Last-mile delivery has led to an explosion of e-Commerce shopping and a booming industry for shipping companies. And yet, just like the fashion industry that saw its share of fast deliveries spiral into overproduction and excess supply, last-mile delivery is facing some significant challenges. While speed has become the norm, what is left in its wake is impacting everyone from the supplier to the consumer.
What is Last-Mile?
Last-mile delivery is the final leg of a shipment, where parcels are entrusted to an intermediary for transport to your front door. It’s what Amazon (and other e-Commerce companies) have to deal with before they can deliver your goods. The term ‘last mile’ comes from its position at the end of a supply chain and its relationship with demand.
For an e-commerce company to reach its customers, it must be able to ship products from one point to another. The process begins at a factory or distribution center where product is loaded on one of many forms of transportation. Once products arrive within the end destination’s region, products are sorted and loaded onto trucks or vans, headed to individual homes. It is at this final stage, the “last mile,” some of the biggest problems occur.
Last-mile delivery can only exist if on-line merchants, both direct to consumer and traditional retailers, provide demand, and it can only work if there are delivery companies to offer supply. That’s a standard business equation, but it makes the last mile relatively vulnerable to disruption.
How Last-Mile Delivery Impacts Shippers
Speed and Cost – Last-mile delivery has led to a new dynamic for consumers, who want their goods fast and can now get them faster. However, a challenge with last-mile delivery is that the last mile doesn’t necessarily increase the speed of delivery. For example, if a package needs to go from New York to London, it could take two days or 30 days. And although the shipping costs may be the same, the last mile will eat up to 30% of the cost, even though it is only a fraction of the delivery journey.
Supply and Volume – In-store shopping, by its nature, provides retailers with a predictable pattern of consumer behavior. While sudden runs on products do occur, they do so in a measured and local manner. On the other hand, E-Commerce shopping is not bound by physical location. As a result, when products see a spike in demand, retailers cannot backfill the supply fast enough. The inability to replenish products quickly has resulted in retailers re-ordering goods only to find that demand has faded by the time the product arrives.
How Last-Mile Delivery Impacts Earth
Impact on Global Warming – Shipping accounts for 2.6% of global CO2 emissions. The push for last-mile delivery further strains the negative environmental impact shipping has. The majority of last-mile deliveries are to an individual household.
Dozens of stops a day means delivery vehicles clogging our roadways, contributing to traffic delays and gridlock. Once off the major arteries, the same vehicles are left idling as they make stops at individual addresses and release unnecessary carbon emissions into the atmosphere.
Last-mile delivery increases shipping waste
Impact on Waste – Front door delivery has led to another problem, excess waste. Products must be shipped in boxes so they may be protected from the elements as they lie waiting for homeowners to pick them up. Additionally, personal orders are rarely aggregated into a single delivery. This means instead of one box for many items shipped; we end up with many boxes for many products ordered, compounding a wasteful delivery process.
How Last-Mile Delivery Impacts Retailers
Higher Cost – Higher costs are a big issue with last-mile delivery. Meeting delivery demands increases complexity across the entirety of a retailer’s supply chain. Last-mile delivery costs go well beyond the shipping itself and include storage fees, waste disposal fees, redelivery fees, and other expenses. Instead of being able to ship their products at lower costs with less risk, retailers must pay more to keep the flow of goods moving.
Fewer Choices – As retailers spend more on last-mile delivery, they’re forced to increase prices to keep customers happy. This has led retailers to either reduce selection, reduce quality, or offset increased delivery costs in highly competitive sectors. So while retailers may generate more revenue and profit, they also are making a slight shift away from the product and onto the price.
Retailer Collaboration – Retailers can work with local and regional retailers to reduce packaging waste, landfill less, and last-mile delivery less. This means using more alternatives and creating more packaging that can be recycled, reused, or made into other products.
Last-Mile Consolidation – Retailers can consolidate shipments together to share last-mile costs. For many companies, distribution centers are in the same general proximity. Another option is to leverage Smart Locker networks, which can reduce the cost of delivery by 30%. Additionally, since products are stored securely, unnecessary packaging can be eliminated.
Conscious Couriers – Retailers can choose to utilize last-mile couriers whose services are often more efficient and environmentally friendly. Where large shipping companies have massive, centralized aggregation centers, smaller local couriers are often closer to the final delivery destination, reducing the overall journey of delivered products.
To learn more about how your organization can maximize smart lockers to reduce cost, increase revenue, and delight your customers, contact the ParcelPort team online by visiting www.theParcelPort.com, email at sales@theParcelPort.com or calling 1-800-818-0870.