How do we solve the last-mile issue?

Earlier in the year I wrote about the trends in the e-commerce and Logistics industry which expanded on some points made in the Shopify Future of Commerce report .

The report pulled out two stark statistics about the last mile of the e-commerce supply chain that - perhaps accelerated by the pandemic - are becoming increasingly omnipotent on where consumers shop:?

1. 2 in 3 customers say that flexible and speedy delivery options from a retailer are important. Yet, only a third of brands are prioritising this part of their supply chain.??
2. Increased competition in the courier market means that consumers can be picky about how they receive their parcel, and will go to another retailer if their supply chain doesn’t meet their demands or needs.

When it comes to online deliveries, over 80% of customers are expecting both a designated delivery date and time slot. The implications of these consumer demands are worrying for retailers, and potentially, keeping up with these demands is contributing to the recent losses of the quick commerce industry.

The demands of the consumer, coupled with supply chain and logistical issues is known across the industry as “the last mile issue”, with the last mile of delivery being the slowest and most expensive part of the supply chain to fulfil (Owens, 2021). A serious contributing factor to the last mile issue is the delivery location itself, with each package needing a “tailored approach to reach its final destination” (Owens, 2021).?

How can retailers tackle the last mile delivery issue??

Buy Online, Deliver From Store - getting inventory as close to customers as possible

One solution provided to tackle the last mile delivery issue is a Buy Online, Deliver From Store (BODFS) model using a nimble, crowdsourced fleet of drivers offering flexibility on delivery options (depending on the size of the item and speed required).? And scalability is dependent on demand. This, of course, combats the consumer demand parameters of the last mile issues, but does nothing to solve the location issues.?

Delivery Lockers - creating a convenient location for parcel pickups

Having a reliable location for delivery gets part of the way to solving the location issue. Companies like Shift and InPost provide delivery lockers at a consistent and convenient location and with the increase in demand for flexible delivery options, the delivery locker industry is expected to grow by $967 million by 2028. Delivery lockers decrease costs for both customers and businesses alike and provide a convenient solution for people less concerned about when they will get their delivery. But, for customers wanting their delivery quickly at home in a designated time slot (which appears to be the majority of consumers) or for large, bulky items, delivery lockers don’t serve as a viable solution.?

Neither of the above solutions manage to address all components of the last mile delivery issue. BODFS satisfies consumer demands by decreasing delivery time and increasing some flexibility but fails to address the issues surrounding location. Delivery Lockers manage to combat address issues but fail to meet consumer demands for speedy, at home delivery.

What’s the real challenge behind the last mile delivery issue??

Getting speedy deliveries to your front door, regardless of where that is isn’t an impossibility. However it does mean improving the addressing system. In the UK, only 26% of street addresses get a driver directly to the right address and this is a massive problem for pretty much every stakeholder in the supply chain.?

For the courier/delivery driver, poor addressing decreases delivery efficiencies with 74% of businesses agreeing that inaccurate delivery addresses are the cause of late deliveries according to a study by Loqate. For the customer, receiving a parcel late - or not at all - is a cause of major frustration: the same study found that 74% of businesses felt that poor addressing data and the subsequent poor delivery lead to poor customer satisfaction, naturally this frustration is often directed at the retailer.?

What’s the issue with using traditional addresses for deliveries?

Sticking with the UK, our humble postcode was invented in 1959 in an attempt to streamline the UK’s postal system with machines rather than labour-intensive manual sorting. Postcodes are and were simply, a way of sorting post to go to the right area of the country, for a local postman to fulfil the delivery. Postmen would have had exceptional knowledge of their local area, knowing for instance:

“The Bates’ live just past the bus-stop on the right down the dirt track and the Smith’s live down the cobbled road behind the local shop.”?

Since 1959 the UK population has grown by circa 17 million, the internet was born and subsequently e-commerce followed spouting further demand 3rd Party Logistics companies to fulfil deliveries globally at any time of the day. DHL Express’ “Keeping up with the clicks” portrays this growth well.?

Postcodes, invented to sort post to get to it the right driver to fulfil their local deliveries are now being used to describe locations to drivers following a sat-nav device with no local knowledge. This, coupled with new build properties, house names instead of sequential house numbers, large buildings with multiple entrances and rural areas (where postcodes cover large areas) is quite literally a logistical nightmare. And, whilst processes have been updated to meet the increase in deliveries, the core issue - the addressing system itself - has not been.

How can we tackle the addressing challenge to solve the last mile delivery issue??

The answer is a global addressing standard, a universally recognised and accepted way of describing precise locations that is unique and easy to communicate. The answer, and perhaps we are biased here, is what3words.?

Going back to the “last mile issue”, how does what3words offer a solution? Well, as mentioned earlier in this blog, a serious contributing factor to the “last mile issue” is the delivery location itself. A solution like what3words provides reliability to address data to help with the scalability of demand-based solutions like the aforementioned BODFS delivery model.?

For the benefit of those not yet in the know: what3words has divided the entire world into 57 trillion 3x3 metre squares and given every one of those squares a unique three word combination, available in 51 different languages and as a free app. This gives people the ability to talk about precise location using 3 words (rather than a lat/long or other confusing code) regardless of their language or geographical location. Here’s our TED Talk if you want to hear more about our vision for a global addressing standard.

How does what3words improve last mile deliveries??

what3words allows customers to receive parcels wherever is most convenient for them, at home, in the office or any other location you can imagine (on a boat, delivered by a skydiver? As you wish) increasing the flexibility of delivery which cannot be met by locker or collection points. Furthermore, with 80% of customers wanting a delivery time and date, coupled with the fact that meeting this demand can be “costly and time-consuming for businesses”, what3words helps with decreasing these costs and time pressures.?

In a study conducted with Quiqup (an on-demand delivery company), the use of a what3words (on average) more than halved the time to find a delivery location and increased overall delivery efficiencies by 30%. However the key take away for me from this study, was that the use of a what3words address decreased the variability of the time taken to find the parcels destination by 13 minutes when compared with street addresses. Helping to give customers a more accurate date and time slot for their delivery - meeting their expectations - and would naturally benefit business planning and costs.?

Around the world, what3words is being used by logistics companies and at e-commerce checkouts to deliver goods exactly where they’re needed. What3words is being used by a growing list of delivery companies including DPD, DHL, Evri, Parcel Monkey, Aramex and many more.?

If your business is suffering from the “last mile issue” in any capacity and you wish to explore using what3words addresses to overcome these challenges, please don’t hesitate to get in touch here or visit this page on our website for further details.