Are retailers getting closer to nailing last-mile delivery?

Discussion
Photo: DoorDash
Jan 18, 2022

A new global survey finds 99 percent of retailers plan to offer same-day delivery by 2025, up from the 35 percent that are able to do so today. Only 29 percent, however, feel they’re currently doing a good job hitting their delivery windows.

The survey of 500 retailers from the U.S., Canada, U.K., Germany, France and Italy, commissioned by Bringg, was conducted in December.

The biggest barriers to delivering on time was found to be a lack of real-time order visibility/tracking, cited by 36 percent and compared to only 14 percent in a December 2020 survey.

The second-biggest barrier was the travel distance between warehouse, retail location, etc. to delivery point, cited as the biggest issue by 24 percent of respondents. Just behind as a major barrier was the amount of drivers and size of fleets available to make the deliveries, cited by 23 percent.

Ranking as smaller barriers were dispatch and routing issues (10 percent) and cost (six percent). The study did note that, when drilling down into the respondents who were highly satisfied by the delivery/fulfillment options they provide, the challenge of cost rises to 42 percent.

Among the challenges to scaling delivery were inefficient manual processes for planning and dispatching the orders, cited by 55 percent. Only 35 percent have fully automated last-mile delivery and fulfillment operations, with 60 percent using a mix of manual and automated.

Forty-one percent indicated they were challenged working with multiple delivery fleets (crowd source, third party, own, etc.). More than 80 percent of retailers are working with upwards of five providers. The pain points of working with multiple third-party fleets include lack of brand control (cited by 36 percent), lack of visibility (26 percent), cost (23 percent) and integrating multiple fleets (16 percent).

Other challenges to scaling delivery included scheduling the delivery times with customers (46 percent) and having multiple fulfillment channels managed by disparate technologies (44 percent).

Sustainability and carbon emissions are also found to be an important consideration, with 56 percent of retailers using fleets with electric vehicles and one in three using bike fleets.

DISCUSSION QUESTIONS: What are the obvious and less obvious hurdles holding back retail’s optimization of last-mile delivery? What technologies and other solutions offer the most promise?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
"The Holy Grail would be a turnkey delivery provider that consolidates all delivery providers into a cohesive network that simplifies the entire delivery process. "
"What could be interesting is if retailers start taking ownership of the last mile. That is, use their own fleet and drivers to deliver online orders."
"Last-mile delivery is already feasible, although what works for Amazon won’t necessarily work for the local health food store. "

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21 Comments on "Are retailers getting closer to nailing last-mile delivery?"


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Neil Saunders
BrainTrust

Working out the logistics of last mile is challenging but seems to be getting better. The big question is: how many of these services are profitable and how many erode the bottom line?

Michael La Kier
BrainTrust

Offering and “nailing” last-mile delivery are not the same. The headline that “99% of retailers may offer same-day delivery by 2025” seems to forget that 98% of all retail companies employ fewer than 50 people. Unless they partner with third parties, this simply won’t happen. Just look at how partnering has eroded margins from restaurants. Adding costs (and logistics headaches) is not a winner for the majority of smaller retailers.

Ken Morris
BrainTrust

I believe the lack of real-time inventory data is the biggest hurdle for retailers. Visibility is essential. Most are strapped with a legacy systems infrastructure that does not update in real time. Point of sale systems that upload inventory movement nightly and e-commerce platforms that do the same at end of day to yet another legacy system of record. You can’t guarantee delivery if you are out of stock. Retailers need to move quickly to an architecture that harmonizes inventory if they want to compete with Amazon, who is real time all the time.

Of course, the last-mile factors that retailers can’t control are weather, traffic, and driver availability. I think we’re going to see robots delivering just about everything at some point. But they, too, will have to have merchandise to deliver.

David Naumann
BrainTrust

Beyond the cost of last-mile delivery, the biggest barrier to successful execution of same-day delivery is the complexity of managing multiple delivery providers. With multiple delivery providers, it makes managing delivery dispatches and visibility to delivery times very complex. The Holy Grail would be a turnkey delivery provider that consolidates all delivery providers into a cohesive network that simplifies the entire delivery process. We still have a lot of room for improvement.

