eCommerce companies are faced with the task of not allowing increasing sales volumes to come at the expense of sustainable last-mile delivery. This can be quite a challenge, especially for e-tailers who want to (continue to) deliver in a low-carbon Four steps make it possible to combine sales growth with a sustainable last mile in a market with growing pains.
The corona crisis in 2020 and 2021 has boosted online shopping worldwide. The measures against Covid-19 also drove the Dutch consumer, already a forerunner in online shopping, even more massively to e-commerce platforms and online stores. The result: a 7 percent increase in sales for the Dutch e-commerce sector by 2020 and a total of 335 million more online purchases, an increase of 27%. Online sales of products experienced explosive growth; Dutch people spent 43% more on stuff than the year before.
Delivery worries due to growth
For online suppliers of products, such a growth spike does indeed bring wonderful turnover figures, but also the necessary logistical headaches. Delivery deadlines, return times, and logistics costs are rising due to exploding demand combined with the scarcity of local delivery capacity. Since the last mile is responsible for 28% of the total transport costs, the result is obvious: delivery worries for the e-tailer.
Rising delivery costs and deadlines under pressure
There are additional headaches if your organization is pursuing a sustainable, low-carbon, or CO2-neutral last mile. Acute problems require acute solutions. Sustainability is not infrequently a secondary concern in such situations. Moreover, due to rapid volume growth, there is an increasing scarcity of sustainable delivery partners, with consequences for speed and price. And that has consequences for the business model: consumers expect ever faster and cheaper home deliveries, not slower and more expensive ones.
Pollution from last mile is increasing
And yet, those last few kilometers can make a big difference in the pursuit of a more environment- and people-friendly supply chain. According to a worst-case scenario from the World Economic Forum (WEF), by 2030, last-mile delivery will be responsible for a 32% growth in CO2 emissions and a 21% growth in traffic congestion in cities worldwide. Furthermore, delivery costs are rising by 25%, and security and profitability for e-commerce business models are at risk. At least, if the last mile does not become smarter and more sustainable in the meantime. Therefore, local and national governments will sharply tighten sustainability requirements for last-mile delivery in the coming years.
Sustainability is inevitable
It should be clear: making the last mile more sustainable is inevitable and should be a priority for every eCommerce company. However, this does not make the logistical challenges any less daunting. Nevertheless, even in these times of extreme growth, sustainable last-mile delivery can be organized well, provided a smart and coherent strategy is in place. This requires four steps.
Step 1: Organize storage and fulfillment locally
Sustainable local delivery = local storage and shipping. A sustainable last-mile benefits from combining a national distribution center complemented by a network of local mini-hubs and micro-fulfillment centers such as dark stores.
Shorter distances between stock and customer mean more control over the logistics process: increased speed and flexibility, better customer experience, and fewer emissions of CO2, particulate matter, and nitrogen.
The majority of Dutch consumers (58%) prefer to buy from a webshop in their own country, and 37 percent of Dutch consumers prefer not to shop across borders at all, mainly because of the cumbersome and lengthy return processes. The customer’s needs, therefore, fit in well with making the last mile more sustainable.
The customer’s needs, therefore, fit in well with making the last mile more sustainable.
Instead of sending all orders directly to the consumer from a large, central warehouse, sustainable last-mile shipping is done from a network of micro-fulfillment centers and dark stores across the city and region. A third-party logistics partner (3PL) is often part of such an eco-friendly last-mile strategy.
Omnichannel retailers can additionally use their local warehouses as micro-fulfillment centers. Such “dark stores” have been rising since traditional retailers desperately sought opportunities to offer their customers a remote shopping option during the corona lockdowns.
Why dark stores?
- Leverage existing hubs
- Close to consumers, so faster delivery, lower delivery costs, fewer emissions
- More efficient order picking, better overview, extended assortment, and better stock control thanks to compact and flexible warehousing
- Being able to offer different last-mile delivery options
- Better customer experience, more loyal customers
Step 2: Work with truly sustainable delivery companies
If you want to take a serious step towards a sustainable last mile, choose a delivery company that really uses sustainable means.
Bicycle couriers like Packaly are the most environmentally and climate-friendly option for the last mile. They don’t emit any CO2 or fine particulates, make no noise, and laughingly evade inner-city traffic congestion, so packages reach customers faster.
An additional advantage of last-mile delivery by bicycle is that returns are also returned to the local fulfillment center faster. In short: the strategic use of bicycle couriers can really make a difference. Not only where emissions and inconvenience are concerned, but also in the customer experience.
Step 3: Invest in a smart Order Management System
For the strategy of local storage and cooperation with sustainable delivery companies to succeed, investments are needed, especially in technology. Essential to this is a smart Order Management System (OMS) that can handle flexible, small-scale, omnichannel inventory management.
A smart OMS smoothly links with the POS (Point of Sale) and the shipping system. Technology can also contribute to the customer experience not only because packages are delivered faster but also, for example, thanks to a dashboard with up-to-date information about the shipment.
Why invest in a smart, well-designed OMS?
- Real-time stock overview
- Stock at the right place at the right time
- Cost and time savings through smarter logistics routes
- More flexibility in the delivery process
- Better customer experience
Step 4: Boost your last-mile customer experience
The last-mile customer experience is largely dependent on three factors: speed, reliability, and sustainability. Recent research shows that nearly three-quarters (74%) of consumers are willing to spend 12% more with a brand that offers a good last-mile experience.
Sustainability is important to the customer experience. More than half (57%) of consumers are willing to change their buying behavior when it benefits the environment. Also, 80% of the customers indicate sustainability as an important argument during their shopping, while 55% appear to be more loyal to a brand that offers a sustainable last mile.
In addition, speed is at least as important in the customer experience: 55% of online shoppers switch without mercy to the competitor if they can deliver faster. Reliability is also essential: for 45% of customers, repeatedly late deliveries are a reason for negative reviews in their social environment.
Only with the argument “sustainable,” you do not save. Even those who want to make their last-mile more sustainable must sufficiently meet all three customer experience conditions.