We show you some of the biggest challenges of last-mile delivery and explain how last-mile delivery optimization will enable you to overcome them.
E-Commerce Last-Mile Delivery - How to Stay Ahead
See how the landscape of e-commerce last-mile delivery is changing and what to do to stay ahead of the curb (+ the best solution for this problem).
When it comes to e-commerce last-mile delivery, the stakes and the demands have never been higher.
In this blog, we’ll look at the nature of the problem and why it’s becoming more and more pressing for businesses - and then we’ll consider what the best solutions to this question need to provide.
- Getting last-mile delivery right can have a huge impact on a business’s prospects. That’s because it’s expensive and it plays a key part in customer satisfaction
- Customers are becoming more demanding in the speed and flexibility they expect of deliveries, and that trend looks set to continue
- Solutions to the e-commerce last-mile delivery problem need to balance and optimise operational efficiency (routing, vehicle usage, driver management), customer experience, and integration into wider supply chain operations
What is Last-Mile Delivery?
In logistics, “last-mile” refers to the final link in the supply chain: the critical business of getting the product into the hands of the end customer.
There are three fundamental elements to consider:
- The matter of transporting products from distribution centre (whether this is a warehouse, a depot, a “dark store”, or anything else) to the customer’s preferred destination as efficiently - that is quickly and cheaply - as possible
- Ensuring that the customer is happy with the experience, is kept informed about their order’s progress, and has opportunities to provide feedback
- Building enough robustness and flexibility into the last-mile delivery system that it can cope smoothly when customers change their preferences or when things go wrong
The E-Commerce Last-Mile Delivery Challenge
E-commerce has been growing rapidly in recent years, but really exploded with the lockdowns of 2020 and 2021 brought about by Covid-19.
By the end of 2021, the UK had the biggest online retail sector in Europe - accounting for 28.9% of all retail sales.
E-commerce last-mile delivery - the costs involved and the experience customers receive - is, therefore, a huge issue for businesses of all shapes and sizes.
Why is last-mile delivery so important in e-commerce?
- Because the last-mile stage accounts for more than half of the costs of shipping - studies suggest it constitutes 53% of the total
- Because it touches the buyer most directly and has a huge impact on customer experience. 84% of shoppers have said that they would not buy from a business again if they had a bad delivery experience
- Because shoppers’ expectations around e-commerce have risen sharply since the start of the Covid-19 pandemic and continue to rise. They want faster, more flexible delivery options and to be kept informed about where their deliveries are
In the past, it was commonplace for online orders to require a week or more for delivery. Package tracking was non-existent and delivery windows were frustratingly vague.
Amazon changed all that when it began offering free, next-day delivery through Amazon Prime.
It didn’t matter that Amazon’s shipping costs went through the roof. The e-commerce giant was big enough to swallow that pill for the sake of capturing more and more market share.
But for other businesses, it was a game-changer. Immediately, the bar was raised in terms of expectations.
Where Last-Mile Delivery is Today
If you’re competing with Amazon, free, next-day delivery is simply table stakes.
Even if you’re not and you have a product Amazon doesn’t offer (yet), your customers are paying close attention to:
- Shipping costs that businesses pass on to them
- Delivery speed and reliability
Research confirms this:
- 83% of US online shoppers expect flexible shipping
- One study found that 90% of people said that free shipping would be the top reason for them buying more online
- 34% of people will abandon a purchase if unexpected shipping costs are introduced during the checkout process
- A staggering 98% of customers say that shipping affects their satisfaction
The delivery experience matters more than ever before, and it’s becoming even more important.
Where Last-Mile Delivery is Heading
More and more shoppers want - and expect - same-day delivery:
- McKinsey found that 25% of US, German, and Chinese shoppers would willingly pay more for same-day delivery
- Forrester and American Express report that 57% of survey respondents say that same-day delivery would make them more loyal to a brand
- 51% of retailers are already offering it, and 65% plan to offer it within two years
And Amazon is raising the bar even further, offering two-hour delivery on some products and order sizes in the UK. The difference between scheduled and on-demand delivery is gradually shrinking, as planning windows get shorter and shorter.
But speed isn’t the only factor that e-commerce businesses need to consider:
- White glove service: For high-ticket items, many businesses are offering premium delivery services that include extra elements (eg installation or assembly upon delivery)
- Contactless delivery: A growing number of customers want items delivered to their doorsteps or delivery lockers, adding extra complexity to the Proof Of Delivery process
- Store pickup or click-and-collect is becoming increasingly popular
- Customers are increasingly demanding that returns processes be as seamless and simple as the delivery itself
What this all boils down to is that customers want retailers to give them choice and flexibility in delivery arrangements, and they’ll reward businesses that do it well - and punish those that don’t.
Why Last-Mile Delivery Must Be a Priority for E-Commerce
Customer experience matters.
We’ve already noted that 84% of customers would not buy from a business again after a bad delivery experience. Here are a few more stats:
- 70% of complaints about food businesses derive from delivery problems
- 93% of shoppers say that they want to receive proactive updates about where their orders are, and 75% consider it an integral part of the delivery experience
- Temando found that while more than 75% of shoppers want clear delivery windows, only around 30% of companies offer them
But that’s not the only reason why e-commerce last-mile delivery is so important.
Remember this other stat? Last-mile delivery accounts for 53% of all shipping costs.
And customers don’t want to pay for shipping…
Last-mile delivery is exceptionally expensive for businesses to provide, and as customer expectations, urban traffic congestion, and fuel costs keep rising, it’s getting more so.
That’s why so many retailers have been turning to technology like eLogii to streamline their activities and drive greater operational efficiency.
