Bryan Wyatt | Senior Manager, Transportation | Chainalytics
The term “last mile” originated outside our industry. In fact, it comes from the telecommunications industry and refers to the installation and delivery of communication services to the end client.
In the realm of transportation, though, last-mile delivery means the item’s final destination in the supply chain (for ecommerce deliveries, that mostly means to the customer’s home or sometimes office).
In the early days of ecommerce, customers simply expected to order parcel-size items online. But with today’s ecommerce boom, they expect to be able to order anything online—from shoes and clothes to a new dishwasher or that shiny new riding lawn mower they’ve been dreaming of. Now, their shipping expectations extend far beyond what items they can buy, to shipping costs and also how and when their goods will be delivered.
Why It’s Important to Establish a Best-in-Class Last-Mile Operation with the Right Carriers
Only a few years ago, online small package orders were limited to what the U.S. Postal Service, UPS, or FedEx could handle. With large or over-sized item shipments, the best a customer could hope for was that the shipper sent the item to the store closest to them. Then, the customer would have to figure out how to get the item from the store to their home, across the threshold, and then into a garage or in-home area.
With new white-glove delivery and in-home set-up or installation options included in last-mile delivery these days, the ongoing last-mile irony gets even more complicated. Last-mile delivery has the very same logistical challenges it did years ago: finding the best way to transport a large item, unload it from a truck, and get it to the final destination.
Only now, the last-mile delivery onus is on the retailer, including scheduling delivery at a time when the customer is at home and having the product delivered at the cheapest cost possible, often for “free.”
Given the operational and financial constraints for retailers, it’s imperative to optimize last-mile delivery. To succeed, we advise that retailers start by selecting the right carrier for the job.
You’ll want to start the process by first matching your freight demands to the carrier or carriers who can manage your last-mile deliveries effectively. But selecting the right carrier goes beyond finding a company that can properly transport the freight. Your carrier will need to handle it the same way you would if delivering via your own private or branded fleet, to ensure you retain customers as well as protect your company’s reputation and brand.
Keep in mind that that the carrier’s driver is the last person your customer interacts with before the transaction is complete. The customer experience with that carrier’s driver leaves a lasting impression. What’s more, social media pretty much guarantees dissatisfied clients will share any negative experience with a whole multitude of existing and potential customers.
You’ll need to think first about how you need the freight delivered and what additional services your customers are expecting, which can vary enormously. For example:
- If you are a retailer selling faucets, do you offer installation services? If so, this requires far more than successful delivery; you’ll need to schedule a qualified installer, which requires multi-step coordination with the arrival of the technician–all while considering customer availability. In this case, the shipper would track the delivery of the parcel to the installer, not to the customer. Then once the package arrived, the installer would arrive at the customer’s home at a predetermined time and day with the faucet. While there, they would install the new faucet.
- What if you are selling riding lawn mowers? These products can’t be moved through a traditional parcel network; the shipment requires a more hands-on approach, like one provided by a home delivery carrier that specializes in large equipment. In this case, you need a carrier who can not only handle large items efficiently through their network but also deliver to a variety of customers’ homes via a lift gate on the back of the truck and most likely has a pallet jack to move the item around. Additionally, the driver may need to be trained to address questions–or even start the mower or provide a product demonstration–to reassure the customer the product is in proper working order.
When selecting a carrier, it’s important to think not only about the current requirements for your freight, but also future customers’ expectations and requirements.
At the same time, it’s important to take a step back and be honest with ourselves—we can’t anticipate everything. What’s more critical is developing a solid partnership with one or more reliable carriers who will provide continuous feedback so you’re aware of changing customer demands.
Your carrier needs to be agile and provide services on-site as the customer requests them. And you’ll need to give them the flexibility to charge for those extra services to keep customers happy. A driver that says, “we don’t do that” is a sure step to losing future sales. In many cases, carriers are already providing extra services to keep customers happy. However, expecting carriers to continue to absorb these costs is short sighted. As an industry, we expect a transfer of these charges to the shipper, either through increased base rates or new accessorial charges. As this shift occurs, shippers must be able to trust their carriers and be confident they will not abuse the arrangement by charging for services not rendered.
Last-mile delivery is constantly evolving. Only by partnering can shippers and carriers build the right infrastructure for the future.
I’ll be writing more about optimizing last-mile strategies in future blogs and articles–addressing the different transportation modes common to last-mile delivery and the operational challenges each presents.
A senior manager in the Chainalytics’ Transportation competency, Bryan Wyatt has over 20 years of experience and expertise in transportation operations, strategic sourcing, data analysis and logistics planning, as well as logistics/supply chain change management.
Read More Chainalytics’ Ecommerce & Transportation Insights