How can e-commerce and logistics companies improve last mile deliveries?
Will Irvine, Business Development Associate at what3words explores the reasons behind the ‘last mile delivery’ problem and what logistics and e-commerce companies can do to solve them.
The last mile delivery problem
When it comes to online deliveries, customers’ expectations are higher than ever before. 83% of customers now expect a guaranteed delivery date and 80% a specified delivery time slot when ordering goods online 1 . The implications of keeping up with these consumer demands are worrying for retailers.
Earlier this year, I wrote about trends in the e-commerce and logistics industries which expanded on some points made in the Shopify Future of Commerce report 2 .
The report pulled out two stark statistics about the last mile supply chain that, perhaps accelerated by the pandemic, are becoming increasingly omnipotent:
- 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.
- Increased competition in the courier market means that consumers can be picky about how they receive their parcels. If their experience doesn’t meet their needs, they will go to another retailer.
The demands of the consumer, coupled with supply chain and logistics issues, is known across the industry as the “last mile issue”. The last mile of delivery is the slowest and most expensive part of the supply chain to fulfill and 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. In short, having inaccurate location information increases delivery times making last mile deliveries inefficient and costly to businesses.
How can retailers tackle the last mile delivery issue?
Retailers have a few options when it comes to making last mile deliveries more efficient, however, they are not perfect. Here are two examples:
Buy Online, Deliver From Store – Getting inventory as close to customers as possible
The Buy Online, Deliver From Store (BODFS) model uses a nimble, crowdsourced fleet of drivers offering flexible delivery options, depending on the size of the item and speed required. This does a good job of combatting the consumer side of the last mile issue but doesn’t solve the problem of having accurate location information for a delivery point.
Delivery Lockers – Creating a convenient location for parcel pickups
Lockers are partially solving the problem of inaccurate delivery locations and with the increase in demand for flexible delivery options, the delivery locker industry is expected to grow by $967 million by 2028 3 . Companies like Shift and InPost already provide delivery lockers at convenient locations for consumers. 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 the 80% of customers wanting home deliveries at a designated time or for orders of large, bulky items, delivery lockers don’t serve as a viable solution.
what3words: An innovative addressing solution
The answer is a global addressing standard, a universally recognised and accepted way of describing precise locations that is unique and easy to communicate. We believe the solution is what3words .
what3words has divided the entire world into a grid of 3 metre squares and given each one a unique address made of 3 random words. For example, the what3words address ///filled.count.soap is the exact entrance to what3words HQ in London. The system is available in 51 different languages and the app is free to use. This gives people an easy way to talk about any precise location 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.
Improving deliveries to customers
Getting speedy deliveries to customers’ front doors, regardless of where they live, 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, which is a massive problem for stakeholders across the supply chain 4 .
For the courier or delivery driver, poor addressing decreases delivery efficiencies. According to a study by Loqate, 74% of businesses agree that inaccurate delivery addresses are the cause of late deliveries 5 . For the customer, receiving a parcel late or having a delivery fail is a cause of major frustration: the same study found that 74% of businesses felt that failed or delayed deliveries lead to poor customer satisfaction. Naturally, this frustration is often directed at the retailer.
The problem with street addresses and postcodes
Sticking with the UK, our humble postcode was invented in 1959 in an attempt to streamline the UK’s postal system. Postcodes are simply a way of sorting post to go to the right area of the country, for a local postman to fulfill 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-hand-side 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 about 17 million and the internet was born which led to a pivot of goods and services being available online at the click of a button. This created demand for 3rd Party Logistics companies to fulfill deliveries at any time of the day. DHL Express’ “ Keeping up with the clicks ” portrays this growth well.
Postcodes are no longer fit for purpose. Furthermore, many new build properties take time to be added to postal databases, some houses have names instead of sequential numbers, postcodes cover large areas in rural locations and apartment buildings can have multiple entrances resulting in a literal logistical nightmare for delivery fulfillment. And, whilst processes have been updated to meet the increase in deliveries, the core issue, the addressing system itself, has not been.
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 ). This increases the flexibility, 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 6 .
In a study conducted with on-demand delivery company Quiqup , the use of a what3words more than halved the time it took to find a delivery location and increased overall delivery efficiencies by 30% on average. 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. Using what3words helps to give customers a more accurate date and time slot for their delivery, which meets 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.
Start using what3words to improve last mile deliveries
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 below or visit our E-commerce page for further details.