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Opportunities and Challenges in Last Mile Delivery

by Ashley Zimmerman

What Is Last-Mile Delivery?

If you have anything to do with logistics or shipping for your company, you’ve probably heard the term “Last-Mile Delivery.” The term is fairly new, as is the problem. This term is borrowed from the age-old issue wired telephone systems. Any company that ships goods should be familiar with its meaning, its importance, and the problems that it causes. Fortunately, there are also new technology-driven solutions popping up all the time.

“Last-Mile Delivery” describes the process of getting goods from a shipping hub to the consumer that ordered the product. Bridging this gap is usually “¦ awkward. The big shipping company that your business uses to get your goods from your warehouse to a shipping hub probably stops there. That leaves your goods at the shipping hub instead of on your customer’s doLast mile deliveryorstep where they belong.

You may be thinking, “Delivery has been around for a long time. How has no one solved this yet?” The problem is that delivery hasn’t been around that long, and it changes constantly. The idea of ordering a product remotely, at least in America, only goes back to around the end of the nineteenth century. That’s only a little more than one hundred years ago. And in that case, the items weren’t delivered to the customer, they were delivered to a shipping hub, like a post office, and the customer had to deal with last-mile delivery themselves.

Big-box stores have recently tried to replicate this in the internet age with “site-to-store” shipping, which is much the same. Shoppers find something that they want online and order it but it only goes to the store, not to their door. To compete with pure ecommerce companies like Amazon, main retailers with brick and mortar is getting into shipping from store to home, faster, cheaper shipping than pure ecommerce. This local commerce brings its own logistics challenges.

In the age of the internet, online companies are quicker to send goods to customers directly. This created competition between brick-and-mortar stores with shipping services and online retailers. This has, in turn, led to more people trying to solve the problems of last-mile delivery.

Why Is It Difficult?

So why is last-mile delivery so hard? There are some serious obstacles that are faced both in the case of rural and of urban customers.

The issue is more obvious in the case of urban customers. If a customer lives farther from a big city, they probably live farther from a shipping hub That means more distance that needs to be covered. It may also mean covering that distance on poor roads. It may also be more difficult for drivers to find the customer. Many rural areas are still not well-mapped by services like the GPS devices that many drivers use. The destination may appear, but the roads to get to them may not be mapped.

Last-mile delivery to urban areas has its own problems. You may think that if the customer lives very near a shipping hub, there should be no problem at all. However, deliveries will still stop at the shipping hub, not at your customer’s door. Urban areas are often at least as difficult to navigate as rural areas if one is unfamiliar with them.

Conventional Markets

There are solutions to these problems, even if they are less than ideal. How companies solve these problems also depend on the size of the company and the sizes of its shipments.

Online retailers are able to take effective advantage of shipping because they are often only sending a few items to an area at a time. This means that unless the item is very large, they can simply put it in the post. If the item is very large, it is fairly easy and relatively inexpensive for them to send the items through a shipping company.

When the business scales, however, overcoming these problems often become more difficult. The larger volume is being sent out, the more difficult it becomes to use infrastructure like postal services. Using larger shipping companies becomes necessary, but these do not always ship to the door. It is possible to arrange for a postal or delivery service to pick up the package and carry it the rest of the way, but this can become complicated and expensive.

When a company becomes large enough, they find ways to solve these problems. Large retailers like Amazon are able to do this by establishing their own shipping hub and increasing their number of warehouses. This is not an option for most retailers.

New Markets

The good news is that a new market has arisen for those medium-sized businesses. Businesses that are too large to use postal infrastructure and too small to have multiple shipping hubs and their own drivers can take advantage of these services.

Many of these new last-mile delivery businesses are crowdsourced businesses that connect local delivery drivers with companies that need local deliveries. These services take over for the shipping company or the postal service that would take the deliveries from the shipping hub to the customer in the models discussed above. They also overcome many of the problems discussed above.

Because the drivers are local, they are more likely to know how to get from the shipping hub to the customer. These local drivers can navigate the backroads or the interstates of their area that other drivers may struggle with.

In the past, there may have been serious security concerns with these services. The current ability to track items and individuals make these services very transparent and very secure.

The Main Cost

By using local drivers, these companies also mean that most of the cost in using them is the drivers themselves. These companies remove much of the bureaucratic infrastructure that adds to the cost of other delivery services. By using mobile devices that drivers already own, they also reduce the technological cost, despite these solutions being very technical in nature.

Technology Solutions

So what kinds of technologies are behind these new solutions? The biggest is a combination of mobile technology and crowdsourcing. This is what allows these companies to find expert drivers and to work with them to work for companies in need.

GPS is also an important technology that makes it easy for drivers to navigate and for companies to track the items being shipped. Other technologies like RFID are also effective at keeping track of packages in transit.

Last-mile delivery can be a difficult problem to solve. Solving it, however, can change the level at which your company competes. In the markets that we live in, getting your goods to your customer’s front door is huge. Thanks to emerging markets, companies of all sizes have access to solutions to the issues of last-mile delivery.

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