HOW TO GAIN A COMPETITIVE ADVANTAGE IN THE BRAVE NEW DELIVERY WORLD
Ever since communities across the country began quarantining in early 2020, online shopping has become a way of life for many consumers. Faced with supply shortages and social distancing guidelines that restrict the number of consumers in a bricks-and-mortar store at any given time, online delivery services and online retailers such as Amazon are booming. But while these increases have been a boon to many online retailers, despite these sales increases, other, often-smaller retailers have struggled to provide satisfactory last-mile services to their customers. In an Amazon Prime world, many consumers expect fast, free (or low cost) and totally transparent shipping—but that’s not always possible. Unfortunately, this can damage a retailer’s reputation—and their chance at repeat sales. Hence, this is why last-mile services matter.
But what are last-mile services, and who are the best providers of these services? Here’s what you need to know about the importance of last-mile for your business.
What are Last-Mile Services?
Last-mile services initially got their name from the telecommunications industry, where the last-mile referred to the challenges faced by telecom providers connecting homes to their main networks. Today, while last-mile issues still do exist in telecom, they also exist in logistics: namely, in getting merchandise into the customer’s hands.
The “last mile” of service occurs in the final stages of your product’s journey—after your merchandise is manufactured and warehoused, and once the customer’s order is placed. From there, the merchandise must be pulled and packed and finally shipped and delivered. That shipping and delivery is what they refer to as last-mile service, and it comes at a cost. In fact, that cost can often compose more than half of an order’s total shipping cost, including the price of labor and shipping supplies. In fact, last-mile service is generally the most expensive part of an order’s journey. It also takes the most time. This can make last-mile shipping a big expense for smaller retailers trying to go toe-to-toe with the Amazons of the world, who often have their own logistics fleets and also utilize local carriers for faster deliveries.
This issue is known as the “last mile problem” or the thorny issues of high shipping costs, slower-than-desired shipping speeds, and yet another big wrinkle: tracking difficulties. You see, even with a tracking number, tracking through some carriers often leaves much to be desired. With slow-to-update tracking numbers, delays and inaccuracies, customers are often left frustrated and unwilling to do business with you again.
So, how do you solve the last-mile problem? The answer lies in your last-mile delivery service.
Solving the Last Mile Problem
When it comes to last-mile providers, you have many choices. From couriers to smaller, local logistics companies, to larger household-names, who you choose to provide your last-mile service matters.
1) Higher Costs
Generally speaking, the larger the order volume, the lower the rates you can expect from your last-mile provider. While smaller 3PLs try to stay competitive, their efforts are often thwarted by higher fuel costs and delivery issues, such as having to return to a delivery stop multiple times to gain a signature. Thankfully, however, there are exceptions to this rule. Sometimes, smaller 3PLs can negotiate fair rates with your business, enabling you to ship your merchandise in a cost-effective manner. However, this works best if your deliveries are mostly local.
2) Delivery Times
Speaking of delivery times, this is yet another big issue faced in last-mile delivery. From far-spaced rural routes to jam-packed city streets, 3PLs can sometimes struggle with even getting to your customer’s front door simply due to time constraints caused by these problems. This can delay a shipment, causing customer frustration, which of course hurts your chances for repeat business.
3) Tracking Technology
When it comes down to how to make your last-mile services more efficient, the bottom line can often be the technology used by your last-mile provider. Third-party logistics providers such as FedEx, DHL and UPS all have their own tracking systems and proprietary software that allows for not just internal efficiencies, but for the transparency for your customers to track their orders. This improves customer experience and, naturally, customer satisfaction.
To better understand just what a last-mile provider truly does, here are some unique providers and what they’re doing to help your business.
Haultail. A new delivery service available in many markets across the U.S., Haultail uses its own app to allow customers to schedule their local pickup or delivery via its network of certified drivers. Haultail can collect and deliver new items from retail stores, storage facilities or even homes, and deliver them, often faster than delivery services offered by mass retailers, giving smaller retailers a competitive edge and consumers higher overall satisfaction with their purchase.
TForce Logistics. With headquarters in both the U.S. and Canada, TForce Logistics boasts a network of more than 6,700 last-mile providers in every major city in America. The company offers everything from warehousing to reverse logistics of last-mile products and keeps customers in the loop about their product tracking via text message updates. TForce has also expanded their last-mile services into Toronto, Ontario, Canada.
CFI. Based in Mexico, CFI has recently expanded to Chicago with its first U.S. consolidation and distribution center, and plans for more locations across los Estados Unidos de América. This is a rare move, as in recent years the trend in 3PLs is to move away from Mexico. CFI, however, plans to remain in the country, offering international services, including last mile, on both sides of the border.
Dachser USA. To help customers navigate the unprecedented increase in online sales and the need for last-mile delivery, Dachser USA recently created a “dedicated customer solutions desk.” This new department is staffed by logistics industry experts and serves to help businesses of all sizes deal with unexpected issues such as shipping delays, drayage capacity issues and even demurrage charges, according to Guido Gries, managing director of Dascher Americas.
SEKO Logistics. Based in Itasca, Illinois, SEKO Logistics has responded to the COVID-19 crisis by working with businesses of all sizes that have been impacted by shutdowns of their regular logistics providers due to the coronavirus. SEKO has enacted its own COVID-19 policy, requiring PPE for drivers to protect both employees and customers, including the last-mile customer.
The Last Word in Last Mile
Ultimately, if you ship a product to a consumer or business, you’re probably going to need last-mile services. Whether you require local services and can partner with a smaller logistics company that can act nimbly and respond faster than larger delivery services, or you ship at a volume that enables you to benefit from reduced bulk shipping rates with a larger 3PL, choosing the right last-mile service can potentially save you money and help bolster customer satisfaction.
When choosing your last-mile provider, look for bulk shipping rates, route consolidations and transparent tracking services. The important takeaway: Last-mile services shouldn’t be an afterthought. They are, in fact, a crucial step in your supply chain and can be the determining factor between a good transaction and a great one.