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Is something you purchased online being delivered this week? Odds are the answer is yes.
Online delivery, especially during and post the Covid-19 pandemic, has exploded in popularity and demand. This is great news for shoppers who want convenience and no-touch buying, but the online delivery frenzy has tapped out most traditional delivery services.
Shipping services have hit capacity, are stretching out their delivery horizons, have raised prices or all of the above. And retailers that want to provide fast and free delivery are feeling the pinch. After all, retailers know they can’t grow if they can’t get their products out the door and dropped on a customer’s door quickly and cheaply.
Capacity problems have even hit huge brands. Last year, UPS limited the volume of shipments it would make for Gap and Nike in the face of capacity limits.
And this year, retailers are responding by diversifying their delivery partners, often looking to unconventional solutions like DoorDash, Uber and regional carriers to deliver their products to porches all over the country.
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The retail and logistics industries describe the challenge of delivering all the way to a customer’s porch as the “last mile” problem. And while every kind of retailer is adopting last-mile solutions, there is an emerging consensus of “workarounds” to the last-mile problem forming across the entire retail spectrum. Some of those workarounds are being brought to market directly, some are still being plotted out in boardrooms and still others are being brought to light in new industry research.
I know this because my independent thought-leadership research firm recently ran a large survey study for a Courier-as-a-Service (CaaS) client of ours, OneRail, to understand how retail leaders can use unconventional delivery providers like ride-share drivers to work around carrier-capacity roadblocks.
What To Know About Carrier Capacity Limits and the Last-Mile Problem
Results from the study revealed hidden insights about how retailers are responding to carrier-capacity limits for last-mile delivery:
• Last-mile delivery is the No. 1 delivery pain point for over half of retailers surveyed. In addition, last-mile delivery is 41% of the total shipping cost for most retailers.
• Retail leaders need tech to profitably deliver that last mile. Forty-four percent of retail leaders say last-mile delivery is critical to their profitability, but only 30% definitely have the tools to manage it.
• High-growth retailers see great last-mile delivery as a competitive advantage. Retailers growing quickly are nearly 30% more likely to use technology to predict delivery outcomes than retailers growing slowly or not at all.
• Retailers are turning to CaaS platforms to solve for carrier capacity limits. When large product shippers are too expensive or unavailable, retailers are increasingly turning to platforms that tap into ride-sharing, food delivery and regional carriers to ship their products that last mile.
What To Do About Carrier Capacity Limits and the Last-Mile Problem
The data is clear. Retailers know they can’t trust the survival of their business to large delivery service providers who are tapped out and able to capriciously raise prices as demand spikes.
Based on our research, there are a few actions I’d recommend brands take to help minimize this issue:
• Leverage ride-share drivers for product delivery. As e-commerce and home delivery expand to new categories, capacity limits are likely to be with us for some time, so retailers need alternative delivery modes as an “escape hatch.” These alternatives include CaaS platforms and other ways to tap into the army of ride-share drivers eager to deliver packages rather than people and food.
• Take advantage of new last-mile tech. The smallest delivery mistake can lead to an upset customer or a lost sale. Retailers are using three main technologies to ensure a seamless delivery experience: real-time order tracking, the ability to resolve delivery exceptions and integrated POS and warehouse operations data. In fact, most high-growth retailers have even consolidated their order-delivery systems onto one platform as 84% of high-growth retailers say they manage most of their order delivery on one platform.
• Make great last-mile delivery a competitive advantage. More than ever, your delivery experience is your brand. The retailers that realize and execute on this will own the future.
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Author: Justin Ethington, Forbes Councils Member