How to fund Last Mile technology innovation

Any national retailer that truly wants to deliver on the promise of convenience should now be building essential and valuable partnerships with a network of small tactical delivery companies, as well as with the larger global logistics organisations. These companies need to be invested into the retailer's vision of what constitutes an exceptional delivery experience.

Many successful omnichannel retailers became aware of the emerging reliance on these smaller delivery firms and their local expertise years ago, having already invested heavily in finding and cementing these critical "Last Mile" relationships. Now that effort is paying off in increased customer confidence, loyalty and satisfaction.

According to the Barclays The Last Mile report, in 2013 products ordered online generated just over one billion deliveries. However by 2018 this number is expected to grow by 28.8% to 1.35 billion. Clothing and footwear sales will continue to generate the largest online volumes growing by almost 50% between 2013 and 2018.

Providing customers with status flags, such as Amazon’s “ordered, dispatched & delivered", will not be good enough for consumers who want to manage already time poor, highly pressurised lives. Blame disruptors like Uber; they've provided customers with a real-time view of their taxis and this expectation has already propagated into retail and other sectors.

One of the most pressing final mile challenges retailers face will be providing real-time delivery tracking on purchased items. Consumers will want to know exactly where their package is, exactly when it will arrive and if it is likely to be delayed, for exactly how long. It may sound like ‘stating the obvious’ but technology investment will play an increasingly significant role in ensuring consumer demands are met, especially concerning retailers', "next day", "same day", and "one-hour" delivery promises.

Uber is already exploring the Last Mile marketplace and has recently launched a service entitled UberRUSH in San Francisco, Chicago and New York. This proposition works with existing eCommerce marketplaces such as Clover and Shopify so UberRUSH deliveries can be placed at the time of purchase and customers will know the exact location of their delivery using Uber's existing location sharing technology. This service could be just as disruptive in the Last Mile space as their taxi service was when it was launched.

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Selection and implementation of the right technology and expertise will ensure that the right local delivery partner and their agents are assigned to the right customer order, at exactly the right time, in order to make the delivery exactly when expected. Retailers need to leverage the local niche knowledge these smaller logistics firms have in order to meet deadlines.

A myriad of technology integrations with these operators will be required to feed into bespoke delivery tracking applications to provide customers with essential delivery status information. Each delivery partner will have different legacy technology infrastructures which will need to be navigated, plumbed and integrated with.

On the client side, a significant investment into mobile first UX design expertise will need to be made if customers are going to make sense of delivery data, and enjoy the experience on whichever device they are using at any precise moment. This expertise is a rarity amongst in-house software development teams so finding the right software development partners with this expertise will be essential.

On the subject of costs, it’s not as simple as passing these innovation and service costs onto the customer. The customer expects the retailer to absorb the costs unless they are really invested in the relationship. A successful example of the retailer sharing the cost with an invested customer base is, of course, Amazon, whose Prime offering now has over 69m members, all of which are paying part of the cost for next day delivery.

Retailers need to understand how they get to the point where customers are happy to pay membership fees for premium delivery services in order to compete with Amazon Prime. This is the only way that funding these premium services will be possible if retailers want to meet customer expectations, and at the same time avoid being crippled by rising logistics and reverse supply chain costs.

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