As the role of online and physical stores come together, customer journeys are becoming increasingly complex. As such, supply chains have needed to become progressively more sophisticated to ensure efficiency.
Shoppers now demand that online orders are traceable, time allocated and delivered to a place of their choosing – whether home or ‘out of home’. Meanwhile, retailers need returns to be tracked and integrated back for resale as quickly as possible.
For retailers, last mile logistics incur the highest single cost for fulfillment. As the volume of home deliveries continues to ramp up, retailers will need to increasingly rely on technology to optimize the efficiency of deliveries and must remain open to partnerships to improve both capacity and capabilities – both of which are highly capital intensive.
Optimize last mile logistics with ‘out of home’
Online deliveries are on the rise. Our Ecommerce Delivery Benchmark Report 2022 predicts that $650 billion of non-food spending will shift toward online by 2025. Of this, $525 billion is predicted to be home deliveries. Retailers must explore and promote alternative methods of delivery so networks can keep up.
‘Out of home’ delivery can present a much more efficient alternative. Methods like lockers, PUDOs and in-store pickup offer a more flexible and secure collection method, helping to increase first-time delivery rates. Not only does that lower delivery costs, it can also reduce expensive customer contact.
Even better news, the same report has shown that consumers are increasingly open to the fulfillment method, especially as a way of reducing the carbon emissions of their online orders. Consolidating deliveries from multiple online orders to just one ‘out of home’ location can reduce emissions by cutting down the number of deliveries to individual homes. Across the countries analyzed, around a fifth of consumers would be more willing to use ‘out of home’ if there were environmental benefits.
Lean on partnerships
As retailer leaders look to build scale to efficiently service online orders and increase market share, they will have to decide whether to invest and build capacity in-house or look externally. Sharing the load with third parties is a strategy we’re seeing increasingly in the marketplace. Even established online pioneers lean on a range of partners for additional flexibility and capacity (e.g. Asos partnering with Clipper Logistics to handle returns across Europe).
Legacy retailers struggling with investment are likely to require ‘piggybacking’ off existing infrastructure and expertise as consumers shift online. This includes partnerships with other retailers (e.g. shop-in-shops, and between online-only and store-based retailers), and third-party logistics providers in mutually beneficial arrangements. (e.g. fashion retailers Gap and Reiss recently partnered with Next, the clothing retailer, to leverage its ecommerce and logistics capabilities in the UK).
Lower ‘cost to serve’ with shipping rules
Last mile logistics are not only complex, but notoriously expensive. But with the right technology retailers can optimize, and lower the cost, of this stage.
For example, shipping rules can help retailers automatically select the right delivery service to meet customers’ needs at the best price. Metapack’s own shipping software checks and validates each service against the factors you tell it to, like delivery date, delivery type, warehouse cut off times, size and weights and price.
After the right service is selected, a carrier label that complies is generated in less than 300 milliseconds – much faster than typical competitor platforms.
Last mile delivery is becoming increasingly complex, however with the right tools and strategies, retailers can optimize this crucial stage while also providing a more flexible customer experience.