In this e-commerce, “customer is king” environment, last mile logistics is becoming a differentiator for many retailers. The last mile is the last opportunity retailers have to impress their customers. Hence, selecting logistics partners is an important consideration. Jeff Hughes and Charles Schreiner, digital operations consultants with Capgemini Consulting, write, “Often the closest that customers come to interacting face-to-face with brands that primarily sell through online platforms is through other online channels, such as social media. Final delivery becomes one of the last points in the supply chain that is human-driven. That’s where customers encounter a service that is provided by an actual person arriving at the door and delivering an order. And even that interaction may be changing, with the introduction of drone and autonomous delivery.”[1] They add, “If we consider final delivery as an opportunity to enhance the customer experience, then it becomes a potential profit center. This shift in mindset allows supply chains to create and execute operating models that can be better tailored to customers’ individual needs.”
Customer expectations in the e-commerce era
Bryan Wyatt, Senior Manager for Transportation Practice at Chainalytics, observes, “In the transportation world, last-mile delivery refers to a product’s final destination in the supply chain (for e-commerce deliveries, that mostly means to the customer’s home, office, or preferred delivery point). In the early days of ecommerce, customers simply expected to order parcel-size items online. But now that ecommerce has fully established itself as the primary option of consumerism, shoppers expect online availability for anything and everything — from shoes and clothes to a new dishwasher or that shiny new riding lawn mower they’ve been coveting for years. Now, their shipping expectations extend far beyond item availability and now includes shipping costs, shipment method, and expedited delivery.”[2] Failure to meet customer expectations in any of those areas can significantly impact a retailer’s reputation. Mastering last mile logistics creates opportunities for retailers. Part of that mastery is managing customer expectations.
Jennifer McKevitt (@mckvt) reports a 2016 survey found, “About 40% of 1,500 shoppers surveyed … say delivery is the most important detail in their shopping experience.”[3] As a result, McKevitt notes, “The stakes for retailers are extraordinarily high. Based on the risk associated with lost business, sellers able to secure the most reliable shipping options would be well-advised to do so. Failing that, they might not get a second chance.”[3] The single most important aspect of last mile logistics is surety. Lara Ewen asserts, “Any solutions to last-mile delivery problems need to solve issues of speed, security and most importantly, surety.”[4] Surety, she explains, involves making sure the goods actually reach the intended consumer. Not getting the goods into a consumer’s hands is total failure and will likely result in lost business.
Last mile opportunities and challenges
Karen Sage, Chief Marketing Officer at MercuryGate, explains, “While companies have opportunities to gain new customers by offering more buying and delivery options, these often same-day home deliveries do not come without challenges.”[5] Chief among those challenges is cost. Sage reports, “Final mile deliveries can be among the most expensive transportation segments in a supply chain.” In order to delight customers and take advantage of last mile opportunities, Hughes and Schreiner believe steps must be taken before the physical last mile is reached. For example, when packaging a purchase for delivery, retailers could include “a personalized thank-you note” or upgrade gift wrapping options. William Salter, President and CEO, Paragon Software Systems, agrees with Hughes and Schreiner. “We need to stop viewing last-mile logistics as solely a delivery challenge,” he writes. “The broader challenge is ensuring processes and their supporting technologies work together to allow supply chains to meet the market’s insatiable appetite for faster, more precise deliveries.”[6]
Since delivery costs can be a game breaker, Salter recommends finding savings throughout the logistics process. He explains, “The fully burdened cost of a truck mile is $1.59, according to the American Transportation Research Institute. For a 50-vehicle private delivery fleet, where each vehicle racks up 50,000 miles per year, driving 20 percent more miles than necessary means nearly $800,000 in lost profit annually. Customer satisfaction suffers, too.” He goes on to explain how both businesses and customers benefit from automated routing systems. “Automated routing and scheduling ensures delivery route plans are crafted to maximize delivery stops and minimize fuel while making the most of driver shifts and available trucks. It can also collect critical information about the actual routes driven that companies can use to give customers accurate delivery times, and can feed back into the system to generate even better route plans next time around.” If you want to get really fancy at the doorstep, Hughes and Schreiner have a few more recommendations. To make their point, they offer a hypothetical example they call “beige-glove service.” They explain, “Beige-glove services could entail things like guaranteed delivery by drivers who consistently maintain a high customer-satisfaction (CSAT) score, addressing the customer by name, helping with assembly and installation, providing instructional demos, or other services tailored to the wants and needs of the target demographic of a brand.” Such services obviously don’t come cheap; but, as baby boomers take advantage of e-commerce in their later years, such services may actually prove to be profitable. Hughes and Schreiner conclude, “We see an emerging trend whereby high-value brands make significant investments to take back control of last-mile delivery, and other crucial aspects of the customer experience.”
Summary
Businesses know social media makes every consumer a potential critic. As a result, Sage notes, “A poor home delivery experience can have a negative impact on a company’s brand.” This reality heightens the importance of last delivery. “In some instances,” Sage writes, “the final mile delivery is the first personal contact between the consumer and the product. Myriad situations can turn a positive perception into a negative. Is the driver late? Does he get mud on a consumer’s rug or trip over the family dog? Is the product packaging damaged? Any one of these scenarios can degrade the buyer experience.” To minimize risks and maximize customer satisfaction, companies need to assess their entire logistics process. Salter concludes, “Delivery performance has become a competitive differentiator, making it a closely scrutinized end goal at almost every departmental level. Last-mile delivery performance is now inextricably connected to every part of the business.”
Footnotes
[1] Jeff Hughes and Charles Schreiner, “Delivery: The Last Face-to-Face Touch Point for Brands in a Digital World?” SupplyChainBrain, 15 June 2018.
[2] Bryan Wyatt, “Is Your Organization’s Last Mile Strategy Working For or Against You?” Chainalytics, 3 April 2018.
[3] Jennifer McKevitt, “Last-mile delivery could make or break retail sales this year,” Supply Chain Dive, 21 November 2017.
[4] Lara Ewen, “Solving for the last mile is retail’s next big disruption,” Retail Dive, 27 February 2018.
[5] Karen Sage, “The Final Mile: Challenge or Opportunity?” Logistics Viewpoints, 14 June 2018.
[6] William Salter, “Last-Mile Technology Needs a Radical Rethink,” Inbound Logistics, 13 June 2018.
