The relevance of last-mile delivery logistics

November 30, -0001 Vishnu Rajamanickam, staff writer

 (Source: Pexels)

(Source: Pexels)

It was during the dot-com bubble craze of 1999 when Barron's did a skeptical cover story titled "Amazon Dot Bomb". The story suggested a possible plummet of Amazon.com fortunes as wide speculations over the dot-com market had given rise to an economic bubble which was a nudge away from imploding.

The dot-com bubble did crash a few years later, with many companies like Pets.com and Drugstore.com closing their doors for good. Though badly shaken, Amazon.com and eBay survived the avalanche, to rise back to their stock market highs a few years later.

It has been seventeen years since the episode, and the ascent of e-commerce over the last decade has been nothing short of phenomenal. E-commerce’s advent into becoming a mainstream consumeristic habit has jolted supply chains and ushered in a myriad of changes to the logistics rhetoric.

Localz, a company that specializes in supply chain and logistics business intelligence has recently published a whitepaper on last-mile logistics and its importance in the supply chain. FreightWaves caught up with Louise Robertson, Marketing Director at Localz, to discuss what companies need to work on to improve their last-mile logistics that could help improve customer retention.

“I think the way we shop is changing now. As a person, you know what you want, where you want it, and when you want it. This is a phenomenon that we call the i-conomy, which deals with the power of an individual in a supply chain,” Robertson said. “The younger the consumer, the more demanding they get. People want total transparency in the supply chain and want certainty on the product arrival. This is a pressure created by the individual economy.”

The demand for last-mile services has increased by 50% in the last 18 months, driven primarily by the B2C companies. Research into understanding consumers has led to a fascinating result - people associate visibility of supply chains with the brand, and with more transparency, it is easier for businesses to envision brand loyalty. Statistics show that supply chain visibility is so high on the priority list of consumers, that they seem to prefer it over same-day delivery - making this an astonishing revelation.

Transparency18.jpeg

Robertson contends that people who order online do not usually want their products on the same day, unless it is an emergency. People like to fit the delivery into their schedule, and it is not necessarily on the same day. But the trait of tracking deliveries is possibly prevalent because people are being accustomed to services like Uber which offers real-time tracking of cabs. “Research shows that when you receive something on time, or when you expected it, you get a bit of serotonin in your body, which gives you happiness,” she said.

As the demands from the consumer side keep businesses at bay, running a tight ship on supply chains is essential to keep a positive bottom line. Surprisingly, Localz found that of the retailers that it spoke to, 41% of them attested to having no reduction in margins over the last 18 months, while 17% of the companies actually see higher margins.

A lot of last-mile deliveries are still paper-based and lack location insights, leading to several erroneous decisions thereby reducing margins. Widely adopting technology in the logistics arm of companies would lessen resource wastage and tighten supply chains. 56% of customers insist on receiving full visibility, while only 43% of logistics companies provide the service, leading to an alignment discrepancy. To stay ahead in the game, companies would do well with identifying the needs of their customers and precisely catering to it.

All said and done, logistics is a costly affair, and it is about time people realize that the machinery of supply chains can never be made available for free. Amazon Prime, for instance, promises fast deliveries because it allots a chunk of its revenue towards subsidizing costs for its customers, while also charging a nominal annual subscription fee. Smaller businesses cannot afford such an exercise and would have to rely on automation and technology infusion into their supply chains to come up to speed.

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