Next day delivery and same day delivery – this is what retailers demand from their logistics providers, mostly in B2C e-commerce market. The last mile delivery is called a problem, but also a growth opportunity for the industry. Can logistics companies take advantage of it? First, they need to overcome one major obstacle – there are hundreds of IT systems that don’t „talk” to each other.
Incompatible would be the most suitable word. To stay in the game (and according to the Shifting Patterns white paper, the race is after the US$4.6 trillion of revenues), supply chain companies have to be tech-driven. Most of them have developed autonomic software systems to organize their businesses efficiently. The problem is – those systems don’t work with others. Each of them operates on its own standard and it’s not compatible with the rest of the logistics ecosystem. Why is that a headache? Because of the last mile delivery issue.
The last mile delivery – welcome to the jungle
Consumers went digital a long time ago and their expectations towards e-commerce vendors are still on the rise. People want their packages fast, they want it cheap (or preferably – for free), and the whole process has to be transparent. Zalando’s case is not a coincidence – this online fashion superstore has established it’s USP on free shipping and free returns, which was a growth masterplan showing everyone in the business that consumers demands have to be treated seriously.
So what is the last mile delivery all about? Quoting after Supply Chain Dive’s „Why is the last mile so inefficient?” article: „…last-mile deliveries encompass any movement of freight or products between a distribution center and the point at which the end consumer will receive it”.
We want it tomorrow, we want it today
This last phase of the delivery process plays a huge role in managing customers experience for retail and logistics brands. To keep playing at all, they have to remain on top of delivery efficiency and customers expectations. Latest surveys revealed in the Last Mile Logistics Whitepaper leaves us with interesting numbers. According to the document, retailers report:
- 48% of consumers are demanding next day delivery
- 23% of consumers are demanding same day delivery
It’s rather not surprising, that most of the demand comes from the B2C environment. We are talking about North America and Europe, where Amazon has become something far more important than just an online marketplace. However, we cannot underestimate the B2B sector and its role in the last mile growth.
source: The Last Mile Logistics Whitepaper 2018
Why is that a challenge?
Nearly half of transportation and logistics (T&L) costs come from the last mile delivery. Although we can regard the last 15 years as a boom phase for web merchandising and a hegemony of B2C and C2C services like eBay and Amazon, there are loads of pathological situations going on.
For instance, one client receives 5 orders delivered by 5 different cars at pretty much the same time. Can it be more absurd? How to put more logic in the process?
This is where data-sharing technology enters the stage. Sharing the data on the global scale can change the customer experience. When buying goods on e-commerce platforms, clients would be able to get their ordered delivered by one logistics provider, instead of five of them.
What’s standing in the way to get there? As we outlined at the beginning of this article, it’s about companies and their IT systems incompatible with other platforms.
Software as a suffocation
Software as a Service (SaaS) is meant to be a solution for businesses to achieve the „digital fitness” and to thrive in a highly competitive economy. For their own sake, logistics companies buy software platforms or hire software houses to build and implement those systems. Missing the big picture, systems become stand-alone products. Instead of enabling expansion and collaboration, they cause suffocation.
Those solutions are not able to share data and to use the resources and data kept in other logistics software platforms. Any vendor who is closing the B2B deal with a new client and wants to integrate with him is forced to build and implement new, specific interfaces. Otherwise, data generated on the client’s side will never correspond with the system on the vendor’s side, and at the end of the day, everything will go wrong.
Data-sharing as a future
Time to picture a story. Put yourself in the customer’s shoes for a minute. You visit an online electronics shop, place your order, and choose a logistics company for shipping. This information goes to the Hublock platform. Shortly after, you decide to buy some clothes within a larger online marketplace, and Hublock will let you choose the very same logistics company for shipping.
Consolidation of all your online buying journeys significantly reduces the last mile delivery costs. The final result – you will receive all the packages delivered by the same truck from the same T&L company, and it will arrive once (instead of a few times).
It’s a win-win situation. You (as a hypothetical client) cut down the shipping fees and get your purchased goods quicker, and a T&L company reduces costs and gets rid of the last mile delivery inefficiency once and for all.
More than meets the eye
Data-sharing technology opens the gate for serious cost cut down for T&L companies, reducing expenses for retailers, and – thanks to utilizing the vacant spaces on trucks – decreasing the emission of CO2. Yes, data-sharing can join the battle for saving the environment, as a „collateral” good.
Competing with the giants
There is one final aspect. Have you ever challenged the dominance of the global players, like DHL, UPS, or FedEx? Their strong position also relies on their own IT systems, which are in fact designed to coordinate all the work within the organizations and with their closest business partners and subcontractors.
The Hublock platform, on the other hand, gives an opportunity for small and medium T&L businesses to unite and build a network that will be able to become an agile alternative to those global brands.
Are you ready to try?