The Importance of Last-Mile Delivery for your E-commerce Business and how WareIQ always “Delivers”
Processing and delivering an online order isn’t as direct as it sounds. Once an order is placed, it goes through several stages in the supply chain before the delivery is complete. One of the most important and the final step of this process is “Last-mile delivery”. It involves dispatching the products to the end customers.
Ultimately it is the last-mile delivery that determines if the product reaches the customer safely and on time, and this doesn’t come cheap. A report from Frost & Sullivan estimates that up to 40% of total logistics costs can be associated with the last mile. Given the importance of the last-mile in the supply chain, businesses including the e-commerce giants like Amazon and Flipkart have been investing their resources to address these key challenges.
How exactly does the last-mile impact your business?
The last-mile carriers generally work towards delivering the product from an intermediate shipping centre to the final destination. There are a lot of things that can go wrong in this phase that can impact your brand and the overall profits. Some of the major issues businesses can encounter in last-mile delivery include-
- Return of orders and the rising cost of logistics
While order cancellations are common in e-commerce, one of the major reasons for the return of orders by customers can happen due to the mistakes occurring in the last-mile of delivery. Delayed deliveries, inability to track the packages properly, delivery of damaged goods and misplacing orders- all of them can lead to higher returns. Most of these mishaps can happen due to the negligence of the 3PL partner or lack of technological capabilities that can prevent these issues. Return of orders increases your logistics cost further. They also affect your market share and customer loyalty.
According to a report by KPMG, up to 20% of the total e-commerce shipments are return orders. This shows the scale of the problem and how much costs can be saved by minimizing the same.
- Return to Origin (RTO)
This is another major issue that sellers face. It simply refers to sending back the order to the seller when it cannot be delivered to the customer. This can happen due to wrong addresses mentioned in the order or when the customer is not present/denies to accept the order, etc. Such incidents can lead to additional reshipping costs.
- Unable to address the rising demand in tier 2 and 3 cities
With better internet connectivity, e-commerce demands have been rapidly rising in tier 2 and 3 cities of India. The last-mile delivery in this case presents its own unique challenges. The fulfilment centre of your 3PL partner might be far from the delivery location. The interconnectivity between them can affect delivery speeds. Flipkart and Amazon are trying to solve this by partnering with local retail owners and creating pickup points from where the customers can collect their order. Remote locations are even difficult to handle.
- Not meeting customer expectations
Given the benchmarks that e-commerce giants like Amazon set, customers tend to expect the same elsewhere. They expect fast deliveries and may not care about the complications that can happen in the last mile. For example, harsh weather conditions, or a local lockdown can disrupt the delivery timelines. Customers also expect durability in their deliveries. They seek flexible timings and cheaper costs at their end- like the Amazon prime free delivery. Such a level of service is almost impossible without optimising the supply chain in the last-mile.
What can you do to improve your supply chain?
With a growing fragmented market, there is a lot of unpredictability in the supply and demand trends. Having a decentralized inventory stored across multiple warehouses and demand centres across the country can cater to such dynamic markets. Data-driven and analytics-based solutions can further help with business intelligence and are vital to understanding these trends better. They can guide businesses with smart inventory placement, cost optimization, etc.
Having better order tracking solutions will be beneficial to both customers and businesses by ensuring that the orders are not misplaced or rerouted at any stage and are delivered on time.
How WareIQ is able to solve the challenges in last-mile deliveries?
The distance of the final shipping centre from your customers’ location is one of the major factors that can determine how fast the last mile delivery can be performed. The closer the fulfilment centre is to the final delivery location, the faster it can be delivered. It also implies that you will be travelling a lesser distance to make that delivery, saving some transportation cost. The math is direct, and this directly affects the volume and costs involved in handling your return orders too.
WareIQ is able to bring your inventory closer to your customer with its PAN-India fulfilment network. For example, Organic Riot, a consumer brand was able to leverage this network to perform a 2-day delivery to over 85% of their orders. This was only 22% earlier when they shipped through their central warehouse. With WareIQ handling the logistics, the return rate was reduced to just 3 per cent.
In another instance, a prominent D2C brand faced a high RTO rate (25-30%) due to various last-mile challenges like non-verified COD orders, fake delivery attempts by courier partners, and slower speed. WareIQ enabled COD and NDR verification through automated SMS and IVR calls to prevent these issues. It was also possible to bring their inventory closer to demand centres using the fulfilment network in metros. This resulted in a reduction in the RTO rate to just 6%.
Last-mile delivery is one of the most discussed topics among e-commerce brands due to the high costs it incurs and the scope for innovation. As such, optimising it with the help of modern-day technologies is important to stay ahead in the e-commerce race.
Some of the key metrics to track in this context include the rate of return of orders, failures and delays in deliveries and RTO. With its multifaceted nationwide network of fulfilment centres, WareIQ is a proven solution that can help you deliver your orders faster.