Delivery methods are still shaking themselves out with no clear-cut winner in sight
Last-mile delivery continues to evolve, and it continues to bring new ideas and solutions to the fore, some of which may become the de facto way to move goods in the near future. There are also plenty of ideas that will never see the light of day. The biggest change, though, is that consumer preferences are now infiltrating the B2B community, with manufacturers and others now expecting materials and supplies to arrive in shorter timeframes.
“In general, [last-mile delivery] is driven by consumer preferences,” Dave Palle, vice president of product management at Omnitracs explains to FreightWaves. “These changes we’ve seen in B2C models are expanding more into B2B delivery.”
According to a McKinsey report, 70% of consumers are content to receive their goods in the cheapest form possible, but 23% are willing to pay more for same-day delivery. Amazon has perfected the free 2-day shipping with Amazon Prime, and now more retailers are offering similar programs.
These trends will start to infiltrate the B2B market more going forward, Palle says, so it’s always a good idea to follow trends affecting last-mile delivery in the B2C market for what lies ahead.
The biggest trends right now are in the way and speed at which goods are being delivered. Driven by e-commerce growth, which is projected to top $4.8 trillion in retail sales by 2021 says Zebra Technologies, last-mile deliveries from omnichannel retailers are finding a variety of paths to consumer doorsteps. Zebra’s “Reinventing the Supply Chain: The Future of Fulfillment Vision Study,” found that 45% of omnichannel e-commerce shipments went via postal, courier or freight. Another 42% were sent to a third-party logistics provider, warehouse or storage facility.
The survey also looked at emerging shipping options, including crowdsourcing delivery. A full 87% of respondents expect driver networks to choose their delivery orders by 2028. Droids delivering parcels on sidewalks in 2028 are anticipated by 78% of those responding and 81% expect drones to be deployed. Autonomous vehicles (85%), bike couriers (80%), store staff or store fleets of drivers (91%) and dedicated delivery people (96%) were also popular answers to how goods will be delivered in 2028.
Zebra’s study also found that 55% of companies still use pen and paper to manage their omnichannel logistics, leaving plenty of room for technological growth and improved efficiency. Omnitracs is one of the companies that has recognized this trend and is developing solutions to address this need.
“I think we have a variety of solutions that can address some of these needs,” Palle notes. “Whether we are looking at scheduling deliveries or to help plan more strategically … there are a lot of tools to help facilitate these deliveries.”
Walmart has launched a pilot program with Waymo in Chandler, AZ, to have Waymo self-driving cars pick up customers who order groceries online, bring them to the store for pickup, and then back home again. There are also a number of startup companies working on crowdsourced delivery as well as businesses developing delivery droids and other autonomous delivery vehicles. These advancements are part of the disruption taking place, driven not only by e-commerce but also by demographic shifts.
“There is something to be said for how things evolve,” Palle points out. “Cities grow and they become more complex…but cities can only grow so much horizontally and then they have to grow vertically.”
That, too, will change the dynamic as droids or drones leaving packages on the sidewalk is not convenient for residents living on the 30th floor. How is that addressed? Amazon thinks it has a solution with its Hub approach, which involves installing locker-style compartments in large, multi-tenant buildings. Residents are given a code to enter to retrieve their package.
However last-mile delivery shakes out, Wes Mays, director of OEM solutions at Omnitracs, is not sure there is a clear-cut favorite, perhaps best evidenced by the results of the aforementioned Zebra study. “I’m not sure that overall crowdsourcing [is the answer],” he says. “There is not going to be one company doing it all. Crowdsourcing may be part of it [but not the only answer].”
Palle sees associations for last-mile drivers as a possibility going forward. Already, there is talk of some type of group forming to assist in restaurant deliveries. And it’s not just associations to assist in last-mile delivery that may change the landscape, the drivers themselves are pushing to get more of a voice in the process. Just a few weeks ago, a group of 90 or so Safeway.com delivery drivers won the right to join the Teamsters union.
Palle and Mays believe electric vehicles, autonomous vehicles, drones in more rural areas and more will all play roles going forward, as will humans. “There are still going to be some things, white-glove deliveries, appliances, etc., that are going to require a person,” Palle says. “I see a gradual evolution.”
While all this seems to be driving significant change – and it is – Palle notes that logistics companies have been through this before.
“Companies for a good decade and a half have had [to develop] other modes to handle deliveries in areas that were not economically viable,” he points out.
So, all the changes being driven by e-commerce are certainly changing the last-mile landscape, but it’s likely the industry will pull through just fine.
