Evolving Last-Mile Delivery

The final stage of a product's journey, last-mile delivery, acts as the engine propelling the e-commerce revolution. As online shopping surges in popularity, the need for swift, economical, and hassle-free delivery options intensifies.?

Further stoking this demand is the emergence of quick commerce, a hyperlocal fulfilment model promising deliveries within minutes or hours. Research and Markets forecast a remarkable growth trajectory for the global quick commerce market, reaching an estimated $47.4 billion by 2025. This rapid rise is fueled by consumers' growing desire for instant gratification.? In this dynamic landscape, businesses are constantly innovating and optimising their last-mile delivery strategies to stay ahead of the curve.

Last-mile delivery can account for anywhere between 30% and 50% of the total logistics costs. This means that for every dollar spent on getting a product to your doorstep, as much as half goes towards that final stretch.

To illustrate this point, consider that shipping a standard 20-foot container (TEU) full of goods across continents, say from Mumbai to Europe, can cost as little as $500. Similarly, shipping a single pair of shoes from Vietnam to the United States can cost around $30 cents via sea route. Contrarily, Walmart charges approx. $ 8 for the shipment of orders from its nearest store to the customer's residence. This price disparity underscores the challenges and high costs associated with last-mile delivery in the e-commerce era.

Before understanding innovation, it's crucial to address the most significant roadblock hindering the scalability of efficient last-mile delivery: inadequate addressing systems. Inconsistent numbering, for instance, can create confusion where houses with consecutive numbers like 7 and 97 stand side-by-side. This issue is further compounded by the presence of identically named cities in various parts of the country. Additionally, settlements within short distances can exhibit vastly different layouts. On one side of a road, you might encounter a well-organized housing society, while the other side features a jhuggi jhopdi cluster.

These inconsistencies become even more challenging in labyrinthine alleyways of cities like Varanasi, Mathura, or bustling commercial districts like Chandni Chowk or Mehrauli. Even sophisticated navigation systems like Google Maps can struggle in such environments. This erratic addressing system significantly hinders delivery efficiency, leading to wasted time, frustrated customers, and ultimately, increased costs.

To counter this, companies are using AI and ML technologies. Old courier companies are sitting on goldmine of massive data sets collected through millions of deliveries on daily basis, then running algoriths to refine the data and improve efficiency in long run.?

Imagine this: you order a product from Amazon, and the delivery person encounters difficulty locating your address due to confusing numbering. By capturing this data, including the GPS coordinates of the successful delivery location and descriptions of any landmarks, AI algorithms can progressively refine the address database. This enriched information is then incorporated into future deliveries, significantly improving success rates.

The last mile logistics is undergoing phase of immense experimentation from robotics to micro fulfillment centres to crowdshipping platforms, each of these come with there own pros and cons. But for the purpose of this article, I will be focusing upon Automatic Delivery Vehicles a.k.a. Drones. Drones, which have established their place in defense and agriculture is still struggling in logistics with Amazon failing in drone delivery, Walmart struggling severely with these logistical birds. But the question is how India can achieve excellence in drone delivery? Here are few factors:

Favourable Regulations: India's relaxed drone regulations (2021 Drone Liberalisation Policy) streamline registration, operation, and manufacturing compared to the US's complex restrictions.

Clearer Skies: Unlike the US's dense network of airports, India's airspace, especially in tier-2/3 cities, offers less air traffic congestion, making drone operations smoother.

Healing a Broken Chain:? India's quick commerce struggles with an inefficient supply chain. Drones bypass infrastructure limitations, enabling faster deliveries in tier-3 cities.

Beyond Apartment Doors:? Drone delivery isn't limited to high-rises. It can navigate narrow streets, congested neighborhoods, and remote areas, serving a wider population than traditional methods.

Profitability in Tier-3: Traditional methods often find last-mile delivery in tier-3 cities unprofitable. Drones offer a cost-effective alternative due to their lower operational cost per kilometer.

But the challenges remain in drone delivery ecosystem due to multiple leakages and lack of robust network primarily due to following reasons:

Infrastructure Needs:? Developing a robust drone infrastructure is crucial. This includes establishing charging stations, maintenance facilities, and designated landing zones, especially in urban areas.

Weather Worries:? Like helicopters, drones are susceptible to adverse weather conditions like strong winds and heavy rain.? Developing weather-resistant drones and establishing no-fly zones during bad weather are essential.

Technological Issues:? Battery life and payload capacity of drones remain limitations. Continued research to develop longer-range, heavier payload drones is necessary.

Skilled Workforce:? Operating and maintaining a drone delivery network requires a skilled workforce trained in drone piloting, air traffic management, and maintenance.? Investing in drone pilot training programs is crucial.

High Cost: Most of companies are purchasing these drones which are expensive and have less data to show its success which is making its adoption low. The need of hour is Gross Cost Contract Model and introduction of Delivery as a Service model.

Moving on from drones, some small improvements may prove beneficial for overall cost reduction and improvement in customer satisfaction like introduction of “Delivery Lockers” on metro stations, transit areas from where people can pick their orders at their hour of convenience like during late hours when coming back from their respective workplaces.

In my humble opinion, in the upcoming decade, last mile logistics industry will evolve under Delivery as a Service (DaaS) model especially for unplanned needs like Food Delivery or Quick Commerce which may probably led by large conglomerates like Tata, Reliance who will prefer to create their own fleet of delivery partners pan India which will lead to emergence of Delivery as a Service (DaaS) serving to companies quick commerce companies, Food delivery, helping regular courier companies like DHL, Delhivery etc. Something similar is being done by companies like Zypp but at a very limited scale in select parts of Delhi hindering them achieve the benefit of Economies of Scale.

No one can really predict what future holds for doorstep delivery but one thing is for sure either the last mile delivery will be democratised or corporatised. It will not be a space which have elements of both the scenarios. All in all last mile delivery was and is a tough nut to crack for supply chain masters and the current innovations will significantly contribute to improved customer satisfaction with efficient cost.