Within supply chains at large, the last-mile delivery segment has witnessed significant disruption in recent years. E-commerce incumbents and startups mushrooming in the space are on the constant lookout to customize delivery channels and optimize existing networks in an attempt to scale up customer satisfaction. The Amazon effect has had a visible impact on the e-commerce strata, as businesses are now focusing on placing the consumer at the center of their logistics operations rather than considering them to be just another part of the equation.
That said, expedited delivery comes at a stifling cost. The faster a parcel needs to be delivered, the higher the cost of fulfillment, as businesses are often forced to send goods in less-than-truckload (LTL) vehicles due to the delivery time crunch. Companies the likes of Amazon and Walmart can afford to deploy massive and well spread-out logistics networks, significantly reducing delivery expenses at their economies of scale. However, this is impractical for a majority of small and mid-tier e-commerce businesses.
Driver retention and recruitment is another issue, with companies perennially on the lookout for skilled drivers and grappling with high driver turnover rates. The gig economy presents an interesting alternative, employing independent contractors to deliver goods to the end consumers, which would leave businesses with no control over the delivery experience as a lot of these contractors are not tailor-made for the job.
“People order online because it’s convenient and because they want their parcels to be delivered at home. They don’t necessarily want to pick up their own package but want a great experience at their place,” said Pierre Francois, the head of logistics partnerships at what3words.
An excellent delivery experience entails businesses providing visibility on products on their way to the consumers, which allows him to track and trace their parcels as they make their way from the warehouses to their doorsteps. Businesses can cut down on unnecessary idling, deliver faster and save expenses by route optimization — something that what3words does via its mapping technology, which is easier and more customer friendly than the GPS technology that is widely in use today.
Though several delivery modes like drone and autonomous robot deliveries are cropping up, Francois contended that it was not about the manner of delivery but rather the flexibility businesses can provide their consumers that needs to be a top priority.
“I think the most immediate drone deliveries will likely be around the last-mile delivery segment. This is because people look at convenience, and drones offer the flexibility of taking off from anywhere, anytime and deliver literally anywhere,” said Francois.
With regard to last-mile delivery, Amazon’s relevance and its impact on local business practices cannot be overstated. Francois explained that the quality of interaction of companies with their consumers — from the moment an order is placed to the moment the product is delivered — is fashioned around Amazon’s obsession toward customer satisfaction.
“It’s important we improve the supply chain incrementally, as we can’t achieve drone and on-the-go deliveries without providing flexibility to the consumer,” said Francois. “I think the future is really about giving more choices for the consumers on the way they want it to be delivered and changing these options as frequently as the customer wants. For example, if the customer wants his product to be delivered between 1:30 p.m. and 1:45 p.m., the company needs to figure out a way to do it.”
Francois reasoned that this is important as customers often do not want their products to be delivered to the place they live, but instead find it easier to collect parcels on the go — like in their place of work or even when they are at a cafe. The current model of delivery insists on people choosing their destinations at least a day in advance, forcing consumers to remain at the selected locations during the delivery time window.
“The future lies in flexible delivery,” said Francois. “It is about listening to consumers and managing to deliver wherever and whenever they want — whether it’s on the go or around a specific time window.”