The last mile delivery ecosystem

The last mile delivery ecosystem


A new era of online presence has begun and consumers are embracing online selling like never before.

In the past three months 81% of consumers have shopped online all over the world. A minimum of 2.2 billion people are expected to take the plunge and buy products online this year. Mobile devices will be responsible for a lion’s share of those sales.

There hasn’t been a bigger change to the last mile delivery ecosystem than what has happened in the past few years. Online consumers are ordering, while waiting better control and faster deliveries. Disruptive technologies, like droids and drones, are disrupting delivery chains.

Recent trends in last mile deliveries

Reasons for increased last mile delivery

Emerging software solutions have enabled the delivery of players such as Uber Freight and Postmates are rapidly changing the dynamics of this competitive landscape. Unprecedented growth has been seen in last mile delivery over the past five years, coupled with a substantial increase in e-commerce.

From 2014 to 2019, e-commerce sales ratios nearly tripled around the world, the pandemic only caused this situation to progress at a faster rate.

The reason for this trend can be attributed to a plethora of factors such as accelerated urbanization, increased purchasing power of the middle class, overcrowded clientele, technological advances, a wide range of products available online and the emergence of new digital business models, as well as delivery processes that encompass instant and time-controlled delivery.

Subway delivery scenario

In fact, the data shows that the growth of e-commerce is slowly but surely catching up with offline revenues. Offline revenue is expected to grow by 4.1% CAGR between 2019 and 2023, while e-commerce will grow by 17.2% per year. This will represent a 20.5% retail share worldwide in 2023.

The global transport of parcels in business-to-business (B2C) and business-to-business (B2B) commerce will increase significantly. B2B sales will increase in proportion to the increase in their consumer segment. China leads the pack with a 25% online retail penetration with digital giant Alibaba commanding a significant share.

Means of last mile delivery
Products undergoing digital transformation

When it comes to delivery times, the need for speed is an imperative factor contributing to the overall increase in demand for last mile deliveries. Deferred delivery will continue to be the most important delivery segment – with an expected delivery time of one to three days. The fastest growing segments in the last mile environment each year are Same Day and Instant Delivery, up 36% and 17% respectively.

Effect of last mile deliveries

The demand for last mile delivery is increasing year on year and is expected to reach 76% globally within a decade. A survey predicted that the number of delivery vehicles in the the 100 best subways in the world will increase by 38% over the next decade.

Essentially, it is about satisfying the ever-growing aspirations of consumers who buy products online without much intervention. But this will lead to a 30% increase in emissions from delivery vehicles and more than 20% congestion.

This will have a telling effect on the daily commute time of passengers by an additional 11 minutes. The challenge of last mile delivery is very pronounced in the freight segment. This in turn will give rise to – parking problems, congestion due to parking and higher emissions from commercial delivery vehicles compared to passenger cars.

Benefits of improved last mile delivery
Benefits of Better Last Mile Deliveries

Traditional online deliveries

Online retailers such as Amazon, Walmart, and Alibaba have traditionally started online sales in categories such as books, clothing, and electronics. Walmart’s online sales increased by 43% in the first quarter of 2019 before starting to record 40% year-over-year growth. But the trends of the recent year include new categories such as auto parts, pet supplies, office furniture, personal care products, baby care and gardening products.

Even though categories such as grocery, food and health products still dominate, other products are making influential online penetration. These new categories are gaining momentum and will quickly catch up / overtake physical sales.

Mastercard recently revealed that in the past two years, nearly $ 900 billion has been spent online. Overall, we will continue to see more products arriving in the online category and succeeding in the digital battlefield, resulting in an increase in last mile deliveries that will help conceptualize new business models.

Benefits of last mile delivery
Situation after a decade

Technology plays an important role in reducing delivery times. This allows for a more efficient supply chain process and the initiation of alternative delivery methods. In fact, many automotive suppliers have worked on concepts that support last mile delivery. Subways have indeed explored many solutions that include the last mile Eco space and these fall broadly into 6 categories: consumer movement, consolidation, change of vehicle, secure deliveries, final stage transformation and place of delivery.

Recommendations to ecosystem stakeholders

We found that interventions can have a global impact on people, planet and profit outcomes. But there is no one-size-fits-all solution that can solve all problems.

Emphasis was placed on how these interventions can reduce the negative impact of last mile delivery. To begin with, we present three different roadmaps for an integrated approach to optimize last mile delivery for private and public actors while reducing disruption to consumers.

Last mile delivery recommendations
Factors involved in last mile delivery

Introduction of electric vehicles

The first scenario is the introduction of electric vehicles (EVs) for urban areas, overnight deliveries and not during working hours, multi-brand lockers / parcel boxes as well as efficient data-based connectivity solutions for help with dynamic recovery. routing and grouping of loads.

This could reduce emissions of 30%, 30% congestion and 25% delivery charge.

Data sharing

In the second approach, we stress the importance of using data to develop and implement effective interventions. We encourage cities to develop data sharing models through systematic and data-driven traffic management and control, so that cities can combine data such as traffic, emissions and intersection data with of real-time traffic interventions and regulations.

Data availability is not the challenge. Cities and private actors collect a lot of data, but their analysis to derive conceivable information and build a corrective to measure the impact of interventions, as well as intersectoral collaboration, is not privileged.

Software solutions

Finally, automotive suppliers, logistics players and infrastructure providers accept the move from hardware to a growing number of software solutions and hasten their efforts in analytical sphere, enabling the use of real-time routing and route planning solutions, intelligent load pooling, flexible pricing settings, etc. This can be done by building their capabilities or – as in most cases – can happen through an increased level of partnership and merger-and-acquisition activity.

Delivery services

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