The e-commerce sector has grown significantly since its initial days and still continues to carry momentum. The global retail e-commerce sales is supposed to reach $4.5 trillion by 2021. Gone are the days when a select few from tier 1 cities will order online and then wait for weeks for their orders to arrive. Presently, the e-commerce sector is growing exponentially in tier 2, tier 3 and rural regions owing to the factors like increased penetration of internet connectivity, better power resources, the rise in the number of smartphones, focused advertisements, digital payment options and the changing aspirational needs of people. With this increase in transactions, logistics is no longer a simple supporting function but the key differentiator in customer service.
The main aspect of logistics which works as a differentiating factor is the ‘last mile delivery'. In case of e-commerce, last mile or home delivery is the singular point of contact between the supplier and the end consumer. Thus, to deliver a better customer experience, it becomes imperative that the e-commerce players focus on this last leg of the delivery.
However, the growth in the e-commerce market doesn't come without its share of challenges. In many markets, especially urban areas, getting delivery to a customer's doorstep is challenging. The rise in home-delivery demand has strained residential city’s infrastructure that isn't designed to handle this huge surge in trucking traffic. At the same time providing cost-effective, efficient deliveries to rural and far-off areas continue to remain an issue. Here are the few significant challenges that the e-commerce companies are facing when it comes to last mile delivery:
28% of the total delivery costs for an organization comes from the last mile delivery. These costs are often passed on to the consumers. However, if and when an organization fails to do that, it can have a significant impact on the bottom-line results. Inconsistent demand and increasingly higher number of volumes put a more significant strain on the budget of the companies.
There is no panacea when it comes to cutting down costs. However, companies which use modern technologies to optimize their delivery routes and increase efficiency will have a significant advantage going forward.
Increasing demand for transparency
As a part of the evolutionary process, humans always have liked to have the knowledge, understanding as well as prediction of an event. The modern consumer is no different. Consumers are no longer satisfied with quick or free home deliveries. They want real-time tracking and scheduled windows for their shipments. With more and more organizations opting for technologies like ETA devices and Geo-coding, expect more transparency from e-commerce companies as we move ahead.
The need for increased efficiency
The growth of the e-commerce sector and increase in competition has meant a race for the fastest delivery to the consumers. ‘On-demand' is a keyword that has made its way into the e-commerce space. With the consumers wanting everything right there and now, companies are now obliged to provide customers with the fastest possible delivery options. Even though a lot has already been done in this space, dispatching the orders to the precise delivery resource, in the right location and correct time can help increase efficiency and decrease delivery time.
Changing rules and regulations
E-commerce players need to continuously adapt to the changing rules by governments on a national or regional scale. Recent changes like the introduction of GST and the e-way bill, even though beneficial for the industry, in the long run, needs to be adapted thoroughly by the e-commerce industry.
Friction between the last mile delivery and customers is the primary reason for sub-par customer experience. Delivering in the scheduled slots, providing e-proof of the deliveries and taking the feedback from customers on ‘how to deliver the product' are some of the ways in which companies can aim to reduce the friction. Technology that gives customers full visibility over their deliveries and enables communication between the delivery person and the customer can play a huge role in reducing friction. Automating the last mile delivery and reducing human dependency should be the major areas of focus for e-commerce companies advancing into the future.
For successful retailers and logistics providers, the solutions to these challenges will come through innovation, automating processes, technological transformation and reduced dependency on human labor.
The watchword that e-commerce companies need to follow is to fulfill the increasing ‘customer expectation’. The minimum expectation in the current individualistic economy has moved to - ‘What I want, where I want and when I want it’. Delivery standards need to meet the increasing customer expectations, and tools from companies like that allow automation, personalization and greater visibility will play a vital role in achieving this.
The article has been penned down by Nishith Rastogi, CEO & Co-founder, Locus