Dion Kenney
BrainTrust
10 months 16 days ago

Last-mile delivery is already feasible, although what works for Amazon won’t necessarily work for the local health food store. The key is cost-effectively integrating the logistics into the business model. Pizza parlors have been delivering fresh hot pizza for decades with minimal resources. Amazon is building an infrastructure-intensive solution. Somewhere between these two is a viable solution for most retailers. Perhaps the more important question is which retailers really need to provide local delivery for their products and customers.

Scott Norris
Guest

If Amazon ever gets broken up, their local-delivery business would be ideally positioned as a neutral turnkey third-party solution. We can only hope!

Jennifer Bartashus
BrainTrust

Customers don’t know how hard it is to create a seamless delivery experience. Expectations are high, which makes any deviation from those expectations harder to manage for retailers. Blending disparate data sets to offer end-to-end transparency from order to delivery is one of the biggest challenges retailers face. Optimizing the last-mile is really only feasible if the ordering and fulfillment process is streamlined. Technology can help find the cheapest cost-to-deliver for retailers but having that order ready and waiting is crucial for a seamless handoff.

Perry Kramer
BrainTrust

The interesting point is that 42% of those retailers that are highly satisfied with their same-day delivery process see cost as a challenge. The message here is that to execute same-day delivery effectively there are no short cuts. The tier one delivery providers, OMS systems, and Customer Care systems have the capabilities. The maturity of these processes is filtering down to the tier two level in each of the major components of a successful same-day delivery solution. Consumers are driving this and retailers and their software vendor partners will need to continue to step up. As the process continues to mature and become more competitive, license and service costs should drop slightly unless labor costs offset the economies of scale.

Brandon Rael
BrainTrust

Mitigating the last mile has been one of the most challenging initiatives for retailers, grocers, and service companies. Without depending on third-party last mile logistics companies, such as Instacart, Uber, DoorDash, and others, retailers and brands will have to make significant capital investments to shift their operating models to enable last-mile fulfillment capabilities.

There will need to be a significant investment in the store operations teams to enable and empower store associates to fulfill BOPIS, curbside, and same-day delivery from stores. This includes store capital investments to modify the sales floor and checkout areas to support the same-day pickup model. In addition, there will need to be training, operational support, infrastructure, signage, and marketing investments to support this new operating model.

Shep Hyken
BrainTrust

It just keeps getting better – for both consumers and retailers. The “last mile” done quickly (same day) is a major consumer benefit. Retailers finding ways to do it efficiently continues to improve at every level. We’re still in growth mode as far as capabilities. I’m looking forward to seeing what this looks like in two or three years.

Richard Hernandez
BrainTrust
Richard Hernandez
Merchant Director
10 months 16 days ago

I think there are a lot of options available for the last mile, however I do not see one that is becoming the predominant one for retailers. I still see a large investment and much research still left to do before this is perfected.

RandyDandy
Guest
10 months 16 days ago
There’s something rather grotesque about retailers worrying about and wondering how quickly they can get certain goods to impatient customers. Unless it’s about a medical emergency, no one needs anything so quickly that it defies human capabilities. Sure, you can make it about non-human ways of getting these anxious people their trivialities. But only the largest (most solvent) businesses can afford fleets of robots, dashing drone-like across cityscapes. Though isn’t it absurd catering to such consumer whims? Sure you say, that’s what business is (mostly?) about: satisfying desperate desires in addition to or over actual needs. However doesn’t this all tend to make us rather too selfish and self-aware, and to the eventual point of being absolutely unsustainable (economically and environmentally)? Well, whatever. Meanwhile, to the vast majority of smaller stores, I say let your patrons “eat their cakes, but pay not only for it but for how quickly they (think they) need to devour it.” For there is no good reason why the little guys should have to absorb the cost of their wanton… Read more »
Ken Lonyai
BrainTrust

I agree with Michael La Kier. 99 percent? Sure local businesses like hardware stores and mom and pop groceries offered local delivery ages ago. That went away and food delivery arose. But nowadays, there is a massive chasm between food delivery and large retailers offering local delivery that will swallow most small/local retailers’ delivery ambitions. So a survey claiming 99 percent last-mile delivery is highly suspect unless it means that 99 percent of retailers dream of local delivery by 2025.

