The rise of the e-commerce marketplace has already resulted in the surge in the last-mile delivery services, and with the outbreak of the COVID-19 pandemic, it has accelerated in an even more rapid manner.
According to Forbes, the total online sales reached a record of $73.2 billion in June of this year. That is more than a 76% increase year over year from June 2019.
Due to the lockdown imposed by the government in order to contain the virus and the COVID scare in people which held them from opting for Bricks-and-mortar method of shopping, many retailers have developed or joined e-platforms. And this has further upsurged the demand in e-platforms.
The increased traffic and demand on the e-commerce platforms compelled companies to make necessary changes for a better customer experience.
It has been observed that e-platforms during this period have made investments in distribution centres, warehouses, transportation partners, technological advancements etc. in order to cater to the rising demand and customer expectation.
New trends such as on-demand warehousing, in-city warehousing, shared spaces, more use of the multimodal transportation etc. have been observed in the logistics market in order to save cost and at the same time deliver the best to the customers.
While COVID has turned in a boon for the e-platforms, the social distancing norms, the health and safety precautions along with government regulations have also created n number of challenges to the sector especially in its last mile.
Challenges in the Last-mile
Though the last mile delivery is the shortest in the supply chain journey, it certainly is not when it comes to cost. The segment is known to take a large portion of shippers’ transportation costs. According to the Bureau of Economic Analysis, last-mile costs are as much as 28% of entire supply chain expenses.
And, this high cost is one of the biggest challenges for any shipper.
During the time of the pandemic, the standstill of loaded trucks on highways due to the government-imposed lockdown and a rapid spread of the pandemic, the last-mile sector experienced its worst phase.
Even as the trucking industry gradually resumed, the scarcity of drivers and the increased cost of freight added to the last mile cost which took a toll on the profitability of shippers.
Furthermore, the Reverse Logistics or returns has also contributed as one of the major pain points for the segment. The e-commerce boom has only heightened this stress on the supply chain, increasing storage costs and lost profits while being an uncontrollable aspect of the overall strategy to account for.
Apart from the above mentioned, consumers also demand a high level of visibility of their products. They are eager to know from where and how and at what time is their product being delivered. This also becomes a big challenge for the shippers who still are afraid to evolve or collaborate with a tech lagging organisation for their shipments.
Best Practices Going Forward
Moving forward, it is clear that collaboration and technology are the keys to success. While everything was on a standstill for a long period of time during the pandemic it was the technological advancements and strategic partnerships that kept the industry going. With the complexity of last-mile delivery and e-commerce supply chains, technology enables you to optimize your operation and ensure you are scalable as the industry evolves.
Technology integration is imperative given the volume of deliveries per stop and the need for real-time location demands and automated delivery updates. The company with technological advancements will have an upper hand in the market. They can easily manage their supply chain in a more efficient and cost-saving manner with high number of profitability in a fast-moving sector such as e-commerce, last mile space.