Disruption to the Last Mile for Online Retailers
- Category: Blog
- Published: Tuesday, 08 August 2017 10:58
- Written by Tim Leverett
The growth in online retail sales – and consumer’s expectation for faster and cheaper shipping - has changed how ecommerce retailers think about customer delivery. The last mile, the term used to describe an order’s move from an online retailer’s fulfillment center to the buyer’s home, is more than just the last step in the shipping process. It has a huge impact on the customer’s perception of a brand.
The Importance of the Last Mile
With the ecommerce marketplace (and Amazon in particular) pressuring retailers to provide fast and free delivery, the last mile has become critical to how brands compete. The final leg of a product’s journey before it reaches the customer’s door is a key piece in the overall customer experience. This is because it’s the most direct interaction customers will have with any online store beyond the product they’ve bought. This also makes the last mile important to building a loyal e-commerce customer base.
With improvements in technology, this important process is positioned to catch up with the growth in the ecommerce market by enabling online retailers to improve service performance and cost efficiency.
Package delivery via drones is getting a lot of attention as the first big disruptor to the last mile. Even incumbent carriers like UPS are testing package delivery from company trucks to their customer’s home. Interestingly, the process works by the drone returning back to the delivery truck while it continues to move along its route towards the next package delivery.
The most immediate application for drone delivery will likely be in rural areas where delivery density is lowest and distances are wide. It takes less resources and time to send a small drone with a single package over large spaces than a whole delivery vehicle.
The technology behind autonomous vehicles has the potential to improve the last mile, with Amazon already testing their use. While drones get all the attention, self-driving vehicles may have the most immediate applications for B2C deliveries.
It’s easy to envision autonomous trucks making regular, scheduled stops in neighborhoods where people can pick up their package directly off the truck without the need for a driver. Better yet, it’s possible mailboxes will evolve to become automated receptacles where the autonomous trucks can place packages securely inside
Robots are another advancement that e-retailers hope to use to speed delivery times. Grocery and food delivery companies, such as Domino’s, are already deploying robots to assist in delivery but the application for ecommerce is logical as well.
The potential of robots to help the final mile may ideally be in the opposite situations as drones – highly populated areas where products can be stored nearby. In this scenario, robots can be quickly dispatched along city streets to customers.
All these solutions have commonalities – they are all looking to drive cost and time out of the last mile delivery. Reducing delivery companies’ reliance on labor has a big appeal as well. The trucking industry’s shortage of drivers exemplifies that it is not just about cutting back on employees – last mile delivery technology is about making sure customers can be served when labor resources are scarce.
Each of these technologies will have a role in the future of ecommerce delivery and the last mile. The best application for any company will be based on their own product and customer mix. How each technology is adopted and used by ecommerce retailers to meet the demands of the last mile will be an interesting evolution.