5 ways to shorten last mile delivery

When was the last time a customer asked you to deliver a package slower? Exactly. Look, we all know that customers want their parcels to arrive as soon as possible, but how can you meet the demand?  Standing out from the crowd could be easier than you might think - here's how you could improve your last-mile logistics to get customers hitting the 'buy' button.

First, let’s talk numbers. BIG numbers. In 2018, e-commerce sales for retail alone hit US$ 2.8trn¹ worldwide. Not billion, trillion. And that's just the tip of the iceberg of what's to come. We’re set to see a 75% increase in e-commerce revenue between now and 2021. We'll do the math for you here – it means e-commerce will be pushing US$ 5trn. Consumer demand for online purchases isn’t just strong, it’s insatiable. So it's time you quench that particular thirst.

While it's good news for businesses – and great news for delivery companies – fulfilment is hard. Particularly when you get to the so-called ‘last mile’ of parcel delivery. That final hurdle. The cherry on the cake. Getting the goods into the waiting hands of your customer.

Time for a truth bomb

The last mile accounts for around 53%² of shipping costs. Surprised? We weren't – and not because we're specialists.

Getting lots of individual parcels to a whole neighborhood’s-worth of addresses safely (and on time) is a pretty tough task. But now, despite these challenges, even the smallest retailers have got to live up to the high standards set by global giants like Amazon – who have made next-day delivery the norm, and same-day delivery possible. Tough ask, right?

Well, that depends. When it comes to last-mile solutions, and which could be right for your business, they are as varied as the deliveries they expedite. So, with that in mind, we've picked out a few options that we think are worth your consideration. 

There’s no such thing as being too local

We're serious, and so are the forward-thinking businesses that are already taking a more localized approach. Acting like traditional bricks-and-mortar stores, they shift their stock to smaller regional warehouses, selecting the most popular – and often seasonal – items to hold. The net effect? Shortened last mile logistics. 

According to Roy Hughes, EVP Network Operations Europe, DHL Express, several ‘power cities’, such as New York and Beijing, are “facilitating and driving this localization trend,” and should be your focus from the get-go.

While your business may not yet be able to afford to own warehouses, companies like Darkstore³ offer e-commerce brands the chance to store their inventory in leftover storage facilities. Could this opportunity equip your business to provide same-day delivery for nearby customers? If so, what are you waiting for? That empty parking garage won't fill itself...

Crowdsource your couriers

In e-commerce, you've got to give the people what they want – so when consumers want same-day delivery, you give them same-day delivery (at a price, of course). And, luckily for you, this is where crowdsourcing companies like America’s Deliv4 or Asia’s GOJEK⁵ step in.

Taking a cue from taxi and food drop-off services like Uber and Deliveroo, these new crowdsourcing apps partner with local drivers who can choose to pick up a pending delivery from your business and transport it to the customer – who can schedule delivery to suit their preference. It's amazing no one thought of it before.

The great thing is that retailers can guarantee the consumer will be home when the delivery arrives, streamlining the process and eliminating the cost of second or third attempts. Say bye-bye to “We missed you” cards, and au revoir to leaving parcels outside – along with the chance to be damaged or stolen – not to mention the cost to your business' reputation. There are also plenty of ways you can improve customer loyalty with every delivery.

On top of this, the wide array of on-demand options includes service points and storage lockers, which are able to accept a package delivery on behalf of your customer. DHL’s Packstation, launched back in 2001, offers a network of automated all-day booths across more than 3,500 locations – and that's in Germany alone. Amazon Locker provides a similar service, currently operating across more than 50 cities. However you choose to do it, chances are there's an option that will work for you.

The forgotten time waster: traffic and weather delays.

There are a bunch of challenges when it comes to actually getting products to consumers – and all of them need to be overcome. For example, did you know that driving off-route accounts for up to 10% of a driver’s total mileage? Inefficient journey planning can add hidden costs to already expensive services, so it's important to get the best from your route.

But what's the answer? Simple – better planning.

DHL eCommerce management found that, in some markets, couriers were spending nearly an hour planning their routes manually – only to have them disrupted by weather delays or traffic. In the age of modern technology, that seemed insane. But if a big company like DHL Express was doing it, how many more were? Or still are?

The process has now – thankfully –been improved through the use of geo-map reading to update routes in real time – and it's improved last-mile productivity by between 20 and 40% - a crazy amount for such a simple switch. Mei Yee Pang, Head of Innovation at Asia Pacific DHL Customer Solutions and Innovation, says that it is now vital to be taking “a data-driven approach in servicing customers.” And the bottom line agrees with her. 

What will the future of shipping look like?

Drones landing in your backyard? Robots rolling down the sidewalk? No, wait... that's what today looks like. Sorry.

Back in 2018, DHL successfully ran a three-month test of its Parcelcopter in the Bavarian community of Reit im Winkl. Here, users simply insert their parcel into the allotted Skyport (that’s a dropbox to you and me) to begin automatic shipment – enabling easy shipping to areas with poorly developed infrastructure, or those blocked by natural barriers, such as water and mountains.

Back on solid ground, autonomous vehicles can now act as secure mobile delivery lockers, which follow a set route to your customer's door. They will get a text or email when it arrives, and they can then pick up their parcel from the container. The sky (and the ground) really are the limit.

Last-mile innovations like these are set to quickly become the new normal. McKinsey6 predicts a “world where autonomous vehicles deliver 80% of parcels.” And, research suggests that, far from being skeptical about new technology, 60%⁷ of consumers are in favor of, or fine with, drone delivery. Good job DHL Express are ahead of the curve.

While these new flying machines and delivery robots may come with a hefty price tag (to begin with), remember that 23%⁸ of consumers are willing to pay significant premiums for same-day delivery - and rises to 30% among younger, more impatient consumers (you know who you are).

As this demographic becomes the dominant consumer spending group, a delay in receiving a package of just 12 hours can become an important differentiator – and it's one you’ll definitely want to avoid. As a business, you should make gradual adjustments when catering to these higher expectations, balancing cost with quality. Move too fast and you’ll create too many operational problems. Move too slow, and you risk being overtaken.  

What’s just over the horizon?

As an industry, we’re trending towards localized, digitized fulfilment to improve the last mile.

We asked Lee Spratt, CEO of DHL eCommerce Americas – what he believes e-commerce retailers need to do to stay ahead of the game in the near future. “Being more agile in adjusting to market trends,” says Lee, “maintaining an openness towards learning and reinvention, and promoting a newfound flexibility as a baseline for the transport industry.” So there’s your strategy in just one sentence: keep moving, stay agile, and shift with the tech to make sure you don’t get left behind in the race to your customer’s door.