The growth of eCommerce has been staggering, with the number of online shoppers increasing year after year. According to Statista, global retail eCommerce sales were roughly 5.2 trillion US dollars in 2021. This value is expected to rise by 56% over the following several years, reaching around 8.1 trillion dollars by 2026.
As a result, eCommerce logistics companies have been forced to improve their strategies, and last mile delivery has become a critical aspect of ensuring success. In fact, the last mile delivery market size is expected to reach $55.2 billion by 2025, according to a report by Grand View Research.
So with this growth in mind, let’s dive into how you can ensure your last mile delivery is optimized and that you’re ready to serve the wave of eCommerce sales to come!
What Is Last Mile Delivery?
Last mile delivery refers to the transportation of goods from a distribution center or hub to the final destination, which is usually the customer's doorstep. It’s the final—and often the most expensive and time-consuming—step in the delivery process.
Last mile delivery is crucial because it is the point where the customer receives their product, and it’s also the part of the customer experience on which the entire delivery process is judged.
According to a report by McKinsey & Company, last mile delivery can account for up to 53% of the total cost of delivery, making it a critical factor when it comes to profitability. This is because last mile delivery involves the use of vehicles such as vans and trucks, as well as the labour costs associated with the driver and any additional assistants required for delivery.
Challenges for Last Mile Delivery
Delivering the last mile is like running a marathon with obstacles at every turn. Delivery companies face an uphill battle, especially in crowded cities where traffic jams and parking problems can slow down deliveries. And let's not forget the unpredictable weather that can throw a wrench in even the most carefully planned delivery routes.
On top of that, getting packages to inaccessible locations like gated communities or high-rise apartments is never as simple as it should be. But with online shopping gaining more and more momentum, customers want their packages fast, making these obstacles crucial to navigate efficiently.
In fact, according to a survey by MetaPack, more than 70% of online shoppers are willing to pay a premium for speed and convenience, such as same-day delivery. Plus, 54% of customers have thrown in the towel on a purchase because of limited delivery options.
It's no walk in the park, but when it comes to providing a quality customer experience, same-day delivery companies are always up for the challenge.
Fortunately, there are a few revolutionary last mile delivery solutions that can help overcome these challenges. Let’s explore them in detail.
- The Gig Economy
The gig economy is a term used to describe a labour market that relies on short-term contracts or freelance work instead of permanent jobs. In this type of economy, companies can hire independent contractors to perform specific tasks, such as making deliveries. This can save them money, as they don't have to pay benefits to contractors.
According to Statistics Canada, in 2021, approximately 2.7 million Canadians, or 14.6% of the workforce, were engaged in some form of gig work.
As this number continues to grow, the gig economy is having a significant impact on the traditional workforce. With the rise of online marketplaces and platforms, gig work is becoming more accessible and attractive to workers looking for flexibility and independence.
- Smart Technology for Tracking the Location of Packages
Smart technology has revolutionized the eCommerce logistics industry. With the help of GPS tracking and real-time data, delivery companies can track the location of packages and provide customers with accurate delivery estimates. Furthermore, customers can track their deliveries and receive notifications when their package is on its way or has been delivered.
According to a recent study by Grand View Research, the global market size for real-time tracking solutions in the eCommerce logistics industry was valued at $1.32 billion in 2020 and is expected to grow at a compound annual growth rate (CAGR) of 24.4% from 2021 to 2028.
This growth can be attributed to the increasing demand for efficient delivery services and the need for real-time visibility into the status of shipments. Smart technology, such as GPS tracking and RFID (Radio Frequency Identification) technology, allows delivery companies to optimize their routes, reduce transit times, and provide a better customer experience.
- Delivery via Drones and Robots
Delivery via drones and robots is no longer a far-fetched idea. Companies like Amazon have already begun testing delivery drones and robots in select areas. Drones and robots can deliver packages quickly and efficiently, especially in areas with heavy traffic congestion or hard-to-reach locations. However, there are still regulatory and technical challenges that need to be overcome before drones and robots become mainstream in last mile delivery.
- Rise of Same-Day Delivery
Same-day delivery is becoming increasingly popular among customers. This requires eCommerce logistics companies to rethink their delivery strategies and optimize their delivery networks. Companies that can offer same-day delivery gain a competitive edge, as customers are willing to pay more for the convenience of receiving their products quickly.
Last Mile Delivery Solutions
There are several last mile delivery solutions that eCommerce logistics companies can adopt to optimize results, such as:
Outsourcing last mile delivery is becoming a popular option among many companies. By outsourcing, companies can focus on their core competencies and leave the last mile delivery solutions to a third-party logistics provider (3PL). This can be cost-effective, especially for smaller companies that cannot afford to invest in their own delivery network.
- Splitting of Local and National Deliveries
Splitting local and national deliveries can help optimize last mile delivery. By splitting deliveries into two categories, logistics companies can reduce the distance that drivers need to travel, which can result in saved time and reduced delivery costs. This can be achieved by having local drivers deliver packages within a specific area, while national drivers handle longer distances.
Recruiting the right people is crucial for last mile delivery success. Companies need to ensure that their drivers are reliable, trustworthy, and know the local area well. Additionally, eCommerce logistics companies need to provide ongoing training and support to their drivers to ensure they are equipped with the necessary skills and knowledge to handle different types of deliveries and navigate any unexpected challenges they may encounter on the road.
Last mile delivery is a critical aspect of eCommerce success, and with the continued growth of online shopping, it is more vital than ever to ensure that packages are delivered quickly and efficiently.
The challenges facing the last mile delivery process are numerous, from traffic congestion to inaccessible locations. However, with new technologies such as smart tracking, drones and robots, and the gig economy, the last mile delivery industry is evolving to meet these challenges head-on.
Here at eShipper, we are ready to embrace these advancements and our evolving shipping industry – while continuing to provide our clients with reliable shipping solutions.
Let’s grow together in this industry full of so much potential.