Logistics play a critical role in many industries and have evolved as a technology-based sector in the recent years. According to a Redseer report, the last mile delivery logistics market in India is to reach $6 billion by 2024.
It may be mentioned that road logistics market especially the last mile delivery service is flourishing with overall road logistics constituting 8% of the overall GDP of India. India’s last mile delivery logistics mostly caters to FMCG, eCommerce and retail with FMCG being the highest contributor. Logistics is mainly divided between captive and third-party logistics (3P) in the eCommerce segment.
This article will provide insights on the definition, importance, trends, challenges, and solutions for effective last mile delivery and logistics.
What is last mile delivery?
Let us first look at the meaning of last-mile delivery in logistics and supply chain management.
Last mile delivery refers to the movement of goods from a transportation hub to the final delivery destination – be it a home or business.
The main aim of last mile delivery logistics solutions is to ensure that this transportation is carried out within the shortest possible time and at minimal cost. Effective last mile logistics helps businesses in this sector to build a brand reputation and customer satisfaction.
In general, the last mile logistics incurs 53% of total shipping costs and is often the most expensive part of the logistics and transportation operation.
There are several last mile delivery logistics companies in India that offers delivery options to businesses to transport their products. Gati, Delhivery, Rivigo, Ekart, DHL, and FedEx are some companies offering tech-enabled last mile logistics service in India. Additionally last-mile delivery startups like iThink Logistics, Locus are also contributing well to the last mile delivery industry.
You can also avail services like nexLogistics that enables MSMEs and emerging businesses to find reliable logistics partners to transport goods at affordable prices. It brings businesses and logistics partners together on one platform. As a business, you can explore services, compare prices, and work with a logistics partner of your choice.
Why is last mile delivery important?
While every stage of logistics activities is crucial for the complete delivery cycle, improving your last-mile logistics operation is essential to take your business to the next level.
The aim of every professional logistics company is to ensure that the orders are delivered quickly, efficiently and in a cost-effective manner. The reasons why last mile delivery matters are:
- Creates customer delight
Every customer looks for timely and cost-effective delivery of their products. Shipping cost is a major deciding factor, especially for businesses that cater to bulk order. If you cannot offer good prices to your customers, they might switch over to your competitors. So, offering either free or low-cost last mile delivery options can help create customer satisfaction.
- Better revenue generation
By offering free/low-cost delivery options you would be able to attract your customer to spend more on other items from your enterprise. This will help in revenue generation. For example, if you offer free shipping on orders above ₹500, your customers are more likely to add a few more products to save the delivery fee.
- Brand building
The last mile delivery makes the last impression as a customer is not privy to the rest of the supply chain process. If a customer receives a well packaged delivery on time, it creates a positive impact on the receiver whereas late and damaged deliveries create a bad reputation for the brand.
- Sustainability packaging
With rising awareness of greener deliveries, sustainable logistics is another factor that plays an important part in last mile delivery logistics.
What are the top Indian trends in last mile delivery?
With retail e-Commerce sales growing at a mammoth pace, the future growth of every successful business will depend on how best it has shaped its last-mile delivery based on the prevailing trends. Some of the trends in logistics solutions for last-mile delivery that will drive the growth trajectory in 2023 are:
- Omnichannel retailing
With the rise of omnichannel marketing, retail business is about integration of all channels to create a smooth shopping experience to the customer. A consumer today has options like buying it on store, through online or even buying it online and picking up the product from the store. Studies reveal that in 2022 retailers have derived 13% of their sales from omnichannel retail and it will grow 5 times by 2027. To make your last-mile logistics more efficient, think on investing in omnichannel capabilities to improve speed, cost, delivery control and flexibility.
- Driver empowerment
Delivery personnel in India often struggle with extended hours, low salary, job insecurity and a constant pressure to deliver on time. In metros, they need to brace through traffic snarls leading to delays and face customers’ complaints. Hence drivers under such stress fail to create customer delight, and thereby leads to loss of business and revenue. The focus now is to create a better environment for drivers and empower them.
