Seasonal Logistics: Meeting Last Mile Delivery Challenges

Christmas and logistics go hand-in-hand – just ask Santa Claus. While he and his extended elves may have logistics sorted, for online retailers they remain an uphill struggle. Could an additional layer of tech-driven customer service be the answer?

Svante Lietzke
by Svante Lietzke
Waiting for parcel delivery

When you are tracking your package online and it says “out for delivery”

You can almost time it like clockwork. As soon as the Thanksgiving turkey has been cooked, stuffed, and served, it is time for another favorite holiday tradition to begin: online shopping.

Now known as the ‘Cyber 5’, the third-week-of-November break heralds the official start of the Christmas shopping season. It is no longer just a single day (the day after Thanksgiving: Black Friday); over the last few years, it has morphed into a five-day shopping spree. But it is not just the US that is experiencing this phenomenon. Pretty much the entire section of the World that celebrates the arrival of the red-suited jolly fat man is getting in on the action too: which is everywhere from Vienna to Vancouver.

The sharp spike in shopping activity comes at a time of year when retailers are keen to clear existing stock by the year’s end; when they gladly offer up some much-needed bargains to frantic shoppers – who are more receptive to buying for their nearest and dearest whilst they are immediately close-at-hand.

While bricks-and-mortar sales are on a slow downward trajectory (despite this 2018’s relative parity with 2017, according to reports) online sales are soaring – up by 28% year-on-year says Adobe Analytics. However, the biggest pain point, for both consumer and retailers where online shopping is concerned, is the final stretch – the ‘last mile’ delivery challenges to unite shoppers with their goods.

Traditional logistics don’t seem to cut it in a world where shoppers expect to be able to see exactly where their deliveries are; particularly when their phones are always on. Push notifications, social media messaging, and SMS make other areas of their lives easier to handle. Plus automation, Artificial Intelligence (AI) and the Internet of Things are sufficiently evolved enough to make different areas of business tech ‘smart’.

Add in the fact that some $2 billion worth of purchases were made from smartphones during this year’s Cyber frenzy and the increasingly crucial role that mobile plays in all of this is clear. So if the shopping experience is mobile-optimized, surely the delivery experience should be too? To what extent do retailers (literally) need tap into this trend in order to improve the overall customer experience?

Owning Last Mile Logistics

According to recent McKinsey research, the cost of global parcel delivery amounts to about €70 billion, with China, Germany, and the United States accounting for more than 40% of the market. E-commerce is by far the biggest sector driving this. But the sheer amount being spent puts increasing pressure on retailers to improve things – particularly where last mile logistics are concerned.

A single keyboard/screen stroke to place an order sets a logistics chain reaction in motion. But it is not just a case of bagging up the goods to be shipped and sent. That is the easy(ish) part. The difficulty, at least from a customer experience perspective, lies in the need to keep customers constantly in the loop on the status of their order.

Shoppers want assurances that their deliveries will a) arrive b) arrive on time c) arrive when convenient. They are not satisfied merely knowing that their parcels will arrive in ‘between 3-5 working days’ – or even by the next day. They want to know exactly what time it will be delivered; if they can go and collect it from a local store or locker during their lunch break; or whether the delivery driver has actually left their parcel in the designated spot in the backyard (next to the big blue plant pot). Or perhaps they suddenly have to go out: will they be able to schedule in another delivery time slot?

From a retailer’s perspective, creating that kind of customer experience is tougher than it might sound – especially when the overall logistics are essentially outsourced to a courier or delivery company. This lack of consistency is largely down to the fact that different companies have their own ways of deploying customer information.

Bigger companies might be able ‘own’ logistics and offer real-time updates on where a particular item is from a single application, but the vast majority of retailers offer a mishmash of update emails from the retailer; or a courier company-branded moving map indicating a driver’s progress in relation to the delivery address; or even SMS messages sent from driver him/herself.

Then there are information black spots – when tracking information seems to inexplicably freeze up. What do customers do then? They call the retailer. Or submit a query via the website they ordered from. Or they try to email a generic ‘info@xxx’ delivery company email address – and don’t hear anything for two days. Hardly an experience worth recommending or repeating.

It is not just smaller retailers struggling to keep up with the last mile delivery needs of tech-savvy, always-on shoppers. Package delivery stress impacts even the biggest online retailers, who are quite visibly suffering under the extensive weight of free delivery and its associated costs. Even the mighty Amazon has felt the pinch, recently forecasting a disappointing fourth-quarter profit after Q3 shipping costs rose by 22% to $6.6 billion: almost double its operating income. Similarly, higher online fulfillment and supply chain costs are also impacting US retail stalwarts such as Target and Walmart.

