The change in consumers’ buying behavior, especially those shopping online, is forcing eCommerce brands to reconsider how they manage their supply chain.
Today’s online shoppers want free and fast delivery. Companies that want to stay competitive must cut costs and improve the efficiency of their supply chain to meet consumers’ expectations.
One of the most important areas eCommerce brands have to consider is the last-block logistics, also known as last-mile logistics. It is the most expensive and difficult part of the delivery process. This article explained last-block logistics, its importance, and the strategies smart brands are using to solve the last-mile challenge.
What is Last-Block Logistics?
Last-block is the last leg of the journey when moving goods from warehouses or fulfillment centers to the consumers, especially those in dense areas. Last block logistics are complex and expensive to service providers and online sellers, sometimes taking over 50% of the total logistics costs.
Why is Last Block-Logistics Important?
The rapid growth of online retailing coupled with the pandemic, which changed consumers’ buying behavior, has increased the discussion on last-mile logistics. Let’s look at two main reasons why last-mile logistics is receiving more attention now, more than ever.
First, last-mile logistics often accounts for about 50% of the total costs of moving goods from the fulfillment centers to customers’ doorstep. So it is important for any eCommerce brand that wants to reduce logistic costs and improve its profit to start looking for ways to squeeze inefficiency out of its last-mile processes.
Second, consumer buying behavior is changing rapidly. More and more customers want to get their ordered products the same day and at little or no cost. At necessary for online retailers to evaluate their complex, difficult, and costly final-mile delivery model.
Why is Last Mile Logistics Expensive?
- Drivers delivering thousands of multiple packages within the city use more gas and spend more time on the road.
- Delivery drivers stop multiple times on the road, leading to downtime and idling.
- Failed deliveries also shoot up last-mile logistics costs. Some of the reasons why delivery fails include mistaken addresses, customers not at home, and more
- The large number of stops involved in last-block logistics makes it easier for drivers to lose track of their route and travel more miles unnecessarily.
- Other factors that rack up last-mile logistics costs include returns, refunds, and more.
How Companies are solving the Last-Block Logistics Challenge
It is a no-brainer that online retailers that want to reduce their total logistics costs and meet consumers’ expectations of fast and free delivery must rethink their last-mile logistics strategies. Some of the ways smart brands are solving the last-mile challenge include:
- Creation of order fulfillment centers in locations close to the consumers. This way, ordered items get to the customers faster and at a lower cost. An example of this strategy at work is the Amazon fulfillment centers established in several urban areas in the US.
- More brands are adopting hybrid fleet management tools to automate the dispatch process, plan routes, cut delivery times, and save costs.
- Crowdsourcing deliveries is another strategy online retailers use to optimize the last-mile logistics. This involves employing local contractors, who are non-professional couriers, to deliver ordered products to customers.
- Another last-mile delivery trend that is gradually evolving is the use of robotic technology, like aerial drones, to deliver packages to consumers.
This article is written and owned by Sid Bhatt, CCIM | SVN Commercial Advisory Group, Tampa Florida.