20% are even open to paying more for this sustainable choice.
Expansion into New Markets and Services
The expansion of last mile logistics services into new markets — especially groceries and rural areas — showcases the dynamic evolution of the logistics landscape. The online, on-demand food delivery market is experiencing rapid growth. Specifically, the grocery delivery market could reach an impressive $643.90 billion by 2023, potentially growing to $1.27 trillion by 2028, at a 14.57% CAGR. These projections underscore not only the sector’s growth, but also the growing importance of last mile services in linking consumers with vital goods. For remote rural areas, this is particularly noticeable. Yet innovative solutions like multimodal transit and emerging technologies are actively addressing their logistical challenges, such as longer distances and fewer deliveries per stop.
The Role of Customer Experience
Last mile delivery rapidly becomes a key determinant in shaping customer satisfaction and brand loyalty. An overwhelming 93% of consumers are more likely to stick with brands that deliver on time and offer top-notch customer service. At the same time, 57% would quickly switch brands over poor delivery experiences. This trend closely mirrors evolving consumer expectations: 90% of shoppers see two- to three-day shipping as a basic requirement, pushing retailers to broaden their delivery options, including same-day and two-hour services. Personalization also plays a crucial role, especially with Gen Z consumers, 47% of whom lean toward brands that provide personalized product recommendations. Furthermore, a brand’s commitment to personalizing the user experience resonates with 76% of consumers, with 56% more likely to return to retailers that offer online personalization.
Best Practices and Strategic Approaches for 2024
Let’s wrap things up by honing in on the best practices for last mile delivery to step up your delivery game as we move into the new year:
- Optimizing Courier Management: Balancing in-house and third-party couriers is key. Using technology for smart dispatch and routing can significantly boost efficiency, ensuring that the right deliveries are assigned to the right couriers at the right time.
- Embrace Technology for Efficiency: Technologies like real-time tracking, AI and IoT are game-changers, as we discussed. They not only enhance the delivery process, but also play a crucial role in improving customer satisfaction and reducing costs.
- Prioritizing Proof of Delivery: Ensuring a secure and verifiable delivery process is vital. In addition to building trust with customers, it also streamlines the verification process, making it easier to confirm and manage deliveries effectively. OneRail excels in this area with a remarkable 96% proof of delivery compliance rate.
- Cost-Effective Delivery Strategies: Implementing route optimization, smart packaging and collaborative logistics can lead to substantial cost savings. These strategies optimize resource use and reduce unnecessary expenditures.
- Sustainability As a Strategic Priority: Embracing eco-friendly practices, such as utilizing electric vehicles and sustainable packaging, is good for the planet and increasingly expected by consumers. This approach also includes route optimization to minimize fuel usage.
- Building a Resilient Supply Chain: Adapting to changes and disruptions is vital. Doing so includes scalable solutions to handle varying demands and flexible strategies to cope with market fluctuations and supply chain disruptions.
The Final Stretch: Envisioning the Future of Last Mile Delivery
With final mile and last mile delivery, it’s clear that adapting to the trends and changes isn’t just an option; it’s a necessity for retailers and e-commerce businesses aiming to thrive. The convergence of speed, technology and sustainability is not just reshaping delivery processes; it’s redefining customer experiences and expectations.
The role of services like OneRail becomes all the more important for businesses seeking to stay ahead. Boasting a vast network of 12 million drivers and the cutting-edge OmniPoint™ Platform, OneRail promises timely, efficient and sustainable deliveries. This proactive approach, embodied in services like Exceptions Assist™, ensures seamless delivery experiences despite potential disruptions, and with easy integration into your existing systems, OneRail equips your team to leverage these advanced delivery solutions effectively.
Ready to revolutionize your delivery strategy? Reach out to OneRail for a demo and confidently step into the future of delivery.
