Recent DHL study titled “Shortening the Last Mile: Winning Logistics Strategies in the Race to the Urban Consumer” revealed that since 2008, urban populations significantly increase to over half of today’s population, from 3.4 billion to 4.2 billion. In terms of technology usage, there is significant development as well. Back then, only 1 in 100 individuals owned a smartphone. Today, 1 in 5 have one. Also, internet retail sales quintuplet between 2008 and 2018, from $290.4 billion to $16 trillion.
All these numbers suggest that logistics should adapt to a more urbanised, connected, wealthier individuals who love shop more than ever before. Furthermore, shopping online is more popular among urban environment. It means there will be more orders that need to be fulfilled, but only if agreements around last mile, i.e. delivery window and drop-off options suit contemporary urban consumer’s expectations.
The urban consumer today
According to Euromonitor International, there will be an additional 1 billion people living with 60 percent of them going to an urban environment in 2030 and significant majority of them coming from today’s emerging markets. Additionally, consumers will seek a more convenient shopping through today’s growing digitisation wave in society. DHL study also found that consumers not only want certain products to purchase, but they also want certain time for their products to arrive. When asked via Euromonitor’s syndicated Lifestyles Survey, consumers consider a driver for their online delivery shopping habits with the best price, time saving, ability to order anywhere and anytime, and free shipping.
Global trends, innovations, and disruptions
Fast-paced and diverse environment allows people to spend more time on their social networks. Their choices are better informed and their preferences are widely voiced. Yet, great challenge a logistics face is that they should facilitate the wants of consumers with last mile delivery where innovation should be a main concern. DHL study shows that innovation in final mile can be reached by three core areas:
- localising delivery networks enabled by enhanced capabilities in predicting consumptions,
- providing flexible delivery solutions to guarantee convenience, and
- addressing cyclical cost concerns by reimagining seasonal demand.
Moreover, DHL and Euromonitor have identified a model called F.A.D (as seen in the picture below) to help retailers and logistics operators ensure their competitiveness over last mile. It is said that “by improving performance in increasing automation, managing data and building flexibility into networks, e-commerce companies in all markets will better manage inventory and increase efficiency of their last-mile delivery networks.
(F)lexible or more elastic transport networks can include more efficient use of available transport capacity in market, to achieve higher load factors, bring down costs, connect more quickly to end customers, and reduce environmental impact. It can also impact the ability to move shipments more easily between different modes of transport such as bicycles and vans to improve connectivity.
(A)utomation can include a higher level of automated processing at fulfilment centres, but also deployment of autonomous vehicles and robotics to bring down labour costs, increase productivity, and enhance services.
(D)ata management enhancements allow retailers and their logistics operators to better forecasts and positions inventory to reduce waste within their supply chain and achieve better availability of stock. There are also four more keys to e-commerce trend in urban environments.
Customers increasingly expect to select when, where, and how parcels are delivered. Developing flexi-delivery solutions has transformed the way transport operators service the last mile.
E-commerce has increasingly penetrated globally celebrated holidays, regional holidays, and commercial holidays, resulting in significant spikes in sales during these periods.
- Localised delivery networks
Delivery networks are becoming more localised, shifting their supply chain to focus more on regional fulfilment strategies with the aim of shortening the last mile.
Localisation, flexi-delivery, solutions, and seasonal logistics solutions have all been facilitated by innovative technologies. Logistics players are increasingly adopting AI and the use of big data analytics to work towards more flexible models.
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