Why is Last-Mile Delivery Important for E-commerce?

Ever wondered how Blinkit delivers orders across different Indian cities in just 10 minutes? Or how the e-commerce giant Amazon provides the option of a one-day order delivery despite receiving millions of orders from different parts of the country? This is possible because of their efficient last-mile delivery model. 

Customer expectations in terms of supply chain have increased tremendously. Moreover, people today prefer to shop from websites that provide at-home and faster deliveries, leading to the growth of last-mile delivery models. This blog discusses how e-commerce businesses can crack last-mile deliveries in India for faster growth.

The Importance of Last-Mile Delivery in E-commerce

Last-mile delivery in the supply chain refers to the movement of goods from the logistics to the end customer. To facilitate last-mile logistics, e-commerce companies open multiple distribution stores throughout the city. When customers place an order, it is received by the nearest local distribution center and is easily shipped from the center to the customer.

Last-mile delivery in e-commerce reduces supply chain layers by eliminating middlemen. A business itself ensures the delivery of the product to the end customer. This reduces logistics costs and improves delivery timelines, leading to enhanced customer experience. 

The following are the key benefits of last-mile delivery in e-commerce:

1. Cost Efficiency 

“Logistics cost structure is one of the biggest challenges for Indian e-commerce business,” says Kalyan Krishnamurthy, the CEO of Flipkart. He mentions that India is a low-ticket market, and e-commerce businesses can expand further when they find a way to reduce logistics costs. 

However, last-mile delivery helps businesses reduce transportation costs. Businesses transport bulk orders to the distribution centers which are further delivered to the customers. This saves the cost of transporting products for a few customers across the country.

2. Competitive Advantage 

Last-mile delivery offers more convenient and faster delivery options, helping businesses gain an edge over their competitors.

3. Customer Satisfaction 

Last-mile logistics also facilitate faster and more efficient delivery. This boosts customer satisfaction and loyalty.

4. Growth and Scalability 

With last-mile delivery, e-commerce businesses can penetrate even into remote rural areas in India, increasing scalability.

5. Sustainability

Green logistics or sustainable logistics is a fast-growing trend in the supply chain industry. Last-mile delivery models are a key catalyst in facilitating its growth because. Businesses can deliver more products in less time, thereby reducing fuel consumption and the carbon footprint.

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Challenges Faced in Last-Mile Delivery

Even though many e-commerce businesses in India are providing last-mile delivery options, they face several challenges, including:

1. High Supply Chain Costs

Product inventory, management, and delivery involve high costs in India. Using a last-mile delivery model means setting up distribution centers and hiring staff for deliveries and management, which will increase implementation costs for businesses.

2. Theft

Cases of product theft from delivery vehicles are common in India. This leads to financial losses for businesses.

3. Lack of Real-Time Visibility 

E-commerce businesses are often unable to track delivery vehicles in real time, especially in remote areas where there is a lack of Internet connection.

4. Inefficient Routes 

Another challenge in last-mile delivery is inefficient routes in rural areas. Delivery vehicles stuck in traffic jams have higher fuel consumption, which increases costs for businesses.

Strategies to Enhance Last-Mile Delivery Efficiency

Here are a few strategies for supply chain managers to improve last-mile delivery:

1. Utilizing Technology in Delivery Tracking

Using technology in last-mile logistics helps e-commerce businesses track shipment movement in real time. They get quick updates on delivery challenges such as route blocks or thefts. Moreover, businesses can also share real-time tracking links with customers to ensure transparency and improve customer experience.

2. Optimizing Delivery Routes

Traffic congestion and roadblocks are among the biggest challenges for last-mile delivery. The solution to this is route optimization. This refers to planning shorter routes to decrease fuel consumption in logistics. It involves tracking traffic movement and weather conditions to find the fastest delivery route using AI analytics. Moreover, businesses can also plan accurate routes so that multiple orders can be delivered in one trip.

3. Partnering With Local Courier Services

One of the best ways to ensure seamless last-mile delivery is to partner with local courier services. They have a vast network that facilitates quicker and more efficient delivery. This reduces the cost of hiring employees for the management of warehouses or distribution centers.

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Impact of Efficient Last-Mile Delivery on Customer Satisfaction 

According to DHL’s Online Shopper Report 2023, Indian shoppers rank the highest in wanting faster e-commerce deliveries. Moreover, 92% of consumers prefer to have their orders delivered at home. Also, 50% of Indians avoid cross-border shopping because of longer delivery times.

The Global Consumer Insights Pulse Survey 2023 by PwC reports that 41% of Indian consumers express their inclination to increase purchases from retailers that provide an efficient delivery or collection service. These statistics indicate that faster delivery is one of the top priorities for Indian customers. 

Hence, e-commerce businesses can enhance customer experience by providing faster and more efficient delivery through last-mile logistics 

Future Trends in Last-Mile Delivery for E-commerce

The fastest emerging trends in last-mile e-commerce delivery are:

1. Use of AI and Robotics 

Last-mile delivery requires real-time updates and future predictions. Hence, more e-commerce businesses are integrating AI tools to identify and resolve bottlenecks in supply chain processes. Moreover, the use of robotics is increasing so as to automate supply chain processes. There is also an increasing demand for generative AI in last-mile logistics for delivery routing and allocating resources.

2. Last-Mile Delivery Management Platforms 

Last-mile delivery management involves managing multiple distribution centers, delivery vehicles, and delivery partners. Hence, last-mile delivery management platforms are expected to rise for seamless logistics. These platforms can include intuitive dashboards for real-time monitoring of the entire supply chain process.

3. Use of Drones and Autonomous Vehicles

With increasing population and traffic congestion, e-commerce deliveries are likely to happen through drones or automatic vehicles in the future.

Frequently Asked Questions About Last-Mile Delivery for E-Commerce

1. What are the Key Challenges in Last-Mile Delivery for E-commerce Businesses?

Some of the key challenges that make last-mile delivery difficult for e-commerce are inefficient routes, high delivery costs, traffic congestion, and lack of granular tracking.

2. How Does Efficient Last-Mile Delivery Impact Customer Loyalty?

Today’s business environment is highly competitive. Customers have substitutes for almost every product or service. In such cases, faster last-mile delivery improves customer loyalty.

3. What Technology Solutions Can Enhance Last-Mile Delivery Processes?

The latest technology solutions, such as drone delivery, urban warehousing, real-time supply chain process tracking through AI, autonomous vehicles, and route optimization through GPS trackers, can enhance last-mile delivery processes.

4. Why is Optimizing Last-Mile Delivery Crucial in the E-commerce Industry?

Last-mile delivery optimization helps businesses deliver products faster and at low costs. This increases customer satisfaction. Moreover, delivery through local distribution centers means less fuel consumption, thus reducing the overall carbon footprint of the e-commerce industry.

5. What are the Emerging Trends Shaping the Future of Last-Mile Delivery?

Some of the key trends driving the growth of last-mile delivery in India are contactless deliveries, sustainable logistics, the use of drones to deliver shipments, and the growth of urban warehouses.

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The Indian e-commerce industry is expected to reach $325 billion by 2030. While rapid growth means better e-commerce business opportunities, it will also result in high competition. Therefore, businesses need skilled supply chain managers and logistics managers who can adapt to the latest trends and navigate supply chain disruptions. Hence, supply chain professionals must upskill and learn the latest trends. Emeritus’ online supply chain management courses can help you learn the latest supply chain skills and technologies to boost your career.

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