E-Commerce Is Booming: Is Your Final Mile Strategy Up to The Challenge?

final mileU.S. e-commerce sales are projected to grow 18% to a whopping $709.8B in 2020 alone, with e-commerce representing 14.5% of total retail sales- a new record, according to a recent report from market research firm eMarket. Clearly, the impact of the COVID-19 pandemic is reverberating through the world of retail, with consumers increasingly opting to make purchases online rather than shopping in person. E-commerce sales have risen across numerous categories, including books (+295%), cleaning supplies (+235%), and grocery items (+113%), according to Rakuten Intelligence.

Retailers are also seeing increased e-commerce sales of big and bulky items, such as furniture, home gym equipment, and appliances, which consumers have traditionally preferred to purchase in person. According to Statista.com, “69 percent of furniture retailers in the United States reported that they planned to increase their focus on e-commerce in response to the coronavirus (COVID-19) pandemic.” Rakuten Intelligence reported growth of 131% among sports and outdoors items, which includes gym equipment, from March to April 2020. In Q2 2020, Home Depot’s online sales were up 100%, with big increases in sales of appliances, riding lawn mowers, and patio furniture. Ted Decker, EVP, Merchandising for The Home Depot commented on the retailer’s Q2 earnings call that they have seen “triple-digit growth” in e-commerce orders paired with home delivery.

While retailers welcome the surge of online orders, the increased sales of big and bulky items pose unique final mile delivery changes. As the name implies, final mile (also known as last mile) logistics is a specialized mode focused squarely on the final leg of a shipment’s journey to its destination. Final mile arose as a standalone mode due to the complexities in delivering to locations that lack loading docks and other receiving and storage infrastructure. Such locations include residences, small retail locations with limited storage, job sites, as well as retail locations with limited access. While final mile can often refer to the delivery of small parcels to residences, the needs and challenges of delivering shipments which are larger than small parcel to these challenging destinations are often overlooked.

What makes the successful final mile delivery of big and bulky items so challenging? There are several factors. Many shippers rely on LTL carriers to act as their last mile delivery partner, rather than utilizing a combination of LTL linehaul and dedicated final mile delivery provider. This approach carries a variety of risks, including steep accessorial charges, such as Notification, Lift Gate at Destination, Residential, Inside Delivery, Jobsite Delivery and Limited Access. Shippers that have experienced these accessorial charges can attest to their negative impact on the total landed cost of a shipment- particularly when assessed with multiple charges. However, the challenges don’t end with accessorial charges. Using an LTL-only approach carries a higher risk of damage due to frequent loading and unloading of freight, as well as damage caused by delivering into locations with no loading dock.

Perhaps the greatest challenges of final mile delivery are ensuring appropriate levels of customer service and delivering a customer experience that is aligned with your brand. Entrusting a shipment to a carrier is one thing; partnering with a carrier that interacts directly with your customer at the point of delivery is another. Your last mile provider is seen by your customer as an extension of your brand. If they are unprofessional in their attire or demeanor, if they fail to deliver on time, or if they do not perform expected services such as installation, assembly, or hauling away old equipment,  your customer will take notice and may form negative associations which damage brand loyalty.

As e-commerce continues to grow, it can strain your existing final mile operations, especially if your final mile solution is not integrated with your TMS. A TMS offering final mile functionality should make booking, tracking, and managing your final mile shipments seamless and efficient. Ideally, the system should automatically pair the LTL linehaul provider with the appropriate dedicated final mile provider, eliminating the complexity of coordinating these moves manually. A robust TMS for final mile should automatically combine multiple BOLs, PODs, and invoices into a single document, eliminating the hassle of managing multiple sets of documentation. Lastly, your final mile TMS should fully integrate with your e-commerce platform, creating a streamlined experienced for your customers as well as your internal logistics operations team.

As Director of Customer Solutions at GlobalTranz, Karen Tyndall provides shippers with consultative supply chain solutions that reduce costs, drive efficiencies, and create strategic advantages. With nearly 15 years of logistics, transportation, and supply chain experience, Karen has extensive experience in delivering transformative supply chain solutions, including Managed Transportation, Final Mile, and TMS technology.

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