Local Delivery is Local, No Matter Where the Customer Calls HomePosted on June 11, 2019
For consumers, the final leg of delivery, the last mile, is what really counts. They don’t care about the sausage being made, how the item is picked and packed in the warehouse, put in a carton, stacked on pallets … oh well, you know the steps. What they do see is that final piece of the delivery puzzle when the item they ordered a day, a week, a month ago, is left on the doorstep, placed in a locker or car, or carried across the threshold and set up in the home.
Interestingly (well, maybe blatantly obvious), is that is true not only in the United States, but globally. And over the next five years, the importance of managing the entire shipping process from beginning to end will grow along with the last-mile deliveries. According to a report by Analytical Research Cognizance, last-mile delivery for eCommerce will register a 10.2 percent CAGR in terms of revenue, as the global market size will reach $ 4.89 billion by 2024, from $ 3.02 billion in 2019.
And while there will be growth in international shipping, there will also be growing pains as shippers learn to navigate the ins-and-outs of local delivery in different regions.
Take the Asia Pac (APAC) Region for instance. According to a TechWire Asia article, eCommerce sales in the region are projected to grow at 14.2 percent in 2019 to reach $1.2 trillion, or about four times the GDP of Singapore—almost equal to the GDP of Australia.
Kerry Holmes, Managing Director Europe and South Africa at SmartFreight, says that those customers are as anxious as their American counterparts when it comes to receiving their packages.
“This market is very price sensitive but that aside, customers seek deliveries on time and in full and undamaged,” says Holmes.
Meanwhile, in the United Kingdom, consumers aren’t much different as eCommerce is still growing despite being more mature than the U.S. market. According to a recent shipping survey of 1,500 shoppers across the UK, 96 percent of consumers agree that shipping experience has an impact on their loyalty. Customers tend to remember negative delivery experiences forever, with 79 percent saying they are at least somewhat unlikely to return to a brand after just one shipping hiccup.
“The UK is pretty mature in eCommerce. Probably one of the leaders, and still growing in the double-digits,” says Bobby Shome, Vice President EMEA at Microlistics. “This drives a number of things in parcel delivery and last-mile. However, in the end, consumers want their products delivered on-time and in good condition.”
It’s a Numbers Game
While there are similarities, there are some differences between regions in local and last-mile delivery when it comes to the number of carriers to manage for shippers to meet the demands of end users, even in regions and countries that are close to one another.
“There is a greater choice of carriers in Australia with some 40,000 registered businesses in the transport industry versus about 3,000 in New Zealand, with the top five national carriers really owning this space,” says Holmes.
Meanwhile, in the UK, the number of carriers combined with strong environmental concerns has led to growth in “green service” delivery.
“People want to have green service that drops the number of carriers coming down the road per day. Sometimes there used to be 20 to 30 per day on some road,” says Shome. “It goes beyond electric vehicles. Shippers and carriers will find a way to collaborate to reduce the number of journeys that makes sense. And while people are demanding free and low-cost deliveries, they are willing to pay a bit more and wait a bit longer for green deliveries.”
Of course, while some are willing to pay for greener deliveries, overall delivery costs always play a factor in the consumer’s mind when it comes to shopping and shipping.
According to a new Consumer View report from the National Retail Federation, free shipping for eCommerce orders is an increasingly high priority for U.S. consumers, who are also embracing buy-online-pick-up-in-store (BOPIS) in droves, as 75 percent of U.S. consumers expect free shipping even on orders under $50, up from 68 percent in 2017.
While not as extreme as in the U.S., consumers in the UK appreciate free shipping too, if the package shows up on time.
Only 43 percent of shoppers are willing to pay a delivery charge, but of these, 48 percent deemed the capacity to reserve a specific delivery time as highly important, an increase from 37 percent a year ago, according to KPMG’s Annual Retail Survey.
And in Australia, fast trumps free delivery, when it comes to customer expectations. According to a SOTI survey, 61 percent of Australian consumers rate the speed of delivery as the most important factor when buying online. While speedy delivery was the top priority for many, free returns (49 percent), click-and-collect (33 percent), and being able to specify a delivery time (30 percent), were also among the most important aspects of online delivery for Australian consumers.
Regardless of the motivations, expectations, or region, managing parcel shipping is a challenge for those without the right tools or technology.
“With a warehouse management system like Microlistics and multi-carrier transport management software solutions like SmartFreight or Transtream, it's not hard at all to manage networks that include international, national, regional, and local carriers,” says Holmes. “In the absence of the best technology, however, it remains a challenge.”