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Retail Fulfillment Trends in Last-Mile Delivery
This is a guide to retail fulfillment trends that are shaping last-mile delivery in 2021.
This is a guide to retail fulfillment trends that are shaping last-mile delivery in 2021.
And let us be clear about something:
This is NOT an average post about fulfillment predictions for 2021.
Yes, we’ll cover the most important delivery trends this year.
But you’re also going to see new strategies that are working right now.
And solutions that can help you to overcome the biggest challenges in delivery at the moment.
So if you’re looking to improve fulfillment in the coming years, you’ll love this guide.
What are the Retail Fulfillment Challenges in 2021?
The last several years have had a profound effect on retail fulfillment:
Rise in popularity of online shopping and changing consumer behaviors. At the moment, every fourth person on the planet shops online. Or just over a quarter of the global population - 26.28% are online shoppers.
Almost all of them (or 98.2%) want fast, convenient, efficient, and affordable fulfillment, according to delivery statistics.
Impact of COVID-19 on last-mile delivery and the resulting health and safety measures. Due to the pandemic, e-commerce sales have risen 44% in 2020. That represents 21% of total retail sales worldwide.
Amazon, UberEats, Walmart, and other e-commerce platforms shaping retail and fulfillment. For example, 68% of all product searches began on Amazon. While UberEats controls 29% of the global food delivery service market, according to Fortune.
- Increasing costs associated with meeting new expectations and competing in a saturated market. Free delivery and same-day delivery are by far the most costly delivery options. Companies like Amazon and UberEats can afford to offer them because they can run on a negative margin.
These are the biggest disruptors in retail today.
As a result, businesses have to adapt. And face the many challenges to their e-commerce fulfillment services.
On-time delivery is crucial to create a good eCommerce fulfillment experience.
In fact, 13% of shoppers never do repeat business if the delivery doesn’t arrive on time.
That’s why companies have to pay extra attention to planning better delivery schedules.
This can help retailers plan for unexpected events and ensure they never break the delivery deadline.
Lack of Transparency
The lack of visibility from the fulfillment center is another big issue for consumers and businesses.
On the one hand, the lack of transparency over last-mile delivery logistics can lead to less operational control over the fulfillment process. Which is especially risky when working with 3PL fulfillment providers.
On the other hand, modern consumers want to see where their package is as you deliver it. For them, companies that don’t provide tracking links and accurate estimated times of arrival (ETAs) seem less trustworthy.
Ineffective Manual Processes
You can overcome both of the above challenges by automating the fulfillment processes.
Unfortunately, only 12% of supply chain professionals are successfully implementing tech innovations like software, AI, and data analytics.
And without the use of technology, businesses can’t get ahead of the curb. You can never hope to achieve multi channel or omnichannel retail fulfillment. Or build an agile delivery.
Manual processes also cost businesses 5% of gross sales. But the losses don’t just stop with efficiency.
Companies that don’t use technology also can’t expect to offer new delivery methods, such as click & collect, curbside and in-store delivery.
So if you are still planning manually, maybe it’s time to consider automation.
Choosing the right provider
In the wake of COVID-19, companies relied heavily on order fulfillment to generate money.
Those that didn’t have a delivery operation scrambled to build it as fast as possible.
Many businesses choose 3PL or 4PL providers, while others relied on carriers and courier services.
To meet this new demand, they neglected to stop and ask themselves:
And if YES, then what sort of service should you hire.
This led to companies choosing the wrong provider. Or neglecting to evaluate all available options. Or signing contracts which don’t benefit their business model.
All of this causes you to lose money.
But as the dust of the coronavirus settles, businesses are learning from their mistakes.
And new trends in retail, fulfillment, and the last mile are emerging:
Retail Fulfillment Trends Redefining the Last Mile
In 2020, 75% of companies reported disruptions in their supply chain.
This meant that businesses that offered delivery had to evolve to survive.
This rapid evolution led to new retail fulfillment trends to emerge.
Let’s see what you can expect in 2021 and beyond.
#1 Local Fulfillment Center
In 2021, 55% of shoppers prefer same-day delivery to any other fulfillment option.
To offer this to customers, companies have to save costs and ensure faster delivery.
One way to do it is to get closer to customers.
Opening local fulfilment centers means orders travel less to reach the customer’s door. And that cuts the time per delivery and raises delivery speed, sometimes more than 50%.
This is the reason Amazon and other large retailers are investing heavily in urban real-estate and infrastructure, and opening micro fulfillment centers ( MFC) to localize inventory.
In fact, it already owns 390 warehouses all over the United States.
As a result, companies can reduce transportation costs and make it more affordable to offer cheaper delivery.
You can offer same-day delivery or free delivery without transferring costs to customers or adding it to the price of your products.
#2 Sustainable Fulfillment Service
Consumers want eco-friendly shipping. And they are willing to pay extra in order to get it.
Actually, 43% of shoppers in the UK are willing to look for an alternative if a company doesn’t offer sustainable delivery options.
Besides satisfying customers, a sustainable fulfillment process also reduces retail fulfillment provider costs.
That’s why retailers are started working on green shipping fulfillment options such as:
- Five-day shipping instead of same-day
- Free pickup at the retail store instead of shipping at cost
- Zero-emission delivery vehicles such as bikes and autonomous cars
- Recycled, eco-friendly packages
Check this article and find out more about green logistics.
#3 Multiple Carriers
To meet rising demand for online shopping (especially during peak season), retailers have to scale their capacity.