How eLogii Solves the E-Commerce Last-Mile Delivery Challenge
eLogii is a cloud-based route optimisation and delivery management platform that delivers:
- An exceptional experience for customers
- The potential for significant savings for businesses - as much as 50% in some cases
Get in touch to arrange a free demo of the eLogii system, which will show you just some of the ways it can improve operational efficiency, ensure first-rate customer experience, and integrate smoothly with the rest of your supply chain - no matter what kind of business you’re in.
Let’s look at each of those three areas in turn.
This in turn can be broken down into three principal elements.
Whether you use your own in-house fleet, a 3PL (third-party logistics) provider, or your crowdsource drivers in response to changing demand, it’s vital to optimise the routes your drivers take.
Poor routing can result in delays, missed delivery slots, excessive fuel use, unnecessary wage costs, and many other problems.
eLogii uses a highly complex algorithm to calculate the most efficient routes far more quickly and accurately than a human dispatcher could ever hope to.
But eLogii also understands that routing is not just a maths problem. It needs to be flexible and adaptable. Many route optimisation tools work exclusively on a “depot-delivery-depot” model, for example. eLogii has been designed to handle a wide range of needs:
- Multi-day routing for long-distance haulage
- Custom route start and endpoints
- Pickup-only points without corresponding deliveries
- “Return to depot” functionality, for drivers to reload
- Multi-depot operations and shared fleets
Critically, eLogii also offers dynamic routing - that is, responsiveness to changes in plans while vehicles are already in motion. It incorporates:
- Rerouting in response to traffic conditions and obstacles
- Dispatchers changing the order of deliveries, or adding/removing them
- Failed delivery workflows, so that packages that can’t be delivered are not simply returned to the depot (at an average cost to UK businesses of £11.60 per failed order)
Operational efficiency also depends on getting the right packages into the right vehicles and getting as many as possible into each one.
So an e-commerce last-mile delivery platform needs to incorporate:
- Different vehicle types and characteristics (eg refrigeration, loading equipment, restrictions on movements on certain roads)
- Alternative ways of calculating load, including weight, volume, and others (eg pallet number)
eLogii gives users more options in these regards - including customisation of bespoke fields - than any competitor on the market.
It also lets you track the precise location of vehicles in movement, via GPS through the drivers’ mobile app. That’s a vital part of being able to offer dynamic routing. Tools that don’t provide this - Routific, for example - simply can’t handle dynamic routing.
eLogii also helps cut down on driver costs and delays - another significant cost factor.
When planning routes, it can account for driver locations and preferred territories, driver characteristics (eg ability to unload heavy packages), scheduled break times, and other key considerations.
The driver app will also keep track of and feed back on actual routes taken versus planned, PODs collected, timeslots hit and missed, and many other performance KPIs that will enable you to manage your drivers to achieve greater efficiency.
eLogii can help you ensure that all customers receive a consistent, high-quality experience that will keep them coming back.
One key feature of route optimisation and delivery management software is the ability to generate Estimated Times of Arrival (ETAs) accurately, based on the quality of the algorithm’s calculations and its ability to incorporate other factors (eg extra time needed to deliver to a fifth-floor apartment with no dedicated parking).
Many also enable you to notify customers about these ETAs, via SMS, email, and other channels - although a surprising number are restricted in this respect:
- Route4Me and Routific both charge for scheduled ETA notifications
- As well as charging extra, Locus Dispatch IQ can only send text messages, not emails
But scheduled notifications do not fulfill that customer expectation of being kept in the loop at all times. They expect to be able to track packages’ precise locations and if an ETA changes, they expect to be told.
While some tools restrict access to live ETA notifications (Onfleet customers need to be on the $799 per month Professional package or above, for example), eLogii gives you everything you need to keep your clients informed:
- Barcode scanning, for tracking individual packages
- Scheduled and dynamic ETA notifications
- Task notes and customer feedback
Proof Of Delivery
Another key feature of any good last-mile delivery solution is the ability to collect Proof Of Delivery (POD) effectively.
Once again, eLogii offers the widest range of PODs of any tool available, including:
- Barcode scans
- Alphanumeric and QR code scans
- Cash-on-delivery confirmation
These are collected on drivers’ phones via the mobile app - which time- and geo-stamps the POD for complete traceability.
As mentioned in the last section, the inclusion of barcode scanning is particularly important. Barcodes:
- Help drivers identify packages at speed
- Make returns handling far more efficient
- Provide visibility throughout the supply chain, not just the last-mile stage
Supply Chain Integration
That brings us nicely onto the final consideration: fitting eLogii into the rest of your supply chain operations.
eLogii has been designed to integrate smoothly with order management, warehouse operations, and many other types of software via an extensively-documented API and webhooks.
A well-designed API can save you huge amounts of developer time in getting your tech stack to work efficiently. A poor one can be worse than useless. Fortunately, eLogii’s API and webhooks are elegant, up-to-date, and comprehensive in character.
There are indeed logistics tools available that incorporate the upstream supply chain elements - platforms like Bringg and LogiNext. You need to bear in mind that these are mainly designed for enterprises and come with a correspondingly high price tag.
The Bottom Line
The last few years have seen delivery operations leap from the margins to the centre of many businesses’ concerns.
As costs and customer expectations continue to rise, it’s only going to become more important for e-commerce businesses - on the one hand, as an area for reducing costs; and on the other, as an opportunity for securing brand loyalty.
The best way to maximise the efficiency of last-mile delivery is with a route optimisation platform that includes all the other factors we’ve considered here - fleet usage, driver management, customer notifications, proof of delivery, and supply chain integration.
And eLogii does all of those things and more, and it can do it at scale.
That’s why Ananas - one of the biggest e-commerce players in the western Balkans - chose eLogii to provide its route optimisation, planning, and execution platform for delivery and field services as it expands in a 100 million euro drive over the next five years.