Not so long ago, bricks and mortar retailers were the place where we got everything we were looking for. Today, however, the way we shop is changing significantly. With the gigantic rise of e-commerce, people are increasingly shopping through their smartphones or computers. We are living in an Amazon-era where people expect (often demand!) faster, cheaper, and more convenient delivery timeframes.
It sounds and looks so simple to shop straight from your smartphone. Open the app, select the products you’d like to have delivered, and boom! Your order arrives within the next couple of days. But, is it really that simple?
The huge rise of e-commerce has significantly altered retailers' entire supply chains. While for the consumer it’s just about a matter of clicks, for companies to effectively deliver products to customers’ doors requires a huge rethinking of their logistics and mobility approach.
Improving e-commerce last-mile logistics is a wonderful way to drive both customer satisfaction and the reduction of costs associated with it. As the e-commerce industry continues to grow, especially now having been fueled by the pandemic, companies will need to look at enhancing their delivery strategies more than ever before.
Last-mile route optimization can empower companies to better adapt their shipments to customer requirements. By enhancing shipment reliability and arrival time, logistics and e-commerce companies can gain a significant competitive advantage. According to a research study conducted by Capgemini, 55% of consumers will switch to a competing retailer/brand if it offers a faster delivery service.
“Establishing more cost-effective and fast last-mile logistics would enable e-commerce businesses to enhance customers’ shopping experience. By doing so, they’d be earning further repeat business and loyalty from their existing customer base.”
Optimizing the last mile would also enable companies to save costs. By delivering products more efficiently, companies would be able to save costs related to fuel consumption, manual labor, and both time and resources invested in the process. The earlier e-commerce businesses start preparing for the last mile challenges, the better prepared they will be to sustain the e-commerce industry’s continuing boom and build a sustainable competitive advantage over their competitors.
For this to happen though, logistics companies and their e-commerce partners will inevitably need to rely on technological advances, new supply chain models, and other tactics to shorten delivery times and efficiently manage packages volume.
When customers shop online, there’s a series of processes that needs to take place before a package lands on the customer’s doorstep. This journey is divided into three ‘miles.’
The first mile takes place when products are taken in bulk from a production facility to a warehouse. Following that, during the middle mile, products travel from the warehouse to the distribution centers. Lastly and more importantly, in the last mile, product shipments are distributed into hundreds, sometimes thousands, of individual deliveries. Each of these deliveries has its own unique route, destination, and timing.
Of these three stages, the last mile is certainly the most complex and challenging stage of them all. It sounds simple: deliver a package to a customers’ doorstep. Yet, imagine how many thousands of packages are being delivered in this increasingly digital and e-commerce world. How do you plan that efficiently while keeping the costs low?
Without a doubt, the last mile is the most costly stage of the supply chain. Why? The last mile usually requires an end-to-end supply chain transformation in which multiple stakeholders are involved. Creating a last mile that is data-driven, efficient, and customer-focused usually involves a ton of critical thinking to plan the journey correctly.
There is a growing list of pains and headaches associated with last-mile logistics.
Urban landscapes. Oftentimes, urban city landscapes make it difficult for packages to be delivered effectively. There is an increasing number of factors to consider when it comes to delivering in urban environments, such as navigating traffic, road closures, road accidents, and parking/loading zone regulations.
Customers’ Expectation. We are living in an era where customers have high expectations for retailers when it comes to e-commerce. Clearly, customers are in the power seat. Customers are not so open to waiting for days for their packages to arrive. Nor are they comfortable not knowing where their package is during the process. Research by Deloitte shows that by 2023, same-day delivery will most likely become the e-commerce industry norm.
Almost a decade ago, Amazon made two-day shipping the norm. Now, it plans to make two-hour shipping the industry standard. Maybe tech giants such as Amazon can handle such things, but what about other retailers?
Navigating Costs. The last mile is the most expensive stage in the supply chain for e-commerce companies. According to Ship Hero, last-mile logistics costs can make up over 50% of total costs. Last-mile associated costs include labor, warehousing, fleet, and route optimization costs. Oftentimes, offering ‘free shipping’ to customers requires companies to either absorb last-mile associated costs or establish a minimum quantity that needs to be ordered.
