THE LAST MILE OF DISTRIBUTION – Retailers focus on the final leg of a product’s journey to deliver improved customer value
Blog: Apriso Blog
The distance between the retailer and consumers’ hands is a rich source of engagement and the focus of intense competition as both online and brick-and-mortar merchants work to deliver the experience consumers want.
The ‘last mile’ of distribution – the journey of products from the retailer to customers’ hands – holds a number of challenges and opportunities for retailers. “Consumers increasingly want to choose their own scenarios when it comes to online ordering, in-store experience, home delivery and click-and- collect services,” according to the authors of “Rethinking the Value Chain,” a report produced by Capgemini and the Consumer Goods Forum. “Meanwhile, alternative distribution models are rapidly emerging. Companies such as Amazon are forcing the industry to rethink the last mile distribution model.”
Retailers need to consider factors such as local culture, geography, climate and tariffs to find the optimal way to deliver purchases and satisfy each consumer’s requirements. For example, while cost is the main challenge when it comes to last mile deliveries in the US, issues such as infrastructure and postal services are key concerns in other parts of the world, according to Chris Cunnane, a senior analyst in the supply chain and logistics team at ARC Advisory Group, a global technology research and advisory firm headquartered in the US . “In India … the difficult part is figuring out the infrastructure to make home deliveries viable,” Cunnane wrote on ARC’s Logistics Viewpoints blog. “Trucks have a difficult time navigating the crowded streets and the postal service is notoriously slow. One new option in India is the use of couriers to deliver goods purchased from Flipkart, Snapdeal and Amazon India.”
Cost is a key concern for retailers and consumers, especially when there is a lot of distance to cover. “The last mile on average makes up nearly 30% of transportation costs, and it is very hard to bring down,” said Brittain Ladd, a supply chain consultant.
Retailers are responding to the challenges with flexible distribution models that can shorten the last mile and improve efficiency while enhancing the consumer experience. Local warehouses, combined with innovative technologies, are helping to optimize journey planning, while a range of purchasing and collection choices offer convenient options for consumers.
For example, Peapod, an online grocery delivery service that operates in 24 regions of the US Midwest and East Coast, operates three different warehouse formats depending on local market size and density. Consumers can purchase their goods at virtual grocery stores in locations including commuter rail stations. As well as delivering to homes and businesses, Peapod also provides pick-up points in convenient locations.
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