Consumer expectations for shipping rates and delivery times have changed quickly. The shipping and logistics industry is becoming a commoditized service that is adopting faster delivery and cheaper prices.
Third-party logistics providers are transforming the last-mile delivery. Food delivery services, such as UberEats and Grubhub are applying the Uber business model to the on-demand delivery service, evolving the industry to meet shifting consumer demands.
Companies are noticing that consumer purchasing decisions continue to reflect this trend. In response, many companies are focusing on their last-mile delivery because it is becoming an important way to differentiate your service from other parcel carriers.
Let’s take a closer look at how companies are taking advantage of last-mile delivery trends.
What is Last-Mile Delivery?
Last-mile delivery is the movement of packages from shipping warehouses to their final destinations. It is the last leg in the journey. Final destinations can be a residence or business. Either way, the primary goal for last-mile delivery is to get the packages into the hands of the consumer quickly. As competition heats up among retailers, companies are being pressured to deliver superior service.
What Customers Have Come to Expect
More consumers are making e-commerce purchases instead of from traditional brick-and-mortar stores. This is gaining momentum as online retailers are expanding their online shops to offer clothes, electronics, entertainment, food and other consumer products.
Amazon changed the online marketplace. With the advent of premium services like Amazon Prime, the company introduced consumers to free two-day shipping. As more and more consumers buy-in to their service, free two-day deliveries have become the new normal for shipping.
UPS and FedEx are also struggling to maintain their duopoly market as more deliveries are placed by residences. Shipping carriers need to provide the same level of service to all customers, even if it is not conducive to their traditional shipping methods. Retailers are turning their attention toward other ways to provide faster shipping times, including using a mix of local and regional carriers, click-to-collect locations, drone delivery and more.
Carriers must continue to adapt their last-mile delivery and package drop-off to remain competitive.
Trends in Last-Mile Delivery
Gig Economy
As traditional logistics companies continue to overlook delivery service growth opportunities, innovative businesses, such as UberRUSH, Amazon Flex and Deliv. These third-party delivery services partner with independent delivery drivers for specific parcel deliveries. Delivery jobs are posted on an app and available nearby drivers are alerted and can decide if they want to accept.
These services are found in more urban areas where there are a greater number of individuals who drive or bike can earn extra money by delivering a package or two. The benefit of this delivery service model is that delivery driver operates with their own transportation methods.
Insourcing Deliveries
Other companies and retailers are actually bringing the shipping and logistics functions in-house and are building their own delivery channel networks. For example, Amazon is getting into the mix having local drivers make pickups at warehouses and dropping off the packages to their final destination, eliminating the company’s responsibility for last-mile delivery.
Traceability
Shipping carriers are responding to increasing pressures to improve the traceability of their shipments. Consumers expect up-to-date information on their packages down to the exact date and time for delivery. GPS tracking technology is helping to transform the way consumers interact with their orders.
Carrier Salesmen
Amazon took advantage of available big data and analytics to predict what else consumers would be likely to buy based on their previous purchasing decisions. Mobile warehouses are tapping into this same arena. Before a driver leaves for a delivery, they can fill their vehicle with related products for the intention of leading to an additional order at the point of delivery. For food deliveries this is gaining popularity now having more in-person deliveries (not just a standard drop-off), providing the opportunity for an additional sale.
Technology
As innovations in technology continue to develop at a rapid pace, robotics, autonomous vehicles and drones are creating disruptions in the shipping industry. Human labor is a primary cost in the delivery business. Automation could unlock a multitude of new opportunities for shipping carriers as current limitations due to cost and number of available employees would be eliminated by a robot that could deliver 24/7.
While this kind of innovation is still a few years into the future, companies are currently testing the viability of these options. For example, Yelp is experimenting with robotic delivery services specific for the food industry, and Amazon has been threatening drone deliveries that would reduce shipping times considerably. Self-driving vehicle prototypes are also being tested.
Final Thoughts
Changing consumer expectations for package deliveries are forcing parcel carriers to reconsider their shipping strategy and how they handle last-mile deliveries in order to provide faster and low-cost delivery options.