According to market research firm Capgemini, last-mile delivery is currently not financially sustainable for most e-commerce businesses today. Their study found that most organizations see their profit margins erode through last-mile deliveries due to the fact that they tend to charge customers less than what it typically costs to fulfill their orders.
In order for e-commerce businesses and logistic companies to enjoy the benefits of mastering the last mile, they'll have to find ways to better rely on the curbside - especially within urban areas. Yet, such ambition is easier said than done.
Most cities and urban areas around the world haven’t been quick on innovating their curbsides. Most curbside parking and stopping signage is outdated, which makes mobility around urban areas not only complex for last-mile deliveries, but also for ride-shares, self-driving cars, and urban citizens.
Therefore, the first step towards mastering last-mile logistics is to gain a better understanding of the curbside through innovation.
Design thinking within urban areas should merge technology and the human touch to better integrate curbside signage with the community around it. Currently, most ‘No Stopping,’ ‘No Parking,’ ‘Paid Parking,’ or ‘Loading Zones’ signs are isolated from the ecosystems around them. Consequently, rather than complementing each other, isolated curbside signs tend to slow down mobility in the area. By better integrating different signs with both the community as well as with each other, a more structured and organized community can emerge - improving urban mobility, congestion, and productivity.
The demand for smarter, digital curbside is clearly there. Digitizing the curbside can help ease traffic during rush hours, reduce pollution from drivers cruising in search of parking, promote ride-share over single private vehicle use, and future-proof urban areas for when autonomous vehicles begin cruising our roads.
Mastering the last mile by digitizing the curb would not only benefit companies when it comes to reducing costs, time, and resources used. It would also help promote cleaner mobility around cities. The curbside has a heavy impact on the amount of pollution that is created from city traffic. Digitizing the curb would empower people to be more open to taking greener and less-congestion-causing modes of transportation - such as ride-share, buses, and micromobility options.
Not only are logistics and e-commerce businesses the big winners from last-mile optimization, but so is the environment itself.
“Establishing more cost-effective and fast last-mile logistics would enable e-commerce businesses to enhance customers’ shopping experience. By doing so, they’d be earning further repeat business and loyalty from their existing customer base.”
Digitizing the curbside would enable more proficient communication between drivers and city planners. For instance, an Uber driver shouldn’t find out that there’s a clearway at their destination upon arrival. The app should’ve directed him to a safer and legal drop-off zone before the driver even started his journey.
Measuring curbside capacity is also a key component of today’s e-commerce world. Because different modes of transportation require different curbside capacities, loading zones should be clearly defined to support delivery bans, warehouse trucks, and others.
It’s not just logistics companies and their e-commerce partners that need access to curbside data, it’s also the urban citizens themselves. City administrators, for instance, might want to change curbside conditions in real-time for cases of emergencies, accidents, or special events. By improving communication between all involved stakeholders, administering and managing the curbside would improve the way people move, park, and invest their time.
Modii's innovative parking and mobility solutions can give logistics companies and their e-commerce partners a sustainable advantage when it comes to optimizing the last mile. Modii can help companies reduce both the high costs and the delivery that the last mile requires by enabling delivery drivers to better understand the curbside.
Optimization of last-mile deliveries uses the delivery address as the destination. A system that could interrogate the digital curbside at the correct place and day/time could return the closest options for the delivery drivers to stop at, creating more efficiency.
In order for city planners and logistics companies to find solutions that promote sustainable mobility while enabling e-commerce businesses to avoid translating the last mile costs to their customers, investing in digitizing the curbside will be necessary. Modii helps both logistics companies and city planners master the last mile by collecting and interpreting curbside and parking data, creating user-friendly digital maps of the curbside that are accessible via desktops or smartphones, and sharing the data with all stakeholders.
Contact us today to see how we can take your city to a whole new level by digitizing the curb.
