Is last mile logistics nearing a solution?
13 February 2017
A few years ago I wrote about the speed of growth in eCommerce and how logistics may struggle to cope with it. I thought if the fulfillment function (both in terms of warehousing and transport) reached its capacity, prices will inevitably be pushed up and that would put the brakes on the growth of online retail. While it is true that growing parcel volume and demand for fast and convenient delivery have been pushing fulfilment costs up dramatically, that might be about to change.
If it does so, the assumption that online retail will plateau may need to be re-visited. At The Delivery Conference Accenture spoke about the last mile, highlighting the start-ups that are entering the market. They are built around a ‘density’ delivery model utilising algorithms and self-employed couriers; rather than hard assets such as warehouses and trucks and vans. Basically they use self-employed couriers in their own vehicles to, at short notice of an order, go to the nearest pick up point, collect a parcel and deliver it to a consumer nearby. This operates at a much lower cost than a traditional logistics model, which will in turn give retailers more leeway to extend online sales.
This should not be as disruptive as early online retail, because it builds on existing retail store footprint and its attendant supply chain, using them as pseudo distribution centres. A truly Omnichannel solution. It’s a B2B variant on Click & Collect, with a courier picking up for the consumer and taking care of the last mile. Also in the Delivery Conference feature, we have building products supplier Wickes explaining how it delivers sameday and one hour slots with a courier using its Click & Collect process.
The model will be a threat to the traditional courier model, which sends vans from location to location, dropping off parcels. It is asset heavy and more expensive, with couriers owning sortation centres, warehouses, fleets of trucks and vans etc. However, it remains to be seen how scalable density models can be. They may be restricted to heavily built up areas, and their reliance on casual labour may cause problems down the line. We have an interview with one such start-up, Stuart Delivery.
eCommerce is also becoming more personalised for consumers. Their habits are monitored and retailers try to predict what they will want, and cater to their every whim - more choice and faster and more convenient deliveries. But is there a direct correlation between increased personalisation for consumers and increased dehumanisation of those working in the logistics sector? We see reports of workers at e-tailer Boohoo’s Burnley warehouse receiving a ‘strike’ for smiling, and there was the well-publicised abuses at Sports Direct.
I assume if you went back to the pre-eCommerce era, people who worked in warehouses were not subjected to these stresses and tightly regulated regimes. It’s important that our desire to enhance the experience of online shoppers does not diminish some of those responsible for making it happen.