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7 Key Challenges with Last Mile Delivery

Low inventory levels, long queues and heavy shopping bags after a busy day at work. Just a few of the reasons why UK customers prefer shopping online. But does home delivery provide more convenient and better service than shopping in-store?

Retailers need to provide an efficient and transparent last mile delivery service, to satisfy customers’ demands.

Retailers need to provide an efficient and transparent last mile delivery service, to satisfy customers’ demands.

UK retailers will dispatch 1.6 billion parcels in 2016 [1]. This includes click and collect services, returns and parcels from online retailers, such as eBay. The importance of last mile delivery in the customer shopping experience continues to grow. 68% of UK customers [2] say that a good delivery experience would encourage them to shop with the same retailer again. Quick and efficient last mile delivery needs to be every retailers’ priority.

However, retailers face some challenges to do last mile delivery well.

Keeping up with customers’ demands for fast convenient delivery

Customers are constantly changing their online shopping habits. This puts pressure on retailers to keep up. Orders need to be delivered to homes, offices or collection points as quickly as possible. Competition continues to increase as the bar is raised by services like Amazon Prime, doing 1-hour delivery.

Quick and efficient inventory management

Parcels need to be packed and dispatched as soon as the online orders are accepted. Keeping track of all the orders and the status of each parcel is key. A good start to providing better last mile delivery service is good inventory management software.

Innovation: Using the latest technology to advantage

Customers change the way they communicate and shop, as technology evolves. Last mile delivery is also affected by technology innovation. Customers are attached to their mobile devices 24/7.  Retailers need to stay on top of the latest technology to stay competitive.  For example, retailers can track parcels from the warehouse to the delivery address using location technology. This allows them to know exactly where a specific order is in real-time. Customers get used to these new innovations and then expect them as part of every delivery experience.

Updating customers about delivery status in real-time

Customers who have to wait home for a delivery get frustrated. They would rather know the exact time the parcel will be at their address, so they can plan their day. From a retailer’s perspective, committing to a specific time slot can be tricky. Deliveries can easily be delayed with traffic and road accidents.

However, customers’ expectations continue to increase. Customers know about the smarts of mobile apps and push messaging. They expect delivery drivers to update them about when and where they are. Customers are pushing retailers to communicate with them in real-time about the status of their delivery. For example, DPD UK updates customers about their parcel with their new YourDPD app.

Reducing delivery costs

Customers get annoyed by additional charges for same day or next day delivery. They are not willing to pay for a service that is seen as a must have. With customers more reluctant to pay extra, retailers are losing customers to competitors that offer the same service for free. To avoid that, retailers need to think of ways to reduce delivery costs. This may mean providing free options like click and collect, or setting a minimum order price.

Handling returns

Many retailers offer free returns of online orders. This allows customers to easily order items and not worry about if they are the right size or exactly what they want. 74% of UK customers consider a good returns service important when deciding where to shop. For example, ASOS offers free returns to a variety of locations within seven days of receiving an order. The challenge for retailers is the additional cost of providing a free return service. Free returns also complicate the process of inventory management.

Offering click and collect as a service

The majority of UK retailers offer alternative services, such as click and collect. This helps to reduce last mile delivery costs and to meet customers’ demands for convenience. Customers can order online and pick up their orders in a store, avoiding issues with last mile delivery.

Offering low-cost delivery is key to a great customer experience. Showing customers what is happening with their orders in real-time is also important. All the challenges that retailers face with last mile delivery have resulted in additional delivery options. Things like such as safe-place delivery, delivery to a neighbour and click and collect are on the increase.

Providing customers with good communication and a range of delivery options, not just simply providing fast delivery, is key to success.

[1] [2] Source: