Thought Leadership

Ideas that design the supply chain of the future

On demand delivery as the experience differentiator for Last Mile

The times they are a changing. Consumers, as we know, have emerged as the game-changers in deciding the way businesses operate today. Gone are the days when consumer loyalty gave the ultimate power to businesses to ensure monopoly over markets segments. In this age of hyper-connected and on-the-go generation of consumers, it is no longer just a war of price differentiations and product features but mostly it is about the “experience differentiators”.

And we cannot talk about “experience differentiators” and not include one of the major differentiating ground for businesses in today’s market, i.e. their delivery experiences to consumers. A study by McKinsey had showed us long back that “consumers are willing to pay 25% more for same or next day delivery”, today also it holds true or even more. The stakes have risen high enough for every business to take notice and act. A lot of pressure is being put on the existing delivery channels of the businesses due to the competitive differentiations in delivery services provided by lot of ecommerce firms. And this current pandemic situation has actually taken this segment of businesses down a spiral, now delivery differentiators for most of the first half of 2020, starting from the lockdown phases, has gone from same-day delivery to “some day delivery”. Most of the deliveries were either delayed perpetually or they were cancelled or stuck at borders or ports. Though the situation has been changing a bit recently with consumer spending in US up by 0.6% in August from July, but the tighter restrictions and rules have made it sure that few of the delivery channels are still suffering. Though NRF (National Retail Federation) paints a hopeful picture with VP Jonathan Gold mentioning in one of the articles that “We could be in for a much happier holiday season than many had thought.”

But today I am not going to talk about the present situation and all the challenges we still have to overcome in our logistics segments to reach the pre-pandemic level of business or operational efficiencies. But instead, today I am going to talk about the hopeful future, a future where we will be rid of this virus-scare, we will come back to our normal lives, thought it might be, as they call it, a ‘new normal’ but yes it will be normal. A situation where businesses will again be competing in creating delivery experience differentiators and not just struggling to get orders fulfilled. It wouldn’t be wrong to say that the new battleground is and will be even in the ‘new normal’, the “Last-mile”. Being the final point of interaction between your end-customers and your business, it gives businesses of today and tomorrow the perfect opportunity to create the experiences that breed loyalty in this competitive market. To elaborate on the depth of the differentiation led innovation, we need not look much further than the expansion of “On-demand delivery” model into various industries. As Gary Forger had said not long back in a 2018 article “Right now, on-demand delivery is a hot spot of the gig economy.” He had spoken about an economy and market where we have deliveries in a matter of hours and not days. On-demand delivery, today is not a thing of the future but it is already happening. On-demand food delivery was already existing in the market over a long time and so did e-grocery. But Covid19 pandemic boosted the grocery on-demand delivery services multi-fold, and currently even as many countries have opened up in phases, still the on-demand delivery of groceries remain intact as consumers are drawn towards the ease, speed and experience of this last mile differentiator of on-demand delivery.

But let’s talk about how this on-demand delivery is expanding, how it’s here to take over the retail or healthcare or ecommerce segment as well. Quite a few on-demand delivery service providers have started providing digital platforms where customers and businesses can get connected, and local freelance couriers or independent contractors are assigned to execute the deliveries in the most optimized way, that too in hours. Crowd-sourced on-demand deliveries are already happening in parts of North America. Apart from that, technology is aiding in the fulfillment of this level as well. Drone technology has become the new enabler for the perfect disruption in the last-mile segment. WalMart this month just announced the first pilot of their drone-based on-demand delivery service with Flytrex, an end-to-end drone delivery company, in Fayetteville, North Carolina. Though it may take time for them to officially start the service but they are in the right track. They are not the only ones, in late-August, the Federal Aviation Administration approved Amazon's Prime Air service, which can delivery packages of weight up to 5 pounds in 30 minutes. Wallgreens had been the pioneer in this segment on being the first company to introduce on-demand delivery service for healthcare product packages using the help of drone making company Wing, back in October 2019. It was focused on an app based order portal where users can place order and get their deliveries of healthcare essentials in minutes.

Think of a time when, on-demand delivery comes to retail businesses as well, when you can order yourself a shirt which you just saw on your favorite brand’s app, while being on a business trip and get it delivered to your hotel in matter of minutes. So that the next day you are all set in your favorite shirt for your important meeting with client. Isn’t that going to be awesome?

So what does that mean to the market scenario? Industries will be divided into two parts now, ones who will be eagerly putting their R&D efforts to fit this model in their operations plan and the others who might have to play catch-up later on. But whatever group, one may lie on, one thing remains common, “Technology is the key!” and transforming your last-mile delivery with digital solution upgrades becomes the first step towards this new future.

So, what do you feel will be the future of last-mile deliveries?

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About the author :

Srini Vaidy

President and CEO, Highway 905

Srini Vaidy is the President and CEO of the award-winning, cloud-based logistics technology provider Highway 905. He is an established innovator in the Supply Chain & Logistics space, with an ever-dying passion for coding and technology. For more than 30 years he has been ideating customer-centric and efficiency-driven supply chain execution solutions for the Fortune 500 to help them optimize their logistics costs and strengthen their competitive market position. With one eye on technological trends and the other on the happenings in the logistics space, he likes providing readers with an interesting perspective on the future of logistics industry.

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