This means one of two things depending on whether you use an internal vs. external delivery fleet:
- Investing more money into onboarding workers, vehicles, and equipment;
- Outsourcing more processes and hiring more carriers to meet demand.
In both cases, it can be much more efficient to outsource retail fulfillment services to multiple carriers.
Retailers using a multi-carrier shipping strategy have more flexibility. You can choose the best provider based on the demands of the delivery, customer’s location, or cost.
Partnering with multiple carriers helps you to raise your capacity. If demand is high you can outsource more orders to various carriers and raise the capacity of last-mile operations.
#4 Omnichannel Retail Fulfillment
Omnichannel retail allows customers to use all available sales channels to buy products from you. And omnichannel fulfillment is an extension of that.
Omnichannel retail fulfillment enables consumers to buy, but also make delivery requests at all points of contact (physical and online).
These can include your bricks-and-mortar stores, but also online sales platforms such as your website, e-commerce platforms like Shopify, or social media pages.
This means that all fulfillment and sales channels need to cross seamlessly together via technology.
That’s why more and more companies are using API integration to connect multiple apps and centralize delivery and fulfillment operations.
#5 Store Logistics
To support evolving omnichannel fulfillment, in-store operations are evolving as well.
This begins with the retail footprint itself.
Brick-and-mortar stores now serve as showrooms where customers can still buy items in person.
But now, they also have to accommodate fulfillment options such as curbside delivery and buy online, pick-up in store (BOPIS).
Which means you can use them as warehouses or depot locations.
This requires retailers to seriously restructure locations for fulfillment speed and convenience through:
- Creating the infrastructure to manage pickup (by customers & drivers)
- Staff training to optimize how they pick and pack orders
- Guaranteeing real-time visibility
#6 Order and Delivery Tracking
Improving fleet dispatching and using software to do it has raised visibility over the last mile.
Tracking drivers across the last-mile has enabled managers to track specific orders, as well.
At the same time, GPS tracking and geo-location tracking have allowed businesses to raise visibility for consumers.
Shoppers can now see in real-time the location of their order. And in the last few years, this trend has become the standard.
So much in fact that now 93 % of shoppers want to know where their item is throughout the entire shipping process. And half of them won’t order again from a brand that doesn’t offer this option.
#7 Customer Experience
An important thing to realize is that retailers sell products to people.
That’s why all of these trends improve customer experience.
Offering seamless omnichannel fulfillment, real-time tracking, simplified returns, and sustainable shipping options all lead to customer expectations.
So you need to look to align your fulfillment operations with customer values in last-mile delivery.
And as customers expect more from retail fulfillment, the new battle will be seizing opportunities to win over customers through a better delivery experience.
But to do this, fulfillment has to be efficient…
How to Improve Retail Fulfillment?
To succeed, companies need to reshape the fulfillment process for retail orders according to emerging trends.
These strategies can help businesses to concentrate on customer experience while securing sustainable and profitable operations that can grow at scale.
Here’s are ways that can improve fulfillment in retail:
Improved Retail Store Logistics
Online customers are known for impulsive shopping and batching.
They often buy multiple items in different sizes and versions, which drives up the return rate for retailers.
Nearly 70% of shoppers have lately made multiple BOPIS purchases and half of these shoppers say their brand choice depends on this buy online, pick up in-store availability.
That’s why it is crucial for large retailers with brick-and-mortar locations to establish an efficient omnichannel experience.
To ensure online retail fulfillment, large businesses need to focus on:
- Managing outbound logistics
- Managing new inventory
- Modifying existing fulfillment models
- Having dedicated pickup areas in-store for BOPIS and in the parking area for curbside pickup
Supply Chain Management
Creating effective operations is imperative for success at scale.
Nowadays, high efficiency depends on how well retailers can collect and connect parts of data to direct efficient supply chains.
It’s important to gain an in-depth understanding of order and product fulfillment metrics because key performance indicators meet customer demand and overcome difficulties as they grow and change.
Tracking KPIs in delivery logistics can help to reveal gaps in operations and shed light on operations opportunities.
For instance, data analytics help identify problems in performance, provide end-to-end visibility and optimize the flow of inventory levels.
It can also show faster and better routing solutions which lead to cutting costs.
Working with a Network or Fleets
We’ve mentioned earlier how third-party drivers are essential once sales from your online store outpace shipping sources.
However, the growing shipping cost of multi-carrier delivery makes it hard for a fulfillment company to scale operations.
The solution is to make deliveries via your third-party fulfillment company more efficient.
This is not possible without the help of delivery management software.
It can help you optimize the whole process, it allows you to select, integrate, and manage fulfillment providers whenever consumer demand requires.
The right route planner app and fulfillment software can create more multi-stop delivery routes, which improves drop density and tracks driver activity.
Customers want to be a part of every step of delivery, they need to feel in control of their buying experience.
This is why it’s crucial to offer real-time visibility and with the help of last-mile tracking, this is not such a hard thing to do.
Customers are not the only ones that profit from this transparency.
Businesses need real-time visibility to track customers’ orders while en route, monitor inventory levels, manage retail fulfillment providers, and finally optimize performance across the entire retail supply chain.
Boost Customer Experience
Customer fulfillment begins with placing an order and continues through every single step of the retail fulfillment process.
Naturally, with so many supply chain aspects that can affect this experience, retailers need to optimize whole operations with the customer in the center.
This means providing visibility and reliability at every step, all the way from the retail fulfillment center to the customer’s door.
This is simply not possible without technology.
Last-mile delivery software can provide an improved fulfillment experience such as communication tools that allow customers to order changes and offer developed fulfillment services like BOPIS or click-and-collect.