New problems require new solutions
As the e-commerce marketplace continues to grow, companies are reimagining their delivery operations and looking for ways to implement efficient last-mile delivery processes. There are several cost-effective solutions to do just that.
1. Smart warehousing
It’s important for retailers to establish storage warehouses in areas where they have many customers. Often this means locating large storage warehouses in urban centers where businesses can meet shorter delivery time windows—even next-day or same-day delivery. Alternatively, companies can use smaller locations to store fewer quantities of their best-selling inventory to reduce those fulfillment and delivery times. Instead of adding more warehouses, some companies convert portions of their stores completely into fulfillment centers for online delivery orders, known as dark stores, and save significant costs.
In the US, a large home improvement retailer’s goal is to offer same-day and next-day delivery to 90% of the country’s population. The retailer’s large network of more than 2000 stores and 90 distribution centers helps fulfill online sales. Nearly 45% of online orders are picked up at the stores thereby avoiding any additional shipping cost associated to them.
Last-mile delivery can spike during the holiday season or sales periods, resulting in scalability issues. To address fluctuations in demand and ensure uninterrupted service, companies can crowdsource fleets and drivers. A crowdsourced delivery model can connect retailers and customers directly with local couriers driving their own vehicles. This flexibility minimizes reduces costs and allows customers to schedule deliveries based on their availability–avoiding failed deliveries.
One of the United States’ largest retailers recently collaborated with Walmart Inc.’s new GoLocal fast delivery service (which uses third-party drivers) to handle local deliveries for smaller items like tools, paints and other supplies. In 2018, the retailer also partnered with companies like Roadie and Deliv to leverage the crowdsourcing model and accelerate its last—mile delivery.
3. Route optimization
It’s important for couriers to use the shortest and most cost-effective route for order deliveries. Technologies like AI and ML can help monitor road conditions (congestion, closures, weather patterns, etc.), update the delivery driver in real time and schedule routes automatically. By recommending the most efficient route, this can reduce delays, avoid re-routing and boost efficiency of the order fulfillment process. Delivery based on a full truckload model can further optimize fuel and mileage costs while maximizing vehicle output.
4. Transparency and traceability
Customers prefer, real-time tracking of orders. Smart technology solutions like GPS and RFID tags can be used to track and send automated notifications of the delivery driver and order package’s location. Customers can talk to the driver directly, be part of a real-time feedback loop and ensure they are available at the time and place of delivery, thereby avoiding issues like failed deliveries, missed schedules or incorrect addresses. Retailers can leverage smart technologies to monitor weather patterns and plot delivery routes to ensure packages are delivered on time and in good condition.
5. Reverse logistics
Companies often must pay extra costs for returned items. Reverse logistics comprise the complete last mile of the delivery process but in the reverse order. Managing reverse logistics in an efficient and inexpensive way is the key to handling product returns, addressing operations concerns, reducing costs and improving customer satisfaction. They can minimize product returns by addressing common issues: damaged items, wrong items, items that differ from their appearance on the website, etc. Easy and fast in-store returns, for instance, can save money, while improving the customer experience and promoting brand loyalty.
For a large US retailer, almost 85% of returns happen in store and save costs. Its widespread physical footprint helps reduce the problems of both last-mile delivery and returns.