Five years’ time – what can we expect from last-mile delivery?

Last year saw a huge rise in e-commerce, with a report from Ofcom showing that British consumers spent a total £113 billion online throughout 2020 – a rise of 48% on the year before. This is a trend that is here to stay. Our research shows that 85% of online shoppers will either increase their online shopping or keep it the same over the next 12 months.

E-commerce gives businesses the opportunity to reach consumers outside their immediate locality. However, the sudden surge in online shopping meant any delivery issues increased. It is vital that as the world reopens, retailers and couriers do not drop the ball on deliveries as a bad experience will negatively impact a retailer’s reputation.

The current delivery system is not as smooth or as cost-effective as it could be. For example, a customer is unable to let the courier know when they leave home. This means that the courier will attempt to deliver the package, fail, and have to return later on, or another day. This is costly for the courier and retailer, and frustrating for the recipient. There is a better way.

Over the next five years, last-mile delivery is set to be disrupted in much the same way as banking is today. Decades-old workflows are set to be replaced with technology-first processes, improving the delivery experience for recipients while drastically reducing the cost of last-mile delivery.

The outsourcing of last-mile delivery

Same day delivery is already here, however it is yet to be the norm. Increasingly, customers are seeking instant gratification and the opportunity to both buy goods and have them delivered on the same day. Amazon is renowned for being at the forefront of delivery development. They offer same day delivery on certain products as do couriers including FedEx and DPS in some markets. As e-commerce grows and customers get used to buying everything online, the demand for same-day delivery is only going to increase.

Currently for couriers, same-day delivery is costly and so in the future we will see them outsource this part of the supply chain. Gorilla and DoorDash have already moved into this space for groceries. We’ll soon see more businesses enter this space for all other sectors of online shopping. These businesses will be able to undercut the traditional couriers by transporting goods straight from the retailer to the customer, missing out the depot. This saves them valuable minutes and pounds and will in turn benefit both retailers and  customers. As more businesses compete for same-day delivery services, retailers will have more choice in a last-mile delivery partner.

The importance of locality

We can expect to see changing pricing structures and strategies as the last-mile delivery businesses increase. Currently customers will pay the same price whether the retailer is three or three hundred miles away. This is not logical. In the future, we can expect to see couriers splitting local and national deliveries. Same-day deliveries, where the courier can go straight from retailer to customer, will become cheaper than national deliveries which need a drop off.

A second change we can expect to see is same day increase in deliveries being assigned based on where drivers are already heading. Data on driver routes is currently available but not used to assign which drivers get which packages. By assigning packages to drivers already travelling in a certain direction, the driver efficiency will increase – and also the retailer’s value for money.

Data-backed recruitment

A final development we can expect to see in the next five years is the rise of data-driven driver recruitment. One of the main benefits of using delivery logistics technology is that data is already being captured as drivers do their work. However, it is rare to compare this to customer feedback. Unless analysed, data cannot be insightful. With Circuit for Teams, the ability to add recipient feedback is built into the software; significantly increasing the amount of feedback retailers are able to collect.

The delivery driver should be viewed as an extension of the brand by retailers. As e-commerce and delivery grows, the delivery driver is often the only human link a customer will have with an online retailer. The driver’s customer service and the delivery process as a whole has a huge impact on a retailer’s reputation. In fact, 1 in 4 customers (23.9%), told us that they would be actively discouraged from giving a recommendation following a poor delivery experience.

In the future, customer feedback on the delivery service will be analysed with the driver’s routes and salary to give a more complete picture. Couriers will be able to choose the most efficient delivery drivers and will no longer be competing purely on price, but on a balance of price, speed and customer satisfaction.

For more information on Circuit visit www.getcircuit.com

By Jack Underwood, CEO and co-founder of Circuit