New ways to solve last-mile challenges

22 February 2019

Retailers everywhere are racking their brains how to solve the challenges of the last mile: how to deliver all those parcels effectively, affordably and – preferably – as sustainably as possible? Consumers cannot help wondering if there is an easier way, not to mention faster and cheaper, for them to receive their orders.

The Internet of Things and the last mile

There are many variables to take into account: delivery locations, product attributes (size, weight, etc.), time windows, cost, express delivery. The algorithms that calculate routes based on zip codes and possibilities for delivery are geared at optimizing customer service. In densely populated cities, socio-demographics keep presenting web stores and logistics service providers with new challenges. Besides, it seems odd that logistical service providers only deliver packages on the busiest 12 hours of each day. Perhaps the Internet of Things (IoT) can help to create time and space in inner-cities for the effective delivery of packages.

The IoT and big data could well be part of the solution for all those last mile obstacles. Logistics companies might use this in their planning and optimization of routes. In years to come, the whole logistics chain will be undergoing digitization. UPS already offers its customers the option of altering the delivery time and place every second of the way.

The United States Postal Service describes the Internet of Postal Things. In it, an average piece of mail or parcel is scanned 11 times, give or take. When the service will have outfitted its trucks, mailboxes, cars and bikes with sensors, a wealth of information at their fingertips. By using that information, they can create opportunities for better and faster service, reducing the costs and environmental impact at the same time.

New business models

Opportunities abound for logistics service providers to utilize new goods and services to offer improved levels of service to retailers. Startups and traditional parcel delivery companies are increasingly providing standalone parcel-locker-walls where consumers can go collect (or even return) parcels from a range of suppliers. 

Social delivery

In addition to high-tech developments, I have noticed a burst of new crowd-based pickup & delivery ideas. Cab drivers, commuters, college students and senior citizens delivering parcels, even using a bike or electric moped to do so. The IoT and big data can certainly help to make these new and crowd-based initiatives part of a more sustainable delivery process. The smart economy and sharing economy cross paths here. An added benefit of solutions like this is that delivery becomes more personal. They are often referred to as social delivery services. In China, I witnessed these new delivery services bringing people together. When I was visiting the head office of JD.com, I was able to track the many delivery workers — using sensors and chips — in real-time from the information hub of the web store. Based on big data and geolocation, parcels are assigned to delivery workers depending on their availability, location and the delivery destination.

Drone delivery

The opposite end of the spectrum is drone delivery: airborne mini robots like smartphones with propellers capable of depositing parcels on your front lawn. All you need to do is step outside and accept the delivery, even or especially in remote areas that would otherwise be difficult to reach by car. Drone delivery may prove to be an enormous disruption to e-commerce in the next decade. For now, drone delivery is limited to only the largest parcel delivery companies and shopping platforms, they are the only ones who can afford it.

Next week, I will look at in-store distribution centers and how to make the last mile sustainable.

This is blog 44, based on my book ‘The end of online shopping. The future of retail in an always connected world’, published by Business Contact (Dutch/Flemish editions), Nubiz (English edition for UK and US, and Danish editions), WSCP Singapore (English edition for SE Asia), Post & Telecom Publishers Beijing (Chinese edition), Hoepli (Italian edition). Most recently, the book was published in Korean in December 2018 and it is being translated in German, to be published in spring 2019. Additional translations are being prepared for later in 2019.

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