Logistics is a vital component of any e-commerce business. While it can be boiled down to moving goods from point A to point B, logistics is a complex world that if not continuously scrutinized can quickly eat into a retailer’s profit margins.
According to a report by Statista, logistics costs accounted for 14.4% of total e-commerce sales in the US in 2020, amounting to $211.8 billion. More than half of the cost involved includes the planning, execution and control of the movement and storage of goods with physical transport accounting for about 40% of a shipment’s costs.
Therefore, optimizing logistics can have a significant impact on the profitability and competitiveness of e-commerce retailers.
The Impact of First-Mile Logistics
First-mile delivery, which involves moving goods from the seller to a fulfillment center or a courier service, is a crucial element of logistics. For instance, if you are an online seller of handmade jewelry, you must pack and ship your orders to a warehouse or a delivery company that will then transport them to your customers.
The success of the first-mile delivery process significantly affects the delivery service’s speed, cost, and quality, and ultimately impacts customer satisfaction and retention. Customer loyalty is directly influenced by their expectations and preferences regarding each of these factors, as well as their trust and confidence in the seller and delivery service.
The first-mile can set the tone for retail deliveries.
The speed of first-mile delivery determines how quickly the goods can reach the fulfillment center or the courier service, and how soon they can be delivered to the final customer. The cost of first-mile delivery is influenced by a range of factors such as transportation mode, distance, fuel consumption, and labor. The quality of first-mile delivery considers the safety and condition of the products during transit, as well as the accuracy and reliability of shipment information.
First-Mile Versus Last-Mile Delivery
First-mile and last-mile delivery are two distinct processes involved in logistics. While first-mile delivery involves moving goods from the seller to a fulfillment center or a courier service, last-mile delivery is the final step of the process that involves delivering the product to the customer’s doorstep or a nearby location.
Last-mile delivery is often considered the most challenging and expensive part of logistics due to the various issues involved, such as traffic congestion, failed deliveries, theft, damage, and customer preferences. However, first-mile delivery also poses many challenges for e-commerce retailers. Some of these are:
- Finding reliable and cost-effective carriers that can handle different types and sizes of goods, as well as different destinations and delivery times.
- Optimizing routes and schedules to minimize travel time and distance, fuel consumption and emissions, and delivery delays and errors.
- Tracking shipments and ensuring security and compliance with various regulations and standards.
- Managing inventory and storage space to avoid overstocking or understocking, as well as waste and spoilage.
Alternative First and Last Mile Solutions
As logistics costs continue to increase and inflationary pressures begin to shift consumer behavior, e-commerce retailers need to seek out logistics options to remain competitive. A potentially game-changing solution for e-commerce retailers to optimize their first-mile delivery is through the use of a smart locker network.
By implementing a system of automated delivery stations, customers can conveniently pick up their online orders at secure and standardized containers located in strategic places accessible by public or private transportation. Additionally, sellers can drop off their outbound shipments at nearby lockers, eliminating the need for travel to a fulfillment center or courier service.
Retailers can use smart lockers to reduce logistics costs
By using a smart locker network, e-commerce retailers can reduce their first-mile delivery costs and time by:
- Eliminating the need for packaging materials and labels, as the smart lockers provide secure and standardized containers for the goods.
- Reducing the number of trips and vehicles required to transport the goods, as the smart lockers are located in strategic places that are easily accessible by public or private transportation.
- Leveraging data and analytics to optimize the performance and customer satisfaction of the delivery service, as the smart lockers provide real-time information on the status and location of the shipments.
- Using optimized route logistics to pick up deliveries at during off-peak hours and leveraging the best methods of transport from from major couriers to local gig delivery options.
According to a study by McKinsey & Company, using a smart locker network can reduce the total cost of shipment to another smart locker in the network by more than 50% when compared to regular courier options.
Next Generation Logistics
In today’s ever-changing market, e-commerce retailers must prioritize first-mile delivery to maintain a competitive edge. Utilizing a smart locker network, retailers can reduce first-mile delivery costs and time while enhancing customer satisfaction and convenience. The potential benefits of a smart locker network extend beyond last-mile delivery issues, as it can also revolutionize first-mile delivery optimization.