Global eCommerce - Last Mile Challenges

Along with the seemingly inevitable rise in global eCommerce, especially into emerging markets, comes unexpected “last mile” challenges. According to the UN, nearly four billion people worldwide live in residences without street names and numbers, while in some parts of the Middle East, as much as 40 percent of packages are undelivered and returned to sender with the deliverer unable to locate the recipient’s address.

Continued problems with the last mile – the distance from local distribution center to recipient’s address – make that final part of the delivery journey the most costly, accounting for up to 50 percent of the entire delivery costs. However, as with most developing markets though, especially in emerging markets, the challenges associated with last mile delivery also create a considerable opportunity for those willing to tackle the problem by constructing innovative business models and flexible logistics operations.

As parcel delivery increasingly moves from business-to-business to business-to-consumer, courtesy of such industry powerhouses as Amazon and eBay, so retailers are looking towards last mile delivery efficiency to reduce costs. However, globally, many of those problems relate to delivery address ambiguity and may require a sizable shift in infrastructure. In many countries, it is not simply the economically poor areas that lack suitable location addressing, but a problem countrywide.

Other challenges for the last mile include: customs requirements varying between countries, even neighboring countries; bad signage; lack of post codes country-wide, such as with United Arab Emirates; and language difficulties with delivery personnel having to translate addresses in multi-cultural and multi-language communities. Some countries just don’t support door-to-door deliveries.

But last mile problems are not simply the domain of emerging markets or rural and remote locations. Busy urban environments also have their own set of problems. City traffic congestion can raise fuel costs significantly, as can the physical time it takes to deliver each package. And as the business-to-consumer market increases, the single-package delivery for each stop, as opposed to the multiple package delivery of business-to-business, will also increase.

Some companies have turned to innovative solutions in addressing the last mile problem, such as utilizing GPS in delivering to mobile phone location instead of a residence, or even remapping the global landscape into three-meter squares to allow delivery to a numbered square instead of a physical location. Cloud-based technologies, along with personalized consumer-driven delivery options, are set to change the very playing field on which the delivery infrastructure rests.

Additionally, the importance of the last mile cannot be overestimated. In an increasingly online world, delivery is often the only touch-point between eCommerce retailer and consumer, even though for many companies it is through a third-party delivery entity.

And while the future of physical parcel delivery and the problem of the last mile surely involves drones, especially for rural destinations, self-driving trucks and robots, at least for sorting, it will also require a different way of addressing locations as well as a different logistical mindset by companies. Increasingly, companies that rely on traditional distribution and supply chain operations, along with logistics networks that have remained unchanged for many years, will inevitably suffer.

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