Overcoming the Challenges of Last Mile Delivery

The volume of parcel deliveries to consumers in the UK is expected to grow at up to 5.5% per annum (Royal mail forecast 2016) while business deliveries will remain level. This is mainly due to the growth in online shopping for both food and non-food items. Citizen Advice in a recent survey (Dec 2019) found that 94% of consumers had received at least 1 parcel from online shopping in the last 12 months.

The main challenges for last mile deliveries are:

Complex customer demands

Not only are consumers demanding more reliable and faster deliveries, they are also starting to expect shorter timed delivery slots so as to remove the need staying at home waiting for deliveries and consumers are increasingly expecting to be able to select their delivery times, mostly brought about by the home delivery of supermarket groceries and their methods of selecting a time slot for delivery.

Surviving peak demand

During certain times of year, such as Christmas it is already busy and some retailers increase the pressure on home delivery by offering incentives to maximise their sales during these periods. Events such as ‘Black Friday’ and ‘Cyber Monday’ create additional delivery frenzies around these times.

More and more retailers are offering next day deliveries due to the expectation of consumers that have already experienced such a delivery service.

Rural deliveries

Home deliveries save time and offer a convenient way of shopping for busy consumers.  However, deliveries to rural communities present their own problems to delivery companies, the distances between drops increases and the density of deliveries decreases, resulting in a higher cost per drop. Locating rural properties can also be problematic while failure of deliveries is high (and expensive) for those carriers who do not offer at least an estimated time and date of delivery.

Depot locations

Locations for local depots and sorting hubs is becoming increasingly difficult to find due to reduced availability and the rising cost of land. Operators are therefore forced to position distribution hubs further and further out of towns and cities, this has the effect of increasing the distance from depot to the first delivery address (Stem mileage) and the distance from the last delivery back to the depot.

Ability to deliver

As towns and cities become denser and competition for street space increases with the introduction of cycle lanes, bus lanes and pedestrianisation, so kerbside parking for a delivery becomes harder. Together with more cities starting to introduce congestion and emission zones this will further restrict the ability of certain vehicles to enter or at the very least increase the cost of deliveries within those zones. This is all on top of the usual traffic congestion and roadworks or unexpected accidents that cause delays for logistics companies.

Retailers ‘free’ delivery

Retailers are also being pressured by consumers to offer free deliveries or at least free deliveries if the sum of purchases is over a certain threshold limit and this has the knock-on effect to logistics companies with retailers asking for cheaper deliveries and pricing models. While 59% of retailers in a recent survey (oracle 2016) charged for delivery it was often no more than £5 if the threshold value limit was not met.

Increasing number of product returns

It is estimated that 20-30% of all clothing and footwear (by value) ordered on-line gets returned to the retailer (Verdict 2016b) with more than half (53%) of online shoppers saying they had returned a parcel in the last 12 months. Managing these returns can cause logistics providers nightmares if they also have to collect these returns while making deliveries.

Failed first time deliveries

Failure rates for deliveries to residential properties are higher than commercial locations, due not just to the size of the standard domestic letterbox, but also to the customer not being home or the lack of a safe place to leave the parcel. This results in a return of the parcel back to a deport and the possible second attempt at delivery or the disgruntled collection by a customer.

Research showed that 59% of online shoppers had experienced a problem with a delivery in the last 12 months (Citizen Advice Dec 2019) requiring them to make contact with the retailer or delivery company as to what to do next or to make a compliant.

Conclusion

Retailers and carriers are aware of the issue and through increased collaboration between them or the clever use of their own delivery fleets, some retailers are starting to gain a competitive retail advantage. They are doing so by offering short, timed delivery slots that can be chosen by the customer and then allowing the customer to track their deliveries ‘Uber Style’ with GPS trackers in the delivery vehicles, these retailers are providing an improved customer service level. Some are even offering incentivised delivery slots in order to group similarly located deliveries together, allowing the logistics side of the business to create denser delivery routes, thus reducing distances between deliveries and cost per delivery. Research has shown that 66% of consumers have chosen a retailer due to the delivery options offered over another retailer selling the same goods. (Metapack, 2015). Home delivery is where retailers can use technology to increase sales, reduce delivery cost, increase delivery capacity and improve the customer experience. Find out how Descartes can help you turn delivery in to a competitive advantage. 
 

Why not read our eBook for more information on digital proof of delivery

Or our White Paper Optimising Home Delivery