Richard J. George, Ph.D.
BrainTrust

Online shopping and delivery entail two related costs normally borne by shoppers, namely product selection and final-mile delivery. The technology appears to be available to make the final mile more effective. The outstanding issue is the cost to make delivery to the home more efficient.

Cathy Hotka
BrainTrust

The last-mile delivery craze assumes that we all live in cities, when a lot of the population lives many miles from stores. We all need to take a step back and look at realistic strategies to serve customers.

David Mascitto
BrainTrust

What could be interesting is if retailers start taking ownership of the last mile. That is, use their own fleet and drivers to deliver online orders. From a technology perspective, a Transportation Management System (TMS) with fleet management, GPS tracking, notifications, etc. would get the job done with low implementation risk. The harder part would be carving out this outbound logistics division within the existing retail organizational structure.

Natalie Walkley
BrainTrust
Natalie Walkley
Director, Körber & Enspire Commerce OMS
10 months 15 days ago

Real-time order tracking and visibility is crucial to optimizing the final mile—the most expensive leg of the supply chain. You can’t optimize what you don’t see, so step one is for brands to leverage technology (i.e. an order management system) to understand where orders are, communicate with customers, increase final-mile delivery options (BOPIS, couriers, locker pickups, etc.), and assess margin across each delivery channel to uncover the most profitable avenues for their audience.

Andrew Blatherwick
BrainTrust

It is interesting that these surveys give one answer as a top line but a more detailed investigation shows a different picture. Cost shows as only 6% reason for not already doing same day deliveries, which grows to 42% on further investigation. It is even higher than that if retailers are honest — they do not want to admit to customers that they do not value them.

Within the next three years, there will be many changes in technology and public perception. By 2025, the impact of same day deliveries on the environment will become a major issue and the whole speed of delivery will go into reverse. Consumers do not need same day delivery so it is a marketing led initiative, and will reverse very quickly once people realise the impact it is having. People do not want to destroy the environment at the cost of their own convenience, especially when they do not even need it!

Oliver Guy
BrainTrust
Oliver Guy
Global Industry Architect, Microsoft Retail
10 months 15 days ago

Key to scaling this has to be use of ecosystem partners who specialise in last mile delivery and can attain economies of scale in doing so because they work across multiple retailers. This assumes of course that the provider can provide a service that is in line with the retailer’s overall brand and brand promise.

In turn this relies on easy, rapid and secure sharing of data between these organisations in order to allow orders to be shared with the providers.

mrmhendrix
Guest
10 months 15 days ago

The same-day, last mile delivery component is a massive opportunity for the anti-Amazon crowd. Retailers don’t need to DIY, they can find brand conscious, retail oriented delivery partners. The retailer should get focused on making their local inventory feeds easily accessible. They will often REDUCE their shipping expense and create a “socially shareable” great transaction for the customer.

Anil Patel
BrainTrust
If we circle back to the evolution of shopping, merchandisers were responsible for taking the product to customers’ doorsteps. Then came the era of big-box retailing, in which retailers reduced their product prices and customers bore the time and cost of traveling to the store location to pick up their orders. Fast forward to now, and we are back to the first stage, except that retailers now are required to sell their products at lower prices while also bearing the cost of last-mile delivery. This, in my opinion, is one of the most significant challenges that retailers face today. I believe the solution lies in finding a fine balance between all of this. Customers are willing to wait a few days to receive their online orders. If not, they can either pay for superfast last-mile delivery or pick up their orders from stores. Order Routing Engines and Distributed Order Management Systems help retailers simplify the order fulfillment process for click and collect and other fulfillment options. These solutions optimize routing paths and provide inventory visibility.… Read more »
wpDiscuz
Braintrust
"The Holy Grail would be a turnkey delivery provider that consolidates all delivery providers into a cohesive network that simplifies the entire delivery process. "
"What could be interesting is if retailers start taking ownership of the last mile. That is, use their own fleet and drivers to deliver online orders."
"Last-mile delivery is already feasible, although what works for Amazon won’t necessarily work for the local health food store. "

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