E-commerce shows excellent promise and growth, and its impact will resound throughout the logistics industry. Unfortunately, the rate of growth remains inconsistent with the growth of logistics, and it rests on a tipping point. Unless shippers learn what customers really want and how to create a successful, satisfying delivery experience, they risk ruin at the hand of Amazon and those that offer final mile service.
In fact, a survey conducted in 2018, published by Trucking Info, found significant changes in how customers respond to shipping availability and costs. The information collected within the study alludes to the ongoing influence of Amazon, not to mention the ways consumers believe their shipments arrive. In other words, customers simply believe anything is possible, and they are willing to pay for it in some cases. However, shippers that take the time to understand the challenges spurred by e-commerce growth and the trends affecting final mile logistics can apply the survey results to win in the final mile.
Using a TMS to Execute a Final Mile Strategy that Yields Desired Outcomes
E-Commerce Growth and the Challenges It Presents to Final Mile
E-commerce growth shows no signs of stopping, and customers are willing to pay for better, faster service. The sharp rise in Amazon Prime membership reiterates this need. Unfortunately, the growth of e-commerce contributes to critical challenges within final mile logistics, such as:
- Too few carriers. An inadequate supply of carriers that offer the final mile logistics and white-glove services demanded by consumers will result in the alienation of your customers.
- Delays in delivery. Failure to keep up with customer needs will inevitably result in delays in delivery, pushing customers even further out the door.
- Poor visibility beyond “out for delivery” status. Poor visibility into the actual final mile, well beyond the loading of items on the final mile delivery van, does not provide enough information about what does and does not work well within final logistics.
- Changing delivery expectations. Changing customer delivery expectations, including the addition of white-glove services for the installation or set up of merchandise, also continues to grow as more customers opt to make their purchases online.
E-commerce Trends That Influence the Final Logistics Mile
The survey also identified a few trends that influence the final mile. These include:
- Free shipping. Everyone wants free shipping, but the trend appears to be slowing. Recent years saw an impact of the number of customers citing “great impact” of free shipping when picking purchases online, which rose to 75% in 2016. Then, the trend dropped by 2018. Overall, customers have focused less on whether shipping was free when making ordering decision.
- Fast shipping. Amazon Prime growth was astonishing, but more importantly, the survey found customers expect delivery much faster than average, and since all Amazon Prime members pay extra for being a member, it means customers are willing to pay for faster delivery.
- Urbanization of fulfillment. Another trend exists within the changing of how shippers fulfill orders and get them delivered. While 3PLs have traditionally handled the surplus, new delivery options, including buy online pickup in-store (BOPIS) and using third-party app-based drivers, such as Uber, are opening new opportunities. The urbanization of fulfillment seeks to employ local people to complete deliveries, even at a fraction of the cost of traditional drivers.
How Shippers Can Apply Survey Results and Win in the Final Mile
Developing a successful final mile strategy requires knowing what trends are taking the market by storm. Customers want fast, free shipping, but the emphasis must be placed on fast. Ironically, customers care about much more than just their costs, so it is up to the shipper to apply survey results and work with customers to explain what they can achieve and what its real cost will be. To simplify things, shippers need to follow the steps:
- Be clear and consistent about shipping costs, including indirect, environmental fees, such as those resulting from poor planning of final mile logistics and requiring more resources, such as fuel, to meet customer needs.
- Offer more than just delivery, including product installation, setup, and debris removal.
- Give customers the power of choice between pickup and delivery options.
- Work with 3PLs and local drivers to expand your fleet.
- Diversify your carrier partnerships, taking advantage of all available carriers.
- Use a TMS that considers final mile needs, leveraging automated, integrated platforms to serve as a connection between shipper and final mile carriers.
Build the Scalability of the Final Logistics Mile With the Right Technology and Partner That Applies E-Commerce Trends
The final mile needs to scale, and with e-commerce growth continuing, final mile needs fast scalability. The days of managing final mile with a simple “out for delivery” notification is over. Shippers must understand the top trends for free, fast and urbanized, i.e. nearby, final mile delivery. Of course, using an integrated, dedicated TMS, such as the Cerasis Rater, can achieve these goals in a single bound.