Last-mile delivery costs account for 40-55% of total delivery costs, a survey by Atos and HERE Technologies has found.
This complex and costly part of the supply chain has been fast-forwarded by five years thanks to the pandemic – and the research has identified both urgent challenges and major opportunities.
Consumers are now showing a preference for subscription-based services and there is an increasing interest in sustainability.
At the same time, companies can increase efficiency and improve performance if they use data and automation in their supply chain. This is critical as the cost of a failed delivery is worth an average of $10, according to a 2019 Capgemini report.
The survey asked 2,500 consumers about their online purchasing habits, delivery preferences, pain points and experiences. It found that consumers' priorities are changing. While well over half – 57% – said they would go elsewhere if they were not happy with their delivery experience, speed and cost are not the only factors.
Quick delivery was a priority for most of those surveyed, but 41% of respondents said they are concerned about the impact of online delivery on the environment.
Younger shoppers are more likely than any other group to prioritize eco-friendly delivery, with 36% of Generation Z respondents listing it as a top priority compared with 27% of consumers over the age of 46.
Almost a third of respondents – 31% – said they would pay a premium to ensure eco-friendly delivery, with that proportion increasing among younger shoppers.
Meanwhile, two-thirds of those surveyed said they would be willing to pay for delivery subscriptions with $5-$10 the 'sweet spot' for price.
Our survey shows that customers could leave a favorite brand if delivery is costly or leads to a poor customer experience. Yet the last mile is the most complex leg of the logistics journey because drivers must contend with limited or difficult parking options, irregular street addresses, traffic and unexpected road incidents and increasingly busy and growing cities and traffic volumes. There is an urgent need to minimize the impact of these external factors to provide the quality of experience that customers are looking for.
Technology is a critical enabler for any company to optimize last-mile delivery to retain customer loyalty, improve sustainability and compete effectively in this dynamic and fast-growing space.
It can be used to reduce companies' carbon footprints, not only through electric fleets but also by reducing time spent idling in traffic and improved routing.
Research shows that retailers subsidize last-mile delivery by about 20%, with customers unwilling to cover the total cost, thereby threatening profitability. So optimizing last-mile delivery to ensure a high-quality delivery experience not only ensures customer satisfaction to retain loyalty and protect the brand, it is also necessary to make essential savings across the business and support the bottom line.