- Focus on sustainability
As mentioned above, consumers today are environment conscious and prefer to order from platform that practices sustainability. Therefore, the coming year will see more focus on sustainability in the supply chain and logistics sector with measures like delivery-linked checkout, automated shipping, fleet optimisation tools, etc.
- Use of advanced technologies
Use of technology is directly related to growth potential, and it is also applicable to last mile delivery logistics. Latest technologies like Artificial Intelligence, Machine Learning and the Internet of Things will become more mainstream and will enable supply chain segment to prevent human error and enhance cost-efficiency.
- Direct to consumer for stronger customer base
Direct to Consumer(D2C) with the help of SaaS tools (Software as a Service) are making a stronger impact with greater levels of flexibility and sustainability. SaaS is used to monitor and manage the changing economies of scale required in last mile logistics.
Step 1- Receiving the order from the customer
Step 2- Delivering order at the transportation hub
Step 3 – Scheduling pick-up with allocated driver and timelines
Step 4: Loading of order onto delivery vehicle
Step 5: Completing of delivery by driver and collection of proof of delivery
What are the challenges associated with last-mile delivery?
Some challenges that are associated with last-mile delivery include:
- Higher cost of delivery
Due to various reasons factored into the last mile delivery process like fuel, maintenance, etc., the delivery cost goes up. Other reasons of increased cost include failed deliveries, returns and replacements. With consumers demanding free and same day delivery within set timelines, managing cost has become a significant challenge.
- Inefficient real time tracking
Tracking shipments plays a significant role in last mile delivery as it ensures that the packages arrive to the destination on time. Tracking systems if not effective would fail to track logistics real time. Surveys reveal that consumers look at real time visibility of their deliveries. The best solution to this is adopting a cloud-based platform to track shipments in real time through an app.
- Rising expectation of consumers
Consumers today have options, and the competition has made it tough to create customer delight. Keeping up to customer expectations has become a significant challenge for last mile logistics as they demand timely delivery with minimum shipping charge. Therefore, to achieve these targets while striving for a better profit margin has put tremendous pressure on the last-mile industry.
- Outdated technology
Many last mile delivery companies still use obsolete technology to run their logistics operations. This results in delays, delivery management issues and operational glitches. Manual technology cannot stand a chance with the availability of modern technology like AI and ML to replace them. This largely impacts the growth of the last-mile industry.
- Greater visibility
Another challenge that is faced in last mile logistics include lack of complete visibility in every step of the logistics process. Customers would prefer to be informed in case of delay immediately so that they can plan the next course of action.
How to manage last mile deliveries?
In order to address the various problems related to last mile logistics like missed schedules, lack of proof of delivery, failed deliveries, lack of real time tracking, etc., businesses are implementing advanced solutions to streamline operations and enhance efficiency. Some tips to manage last mile delivery include:
- Customer-warehouse proximity should be worked on, and the last distribution centre should ideally be near the consumers. This will help in saving time and money in terms of delivery and fuel cost. Availing 3P warehouses can be effective here to cut costs and stay efficient.
- Technology implementation to enhance process improvement. Technology use can help in different aspects of last mile delivery like route navigation, driver allotment, etc.
- Route planning will also help cut down delivery timelines drastically. Use of software to recommend the most efficient routes can be done by scheduling routes based on past routes taking into consideration time, traffic, etc.
- Real-time communication with customers through regular notification will not just help the customers with updated information but also benefit the driver to confirm availability of customer for delivery.
- Real-time delivery tracking system can help the business and customers alike to track the status of the package through the entire delivery process.
To sum up
Last mile delivery logistics play a significant role in the success of a business and every enterprise must work towards strengthening the process. The Indian last mile delivery segment is coming up with various options to streamline operations, and there are many players who are offering an effective logistics support.