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DS Smith has launched a new report – ‘Last Mile Delivery: the Future Unpacked’. The findings, which are based on survey research among 550 decision makers, reveals how e-commerce businesses across the United Kingdom and Europe are witnessing last mile delivery cost increases of up to 90%
The respondents were segmented into the three categories of traditionalists, pragmatists, and innovators, as a methodological tool to differentiate between those decision makers who prioritise relationships with long term value chain partners and known processes and those who are actively seeking out new collaborations and cutting edge solutions through continuous innovation.
The report reveals how outgoing costs around couriers, returned items, and products that have failed to arrive or experienced damage during transit, have risen significantly within the last year, with 39% of ecommerce retailers surveyed experiencing double digit rises in overheads because of supply chain challenges.
In addition, 84% of e-commerce businesses experienced cost increases around the last mile of deliveries within the past year, and 84% of respondents believe that increases are likely to continue to rise over the next 12 months, with 50% anticipating this trend to double again.
The coordination of last mile planning and strategy is anticipated to have a significant impact on the profit and loss of e-commerce businesses, and almost 39% of those questioned reported lower profits as a consequence of operational challenges. Another 35% have increased delivery fees charged to the end consumer to cover these costs, and 35% have increased the price of their products.
The report details how the rise in delivery costs is impacting on other trends within the e-commerce marketplace. For example, 27% of e- commerce businesses are cutting back on sustainability initiatives to decrease their spending, and many are reviewing their short and long term operations strategy. Similarly, 59% are reviewing their returns policies, and 57% are managing future forecasting by imposing minimum order values for deliveries.
The emerging trends in last mile logistics and delivery costs is thought to be compounded by rising consumer expectations around customer service, sustainability, packaging, timing, and flexible options for reliable and secure receipt of their packages. Almost 75% of survey respondents reported that their customers expect to receive newly purchased items in sustainable packaging.
Some 71% of these consumers expect to see options for the tracking of deliveries and communications around this, and 69% expect to see flexible delivery times, alongside 67% that anticipate sustainable delivery options.
The Last-Mile Delivery: the Future Unpacked report reveals that some e-commerce businesses feel that they have not been able to fulfil customer expectations in the current climate, and less than 39% claim to have satisfied expectations around sustainable delivery options. Similarly, 36% are concerned that they have not met customer expectations around the costs of delivery in terms of keeping these as low as possible, and only 30% feel that they have successfully met their customer’s expectations around the flexibility of delivery times.
The findings suggest e-commerce businesses benefit from collaboration and external support when it comes to optimising and developing their value and supply chains and that a wider longer term commitment to innovation is the best overall approach to finding solutions and staying ahead of trends within a competitive marketplace.
The report also outlines how e-commerce businesses that are open to new ideas and regularly reviewing their approach to the last mile of delivery are far more likely to forecast and manage potential issues or challenges in advance. Some 65% of those businesses with an innovative mindset are conducting regular supplier reviews for cost savings and 59% are using third party planning and co-ordination to reduce overhead costs throughout their supply chain, from packaging and production, to warehousing and transportation.
Olivier Cottard, global e-commerce and industries director, said: ‘Amidst this period of transition and fast changing trends, leading companies are developing innovative and effective ways to improve their e-commerce and supply chain models without compromising on customer service. The message from our survey is clear – innovative companies that are more open to new ideas, and which regularly review their set up around last mile delivery and explore new ideas with packaging suppliers, are better able to cope with the significant challenges that the e-commerce sector faces and in a better position to meet the demands of tomorrow.
‘Equally, those with an ambitious and innovative approach have a greater strategic advantage in terms of finding ways to protect their supply chain costs and either meet consumer demands, or excel above expectations.’
