The continuous growth of the e-commerce industry has resulted in a transformation within the global marketplace. In the year 2020 alone, consumers spent in the excess of 860 billion USD on online shopping. This was a whopping 44% rise from the earlier year.
When we take into consideration the shipping logistics of the online shopping business, improving the last-mile delivery process is one of the crucial prerequisites to ensuring customer loyalty. Last-mile delivery is the stage where a parcel is delivered to the doorstep of the customer.
Problems with the last-mile delivery process
According to the reports of SOTI Inc., there are many logistics companies out there that agree with the fact that one of the more inefficient processes in the whole supply chain is the last-mile delivery process.
Now, we can review the more significant challenges that affect last-mile delivery. We will also look at the ways to resolve these challenges to provide a competitive edge to an online store. Any service that offers last-mile delivery needs to emphasize timely delivery, speed, and accuracy.
The goal here is to improve customer satisfaction and brand loyalty. Another research conducted recently has found that around 56% of the shoppers will not buy again from a brand when they are not satisfied with their logistics services. The last-mile delivery process means one of the more expensive and time-consuming aspects of the e-commerce supply chain.
Another research also concluded that the last-mile delivery procedure accounts for more than 50% of the overall shipping costs.
Last-mile delivery challenges and ways to resolve them
Here are some significant challenges in last-mile delivery and ways of resolving them effectively.
1. Lack of proper visibility:
Having proper visibility for a visibility process is one of the significant prerequisites of making sure that you get customer loyalty. Buyers are always on the lookout to get full knowledge about the situation with their package and when it will reach them.
Many businesses have started offering tracking codes to achieve visibility of their product delivery status. However, we live in an age where technology rules. It is prevalent in all aspects of our lives. So, having tracking codes is not sufficient. Customers are looking for real-time info about the location of a package.
They need to watch all steps of the last-mile delivery process. For offering better transparency in this last-mile delivery process companies such as Tesco, Morrisons, and Sainsbury use delivery management software that can offer real-time status. It allows the clients to track their packages to the doorstep.
2. Higher delivery costs:
The procedure used in the last-mile delivery method tends to become expensive for both businesses and customers. As far as businesses are concerned, you can set up an infrastructure that will support timely delivery but it can be expensive.
Apart from that logistics and shipping companies have to allocate money for failed deliveries, complex routes, additional stops on the delivery route, fleet operation, and driver’s salaries. Another problem is that if there is a failed delivery attempt and the delivery has to be rescheduled, these costs get doubled. Keep in mind that higher delivery costs lead to more abandonment in carts of various e-commerce models such as in-store grocery picking.
Research has indicated that more than 50% of customers abandon shopping carts when they are presented with additional shipping costs. Better route planning and greater efficiency can result in lesser expenses on this count.
More than 65 % of the retailers agree with the fact that there are failed deliveries because of poor addresses provided. This impacts the performance of last-mile deliveries significantly. Keep in mind that returns management is costly in Europe. The average cost of failed deliveries can be around 12 Euros. This has a detrimental effect on delivery operations.
It can also make the last-mile carrier management tougher. Therefore, it is not a surprise that destination management is a serious problem in several cases.
3. Using outdated technology:
One of the reports from SOTI has discovered that almost half of the logistics and transportation companies in the world utilize outdated technology for their last-mile delivery. This kind of technology can offer little help in dealing with higher shipping costs and for combating delays.
However, if you can install a GPS shipping system on a delivery vehicle, and use IoT or the internet of things, it is possible to monitor the whole last-mile delivery process. You will be able to forecast the possible hurdles and develop proactive strategies for dealing with these hurdles.
4. Time issue (late deliveries):
Reducing the fulfilment times is one of the biggest challenges faced by delivery and shipping companies. Their inability to stick to the predetermined timeline can become expensive for businesses. These delays in order fulfilment times will harm the brand’s reputation, raise customer churn, and affect the bottom line.
So, you need a solid last-mile delivery procedure that will aid in making deliveries on time. The solution to this problem lies in developing route planning methods to ensure transparency and great communication for all levels of the process.
5. Lower efficiency:
There is a constant struggle going on to ensure the satisfaction of the clients by using a paperless journey for them. It is one of the reasons that affect the efficiency of the last-mile delivery process.
A greater level of efficiency in the process is also critical for boosting your fulfilment capabilities and avoiding product damage. When a procedure lacks efficiency you will get an increased rate of delayed deliveries and more frustrated customers.
This is true, especially while handling big order volumes. For resolving this issue, you need to employ last-mile delivery software. It can streamline the entire process from the godown to the doorstep of the customer.
This means rerouting the workforce and clubbing orders even when there are last-minute changes in the plans.
6. Insufficient route planning:
Route optimization is challenging and confusing, especially for beginners at micro fulfilment centres. It consists of several variables that have to be considered.
Ineffective route planning means there are more delayed deliveries, higher costs, and a rise in frustration for the customers. This challenge can be overcome by making arrangements for more effective route re-optimization. This decreases the costs incurred by these late deliveries. It also has a positive effect on the estimated time of arrival.
In Europe and UK, in particular, there are millions of packages delivered every day. Thanks to the expectations of same-day delivery from the customers, the required deliveries needed by a brand in a single day have ballooned significantly. This fact has been established by the end customer feedback.
This is also becoming a challenge for different brands to juggle the delivery volumes by using the existing delivery processes. The size of the shipment and distances are the factors that have to be considered when you are deciding if a product is reached or not. This leads to the delivery density problem rising in magnitude.
7. Effect of unforeseen circumstances:
While many of the packaged products are in transit there is a rise in unpredicted situations. This can lead to a disruption in the last-mile delivery process. Some of the things that can lead to disruption are bad weather, vehicle problems, and traffic.
Many of these things are out of your control. For addressing these problems, you have to develop contingency plans that can ensure seamless communication between the teams and the clients. There is a requirement to have a plan of action close by.
So, when you encounter an unforeseen and adverse situation, you can use this solution to dispatch the parcel quickly.
- Click and collect method: It is a re-centralization and customer fulfilment delivery method, used by the customers for selecting the convenient local store. It is also used for deciding the specific time for collecting their buys. This method paves the way for shifting some work to the customers. It will reduce delivery route complexity, distance travelled, etc. It will also streamline the different activities and decrease the cost.
- Using software: The use of the right software can streamline this process, improves efficiency, and better the visibility of the supply chain. The use of appropriate software can lead to delivery optimization, automation of vehicle dispatch, tracking parcel deliveries, and better communication with clients.
- Crowdsourced deliveries: This method allows the local drivers to take charge of parcel delivery to the local clientele. Some of the advantages of using this model are lesser failed deliveries, more customer satisfaction, and lower vehicle costs. For instance, Amazon uses Amazon Flex.
Implementation of an efficient last-mile delivery procedure offers top e-commerce brands such as MNS and ASDA invaluable opportunities to adapt to changing client demands. This also allows the brands to differentiate their offerings from their competition.
The people looking to do well with online stores have to confront the last-mile delivery challenges. It will bring to the forefront, the need of using the right technology, such as Tookan for instance. You are also going to need smooth communication and total transparency between your customers and the delivery teams.
You can also talk to the Jungleworks experts in case your brand is facing some of the challenges mentioned above with their fulfilment platforms. These solutions can transform your customer fulfilment centres from being a costly affair to a profitable unit.
Subscribe to our newsletter
'Jungleworks Entrepreneur's Den' to get access to the latest industry & product insights.