Why the Last Mile Should be your First Priority

‘A journey of a thousand miles begins with a single step’ – but is every step equal? In the supply chain, this last step – the delivery from final warehouse to the customer – is known as the Last Mile. Critical for reputation, and reliant on highly unpredictable logistics, the Last Mile is now more significant than ever.

The lasting impact of the pandemic

Generally, sales peak and decline periodically, with traditional seasonal booms around Black Friday, Cyber Monday, Christmas, and the January sales. However, due to the exponential increase of e-commerce from 2020 onwards, the expected decrease in demand is nowhere in sight.

COVID-19 is the primary cause of this increase in demand. As a result of the pandemic, “52% of consumers say they are buying larger volumes of products”.[1] That, combined with factory closures, worker shortages and overburdened transportation networks also due to the pandemic, has resulted in a global supply chain crisis. Therefore, some logistics providers have found themselves unprepared and overwhelmed.

The new challenges

With a global supply chain crisis, there are additional challenges that come with forwards logistics (the flow of goods from manufacturer to consumer), such as fulfilling an existing backlog of orders on top of receiving new orders. The growth of e-commerce is also having a chaotic effect on reverse logistics (the flow of goods from consumer to manufacturer). According to CBRE, e-commerce sales have a 20% higher average return rate compared to traditional brick-and-mortar sales.[2] Also, reverse logistics requires on average 20% more space and labor capacity in comparison to forwards logistics.[2]

Knowing that the Last Mile already accounts for 41% of total supply chain costs, the pressure to deliver the first time and avoid a costly redelivery process is therefore critical for logistics providers.[3]

Heightened customer expectations

In addition to a fast, first-time delivery, customers now expect a superior service. As a result, customer experience is a key differentiator for delivery services, and a key factor as to which logistics provider retailers choose.

According to research by Capgemini, “74% [of customers] intend to increase purchase levels by 12% with their preferred retailer” when provided with an exceptional and efficient Last Mile delivery service.[3] As such, the relationship between retailer and logistics provider is intrinsically tied. Without a smooth and satisfactory delivery by the logistics provider, customers may be more liable to switch to a different retailer that they can depend on.

How to put your best foot forwards on the Last Mile

Delivery services need to ensure that they are making deliveries as time- and cost-efficiently as possible. Especially so, given the ongoing demand and strain on their resources. Flexibility has now become essential for courier services to meet these challenges.

If couriers anticipate delays, consumers expect updated ETAs, with plenty of time in advance. Proactive communications, and a means of two-way communication, ensure that deliveries can be made at a convenient time and place to both driver and customer. This avoids the need for re-delivery, thereby reducing courier costs and stress, and achieving customer satisfaction.

Interested in how else logistics providers can meet both elevated end-customer and retailer expectations, to ensure continued business? Discover more with Content Guru.

[1] ShipStation, COVID-19 UK Research Guide, 2020
[2] CBRE, U.S. Industrial & Logistics ViewPoint: Reverse Logistics Stress Test – Holiday E-commerce Spike Will Lead to Record Returns, December 2020
[3] Capgemini, The last-mile delivery challenge, 2019