Many changes in the last-mile delivery industry have taken place in recent years. This is largely driven by consumer demand for faster delivery times and increased shipping visibility and tracking (“Where’s my package?”). Many third-party logistics providers (3PLs) are affected because they are the intermediary between receiving products from manufacturers, and getting orders to shipping carriers.
The push to improve last-mile delivery accelerated in 2020. The pandemic turned that section of the supply chain on its head as more people began shopping online due to quarantines, stay-at-home orders, and health concerns over in-person shopping.
To gain a competitive advantage in last-mile delivery, companies need to understand the top trends in last mile delivery and adapt to the ever changing landscape and improve the customer experience.
Last Mile Delivery Explained
Last mile delivery is defined as the movement of goods from a transportation hub to the final delivery destination. Whether a home delivery or a commercial business, the focus of last mile logistics is to deliver items to the end user as fast as possible.
From the time an order is placed to the moment it arrives, most of the services that go into the many steps in between, are considered last-mile logistics. This is a key area of the supply chain that can make a big difference in customer satisfaction.
Last mile logistics has become a popular area of interest for ecommerce businesses due to the growing demand for same-day delivery, real-time tracking, and integrated omnichannel fulfillment. With the globalization of ecommerce, brands need to businesses to have an strategic warehouse locations and an optimized transportation delivery network to meet consumer demands.
Because consumers base their perception of a brand on the overall delivery experience, the final mile of the supply chain is imperative. Ecommerce businesses looking to stay competitive need to find supply chain partners that will provide exceptional service.
Top Trends in Last Mile Delivery
Here are ten trends that companies are actively testing and implementing in an effort to enhance the last mile delivery process and keep up with growing consumer expectations to get their orders faster and be able to track every step along the way.
1. Smart Technology and AI to Enhance Supply Chain Visibility
Visibility of products along the supply chain is a major area of focus for ecommerce companies and their customers. First, for a brand, visibility is a critical part of forecasting and inventory management. Second, letting customers know the current status of their order and when a package is on route to its end destination are only the beginning of what to expect in the future.
Shippers and logistics companies are exploring ways to pinpoint the exact location of orders. There are many AI tools cropping up that can give a brand real time data. Not only does this aid in traceability, but it can lead to more accurate forecasting. Other smart technology like RFID or GPS can help brands with sensitive products monitor temperature and humidity of the product environment.
2. Cutting Costs with Automation
It’s worth nothing that with more smart technology integrations being used, there are more ways that brands are able to force efficiencies. In simpler terms, this often means cutting costs by automating more aspects of the supply chain.
With tools like an AI-powered TMS systems, businesses can enable route optimization and automated carrier or service selection. By letting smart tools do the delivery route analysis, businesses can be freed up to monitor and discover other areas to cut costs throughout every area of their supply chain.
It might not seem like minor changes will have a major impact on initial costs, but when applied to economies of scale, businesses can apply their cost-savings to offer shopping incentives like two-day and even same-day delivery services.
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3. Reliable, High-Quality Fulfillment Over Faster Fulfillment
In years past, the Amazon Effect created consumer demand for products to be delivered in two-days or less, and distribution centers needed to fulfill orders at an ever increasing pace. Shipments that previously required days to process have now become commonly fulfilled and shipped out within hourly time frames, if not faster.
Where speed was a trend of years past, last mile delivery providers are now taking a different approach to fulfillment: reliability. There are many steps between an order coming in and when it gets handed to a carrier. Fulfillment providers know that the customer experience doesn’t stop at speed, the accuracy of orders is just as important. Every step of the fulfillment process needs to be perfect, not just speedy.
Ecommerce brands trying to stay competitive have partnered with fulfillment providers with reliable quality performance. This means meticulous inventory management systems and multiple quality control checks within their order fulfillment process. If speed was last year’s trend, this year it’s all about efficiency and reliability.
4. Regionality is Increasing
Delivery speed is a universal need at this point. Many businesses see the need to increase the number of warehouses or fulfillment centers to meet reliable same-day delivery, but they also see the need for regional differences.
- Urban fulfillment centers have cropped up in many densely populated locations to be located close to the maximum number of customers.
- Regional carriers are being utilized more heavily (not just the national brands like FedEx and UPS) to diversify delivery options.
- Brands are also able to get marketing content to regional consumers with hyper-targeted social media ads. Buyers in one area may want very different products than those in a another area, and brands now have more tools to meet demand.
