Choosing the right type of last-mile delivery for retailers

With e-commerce sales culminating in a 56% growth in Q4 of 2020, last-mile delivery is more important than ever. Last-mile delivery is key to building a strong omni-channel strategy and gaining a competitive edge.

What is last-mile delivery?

Last-mile delivery is the final phase in the delivery process when the parcel lands in a consumer’s hands. Retailers that ensure a smooth and satisfactory last-mile delivery experience are able to build a differentiated value proposition and retain customers. Three-quarters of consumers will spend more if they’re satisfied with delivery services. Deciding how best to pursue or blend delivery models requires careful consideration. Let's take you through three major last-mile delivery options and things to consider before making a selection. 

Home delivery

A common option for most online shoppers, home delivery allows shoppers to purchase items online and have them delivered directly to their doorsteps. 

Attended home delivery benefits

Limits social contact: Home delivery offers retailers the opportunity to offer contactless collection. Instead of handing items to shoppers at their door, delivery workers leave items outside for shoppers to pick-up. This limits face-to-face contact with customers.

Convenience: Home delivery improves the last-mile delivery experience as customers can select where they want their parcels delivered and choose specific delivery times or slots. 

Considerations

Time-consuming: Home delivery can be a time-consuming and costly way to handle deliveries. Delivery vans have to stop at every home to make a delivery and locate the right doorbell.  If no one is home to accept the delivery, carriers need to try delivering it again. This increases your shipping costs due to extra handling. 

Missed deliveries: Waiting for a package that never arrives is frustrating for consumers and negatively impacts customer retention. To minimize missed deliveries, retailers should implement last-mile delivery tracking so customers know when to be at home.

Causes inconvenience: Customers find having to wait for home deliveries frustrating-especially if the package isn't delivered at a convenient time. Receiving personal packages at work might also not be convenient as companies may not have spacious storage and mailroom places. So home delivery isn't always convenient for customers.

Third-party delivery services: Relying on third-party delivery services for last-mile delivery can lead to unsatisfactory deliveries because you don't control the customer experience. 

Need to provide visibility: Shoppers want to know where their merchandise is and when they'll receive it.  47% will not order again from a brand with poor delivery visibility. To deliver a superior home delivery experience, you need real-time track and trace capabilities, to help customers track their packages in real-time. Localz product delivery tracking solution gives last-mile visibility and allows customers to track their delivery in real-time ensuring a secure first-time delivery experience.

Decentralized pick-up locations 

Decentralized pick-up locations such as lockers, post offices or third-party convenience stores are alternative forms of last-mile delivery that enable retailers to meet consumers’ demand for fast and flexible delivery.  

Benefits of decentralized pick-up

Low delivery cost: Multiple residential deliveries can be consolidated at a single location for pickup.  This lowers costs as delivery is made to fewer locations and retailers don't have to make a single-item e-commerce delivery to a residence.

Convenience: Decentralized pick-up locations meet consumers’ need for ‘anywhere, anytime’ pick-up. For instance, with lockers, customers can pick-up their items at a convenient time. Also, customers have direct access to pick-up their orders and get in and out of the store faster.

Reduces social contact: Decentralized pick-up location options allows retailers to offer contactless collection through pick-up lockers. To pick-up their packages, customers use a code or one time password to access their lockers. All this is done without the help of store staff.

Gives e-commerce brands an offline presence: Pure play e-commerce brands can enhance their e-fulfillment strategy by placing parcel lockers in physical locations or using convenience party stores as pickup points. This relieves shoppers from waiting for packages.  

Considerations

High installation and real-estate costs: The cost of installing parcel lockers can be expensive depending on factors such as type of locker, number of lockers, and customization. Placing lockers in centralized locations can also result in high real estate prices. 

Third parties: Bringing third parties into your last-mile delivery limits your ability to give individualized service and control the delivery experience.

Layout and sizing: Parcel lockers may not be appropriate for large items due to their size and may not be suitable for deliveries that may require refrigeration. 

In-store collection

In-store collection such as click and collect, also known as “buy online, pick-up in-store,” BOPIS, or curbside pickup remains the most preferred form of contactless collection. In this form of last-mile delivery, consumers place their orders online and walk into a store to pick-up their items. 80% of consumers will continue to use BOPIS and curbside pick-up this year.

Benefits of click and collect

Retailers own the customer experience: Store associates are trained on how to communicate with customers about their packages and process orders quickly. This ensures the collection process is fast and improves the customer experience.

Removes delivery costs: Click and collect allows consumers to pick-up their orders themselves for free and save on shipping charges. This helps reduce cart abandonment.

Convenience: Today's busy consumer expects convenience in every part of their retail experience. Click and collect allows consumers to pick-up their purchase at their convenience and at a pre-chosen location, instead of waiting at home for a delivery. With curbside pick-up, consumers don't even have to leave their cars.

Increase sales: When customers come into the store to pick-up their orders, they are exposed to additional merchandise and often make additional purchases. 75% of people who used “buy online, pick-up in-store,” BOPIS bought something else while they were in the store. 

Enable stores to stay open during restrictions: Retailers that operate the click and collect model are permitted to stay open so consumers can pick-up online orders from branches. Consumers can wait at curbside or queue up outside the establishment to pick-up deliveries. Staff can even delivery orders direct to customers’ boots/trunks.

Reduces fulfillment costs: Offering click and collect slashes fulfillment costs as retailers don’t have to invest in delivery fleets or pay for couriers services to make deliveries. 

Same day delivery: Click and collect enables retailers to offer same-day delivery for products ordered online without incurring additional logistics costs.

Considerations

Ensure accurate inventory: Retailers must maintain the right amount of inventory in the right stores, in the right quantities, by leveraging inventory visibility platforms. This will ensure accurate end-end inventory visibility and enable retailers to satisfy both in-store and click and collect customers.

Need to ensure frictionless omnichannel experience: Use location-based solutions to let staff know when customers are on their way to collect their orders.  This ensures items are processed for pickup and reduces wait times. Also, leverage click and collect solutions to help you improve your handover process, ensure a frictionless experience and strengthen your omnichannel strategy.

Win the last mile race

Excelling at last-mile delivery is one of the most critical factors for success. Whichever last-mile delivery option you choose, leverage advanced retail customer experience solutions to help you deliver an outstanding last-mile delivery experience, streamline operations, and capture market share.