Innovation In Last Mile Logistics

So is it ever possible for retailer logistical processes to match up with customer expectations? In this instance, the best possible customer experience is a low effort one: one that does not require a huge amount of time. That is why so many are willing to pay extra for faster delivery times. A recent report found that up to a quarter (23%) are willing to pay for same-day delivery.

While current same-day delivery take up is still low volume, the margins gained by monetizing swifter delivery could potentially finance even better solutions. Even now the pace of change in last mile logistics is undoubtedly rapid with companies experimenting with autonomous and semi-autonomous vehicles. Amazon’s drone strategies are well documented, while Starship Technologies has been testing delivery robots for some time now. UPS is even exploring a drone launching van initiative – which will apparently save some $50 million per year thanks to reduced mileage.

Drone with parcel

Logistics & The Use Of Messaging Services

But as innovative as these types of technology may be – and as useful as they could prove during the Christmas period’s inclement weather – they are by no means the norm: yet. And one has to question if drones and unmanned robots are little too frivolous/expensive a solution to enjoy mainstream adoption. Time will tell, but surely there are more practical ways to meet last mile delivery challenges – ways that cut costs and meet customer expectations –?

Amazon Lockers are proving popular with busy consumers; allowing them to ‘click and collect’ from a secure central point, at a time to suit them. While this may work for city dwellers, those living in more rural areas are more reliant on home delivery. In times when delivery capacities are stretched, retailers have been known to turn to crowdsourced delivery services. But the cost is often prohibitive.

This was the hard lesson learned by UberRUSH, the ride-sharing service’s foray into logistics, which shut up shops earlier this year. Though Uber failed to effectively transpose its taxi-based business model to the last mile concept, it did highlight the customer’s need for real-time data and for there to be a constant dialogue between delivery and destination.

This is where messaging apps could make a real difference – providing the real-time transparency that consumers need. Services like Apple Business Chat; Facebook Messenger; WhatsApp; along with more recent addition, Google Rich Business Messaging are already popular with mobile users and an increasing number of brands – including companies as diverse as Subway, American Express, and – are using them as customer service interfaces; building channels that act as touchpoints along the overall customer journey.

While delivery information hasn’t specifically been identified as a core use case (even though DHL is on board with Google’s RBM service), the alignment of logistics data with a messaging service neatly ticks the ‘transparency’ box. And the good news for retailers is that with the right connectivity or ‘smart’ infrastructure the entire process can be automated using chatbots.

„The alignment of logistics data with a messaging service neatly ticks the ‘transparency’ box. And the good news for retailers is that with the right connectivity or ‘smart’ infrastructure the entire process can be automated.“

Imagine if your customers could simply message a single point of contact in order to request real-time updates on their delivery. Not only that, but they would also receive push notifications letting them know the exact time of arrival, and be given the option to either reschedule or have their delivery sent to, well, wherever they are at a given time: without having to sift through several different communication channels.

While service agents can be used as the final point of contact for inquiries, advances in Natural Language Processing are already humanizing chatbots; making the overall experience a more seamless one for customers. This has additional benefits for retailers too: reduced costs and more productive staff – as employees can turn their attention to less routine, and more meaningful work.

Technology has a big role to play in coordinating transparency in last-mile logistics – during the holidays and beyond. But ‘on-demand’ means exactly that. And while as consumers we expect to be able to get what we want, when we want, from our mobile devices, when ordering physical goods a little more patience is needed. But that does not mean we should expect substandard service from retailers or couriers. Transparency, a low effort experience, and communication are the key criteria here.

The holidays are a massive test for brands in their quest to meet customers’ needs. And there can be no doubt that retailers and couriers need to either work together more closely to provide a single point of contact, or the retailer needs to exercise some brand utility and provide an end-to-end messaging service that keeps customers informed every step of the way. Luckily, given the way messaging services are evolving, in line with AI and automation, things are set to improve dramatically in the next few years.

And, if drone deliveries really do, erm, ‘take off’ (no pun intended) and we find ourselves actively communicating with the chatbot that is directing an Unmanned Autonomous Vehicle to our intended location, well, Santa may well have some competition in the near future (!).

Svante Lietzke
Svante Lietzke
With a background in the logistics sector and operational experience in hospitality, Svante is responsible for the solution design and operational fit of Mesaic's conversational operating platform for our partners within the respective industries. He is enthusiastic about new tech and the numerous possibilities of digital experiences.

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