For brands with perishables or sensitive products, the use of last-mile delivery providers like Postmates, has been an easy integration when dividing up their fulfillment in a regional strategy.
5. Micro Warehousing and Fulfillment Centers
Renting additional commercial space and utilizing it for your companies fulfillment operations is another way last mile delivery can improve order fulfillment operations. This is because, with an increase in order volume, you will need a larger footprint to be able to fulfill the spike in orders.
With more facilities dedicated to fulfilling orders, you can dedicate different micro warehouses for different types of deliveries and distribute your inventory accordingly. You could have one space for next-day and same day deliveries stocked with your most popular products and another one that provides a slower fulfillment time frame.
6. Autonomous Vehicles, Drones and Robotic Delivery Gain Traction
It still may not have mass adoption, but with self-driving vehicles and drone delivery services becoming a viable mode of transportation, last mile delivery carriers are testing many options.
Any ecommerce company needs to be aware of this kind of trend, even if it might be several years off. Self-driving vehicles, drones, and robots will become important factors in enhancing last mile delivery options. Once automation reaches the point where it can offer high reliability and same-day delivery, their adaptation will be near universal across the fulfillment landscape.
Some examples of autonomous vehicles already in play include Amazon’s “Scout” an autonomous robot, which delivers packages to customers; Amazon’s drone-based deliveries with “Prime Air”; Starship Technologies operates fleets of delivery robots in various cities, handling deliveries for food, groceries, and parcels; FedEx has developed Roxo™, the FedEx SameDay Bot for local deliveries; UPS has experimented with drone deliveries, particularly in rural locations.
7. The Gig Economy and Crowdsourcing
The last mile delivery business has begun to see the emergence of technology-based solutions that utilize crowdsourcing and the gig economy to deliver products to the end customer. This has come to be known as the Uberification of the fulfillment space. Independent owners of delivery vehicles can be connected with companies that need their orders delivered in specific areas.
The technology that enables this doesn’t require upfront capital investment required in traditional fulfillment and so there are less barriers to entry. Essentially, if you have a car or truck you can become the last mile part of a company’s supply chain.
Crowdsourcing last mile delivery isn’t without its challenges. There is some concern that you will have less visibility with crowdsourcing than they would with traditional fulfillment methods, since it requires a web of independent contractors that you will have to rely on. If something goes wrong with a delivery the responsibility still falls on you to correct the error.
8. Insourcing Deliveries
Rather than outsource last mile delivery to a 3PL, some ecommerce businesses are moving towards handling fulfillment themselves, relying on their own fleet of vehicles or a hybrid fleet to deliver their products.
Outsourcing is still the dominant method last mile deliveries are handled, this is a trend worth paying attention to as companies look to handle their supply chain end to end themselves. This trend has inspired some 3PL providers to enhance their own, more robust last mile delivery operations to compete with insourcing.
9. Hybrid Fleet Model
Some retailers have adopted a hybrid fleet model — that is, a combination of their own insourced fleet with third-party providers and gig and crowdsourced delivery drivers. This can better allow them to scale their last mile operations with changes in demand.
A hybrid fleet method requires a transportation management system capable of coordinating all of the various aspects under the last mile delivery umbrella. This transportation management system must provide you with a centralized dashboard from which you can optimize routing, monitor vehicle location, and receive delivery updates. It should also provide robust analytics with historical reports and more.
With a hybrid fleet model, you can combine scalability and control, given that it is implemented effectively, making it one of the leading trends for last mile delivery today. While many companies are exploring this trend, it can be challenging to implement and difficult to manage all of the various moving parts. Because of this, outsourcing to a single third-party logistics provider is still the dominant method for last mile deliveries.
Bottom Line
The technology being implemented to push the boundaries of last mile delivery is rapidly growing in complexity and scope. This is expected to continue with the growth of ecommerce and along with it the increased demand for fast and efficient last mile delivery.
The solution to last mile delivery challenges is not one-size-fits-all. For some businesses, outsourcing to a third-party logistics provider may be the best combination of improved technology and analytics could be the solution to handle rising last mile delivery complexity while also lowering overall fulfillment costs.
Regardless of what your fulfillment strategy is, the importance of optimizing last mile delivery is undeniable. It is important to stay on top of the trends we discussed and determine how they can best fit into your overall fulfillment strategy.
If you are looking for a 3PL to help with your logistics support we would love to hear from you. Send us a note to connect about how we can help your company grow. You can read DCL’s list of services to learn more, or check out the many companies we work with to ensure great logistics support.
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