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Is the last mile solved?

Are a fast-developing range of delivery-as-a-service providers making last mile fulfilment a commodity?

Consumers want a “just deliver it to where I am at the time” option.

The 2017 State of Ecommerce Delivery Report found that 90% of consumers will track the delivery status of their online orders. Delivery must fit in with the increasingly hectic lifestyles of consumers.

Consumers want to be in control. It's unpalatable to receive a 'we're sorry we missed you' note from the local PO through the letter box. And if a customer misses a delivery, what options await them? Pick up the item at the local post office or try again and re-arrange the delivery? Consumers also want to be in the know -where is my delivery? They want to be in control want to receive it at a time and place that's convenient to me. They want instant gratification - On-demand, where consumers can have items delivered within the hour.

Retailers are getting ever more experimental in finding a cost-effective solution to this problem.

Given the cost and scale requirements to run an effective last mile delivery function, retailers have always been firm fans of 3rd party logistics.  However, as consumer demands get more…demanding, retailers are experimenting with a combination of new technology-enabled, disruptive delivery start-ups and partnerships. They hope that these upstarts will help them overcome the challenges of last mile logistics and meet the demands of 'new retail'.

 

In a recent review of the delivery-as-a-service market for a grocery client, I categorised this range of ultra-flexible fulfilment services as ‘Delivery-as-a-Service’ (DaaS).  Within DaaS, there are a number of innovations that are becoming increasingly common in all major cities. Each of which offers specific pros and cons to different sizes and types of retailer.

On-demand couriers can enable you to retain control over your customer experience.

Best described as a hyper localised courier. Traditional couriers have responded to the demand of on-demand delivery offering delivery in as little as 1 hour. To achieve this, many have invested in technology to allow for a seamless integration with a retailer's digital estate.

The number of couriers offering this level of service is growing within the UK.Many are focusing on high-density, high demand cities such as Manchester and London - a perfect playground for trialling this level of service.

Tesco have partnered with Quiqup to fulfil the delivery demands of the Tesco Now app which allows customers to order groceries to be delivered within 1 - 4 hours.

Through partnership with a 3rd party, Tesco have the flexibility to trial and scale these service levels with relatively low upfront costs by investing in people, processes and tech. The development of the app however would have cost quite a sizeable amount! Tesco could have alternatively advertised products via a 3rd party website or app, but by integrating with an existing digital estate Tesco retain the control over brand and customer experience.

The fast fashion retailer ASOS has championed choice for its customers via its partnership with On the Dot. ASOS offers no less than 10 delivery options.Loyalty and frequency of purchase are encouraged with it's new 'premium delivery' service and ASOS Instant - where customers can arrange between 6pm and 10pm on the day of purchase.

Concierge shopping is increasingly common, but introduces significant customer experience risk.

Simply put, products are advertised, purchased and fulfilled via a 3rd party platform. Products are hand-picked from local stores and delivered to consumers door within a window of 1-3 hours.

This type of order fulfilment is favoured in the grocery sector. Whilst Tesco have found its perfect match with an on-demand courier many grocery retailers are preferring concierge delivery. But why?

For grocery retailers who are experimenting with grocery delivery or are trialling the viability of ecommerce have found this as a viable option to launch a trial.

Lidl is now offering a one-hour grocery delivery service in Dublin via Irish start-up, Buymie. Buymie allows shoppers to order goods from a selection of local stores in the city using its app. Their staff would then pick, pack and deliver the order from a local store. Concierge delivery allows Lidl to test the market for demand without heavy investment or commitment.

The use of a 3rd party app removes the need for complex integrations - it can be a straightforward exchange of product and pricing information. However, this approach removes some control from the retailer, managing the customer and brand experience will be more almost impossible, especially as the app will offer various assortment from other retailers alongside your product offering. Even ignoring that customer won’t be coming to your website: what happens if your supplier starts delivering ice-cream that was picked and packed 3hrs ago?  Who is liable, and who’s reputation will be damaged?

Digitised 3rd party logistics providers can now offer supreme flexibility.

To satisfy customer demand, An Post has launched it's new (and very handy) 'In-Flight' delivery options which will allow shoppers to choose exactly when and where their parcels will be delivered.

When an order is made, customers complete the delivery information, but with the in-flight option the delivery location can be amended 24 hours before it is scheduled for delivery. Options provided are: 

  • Delivery to a safe place (e.g. a porch or specific spot in the garden);
  • Delivery to a neighbour;
  • Delivery to an alternative address;
  • Delivery on a different day; or
  • Click & Collect at any Post Office or specified collection point.

I can't claim this is a new approach, in fact couriers have offered these delivery services for some time. But the option to change your delivery address the day before it’s due to arrive, that’s rarely offered! The marketing of the service as an 'in-flight' option has gained traction with customers, and just in time too, as we enter the busiest quarter of the year. These additional options, at the 'out for delivery' stage hands control and choice to consumers to track and manage their deliveries.

Convenience is king, and new Delivery-as-a-Service providers make a compelling case for at least running 1-2 last mile trials to understand profitability.

As consumer lifestyles become busier and technology further deepens our connectivity, convenience will be at the centre of last mile delivery. Having the right range of options and service levels for customers will support the success of a retailer.

 

Customers want to have a variety of delivery options, with visibility of the delivery process – and ultimately they want control over their delivery. And last mile delivery? Well it's complicated. Most retailers struggle to ensure last mile delivery is profitable, let alone trial new services. But for a retailer to be successful it needs to start somewhere.

Further Reading