Expectations around last-mile delivery options and quality have never been higher, as retailers and brands focus on this key touchpoint for end consumers. For smaller businesses, this is particularly important, with a recent report from Geopost suggesting that 86% of SMEs believe that a good delivery experience is essential to the success of their business.
Respondents in DHL’s E-Commerce Trends Report agree, with 95% of online shoppers saying that delivery options influence where they spend their cash.
But are last-mile delivery providers doing enough to cater to the needs of retailers and their customers, and what do those retailers and customers actually want? Understanding these needs is crucial to the success of last-mile operators.
Rob Wood, marketing and e-commerce director at PMT (Play Music Today) and previously e-commerce director at toy retailer The Entertainer, believes that end customers’ requirements for delivery at his business are relatively simple. “Customers don’t ask us for anything groundbreaking,” he says. “If you read our Trustpilot reviews you’ll see that their number-one priority is safe, reliable delivery.”
A demand for certainty
For last-mile delivery to be considered safe and reliable, end consumers must have confidence that their parcels will be handled carefully, especially at this crucial final touchpoint. “With last-mile delivery, knowing who your local driver is can often make all the difference,” explains Wood. “People just want the confidence that parcels will arrive when they expect and be treated sensibly if there’s no one home to receive them.”
Andrew Busby, a retail consultant for Redline Retail, also highlights the need for confidence in a parcel’s safe arrival when expected but believes some last-mile operators are getting their priorities wrong. “Certainty is vital. It often doesn’t necessarily need to be same or next day, but I need to be confident that it will arrive when I’m told it will,” he argues.
“Last-mile delivery providers are generally pretty good. However, they are all missing the trick of certainty and it’s costing them in their supply chain,” Busby continues. He believes this is because many assume that speed overrides certainty. “Always assuming the customer wants their delivery ASAP is ramping up costs for the retailer,” he adds.
According to Ryan Hunter, chief sales officer for DHL eCommerce, this was evident in the DHL survey: “Customers want to know where their orders are, so they expect transparency and real-time visibility. Our report found that customers value this more than speed.”
Delivering on promises
“It’s in the basics,” says Thiemo van Spellen, global accounts managing director at Geopost. “It’s about predictability and reliability. Reliability is a key priority, so it’s about promising what you are going to do and then doing what you have promised.”
Such visibility is even more important when it comes to cross-border delivery. “With cross-border parcels, it’s crucial to have a clear promise to the market and day-definite delivery,” van Spellen continues. “It’s about sharing in advance what the expected delivery time will be and then making it happen. You don’t have to always be the fastest as long as you have a clear promise and deliver that.”
A need for clearer communication
Dave Elston is a former head of e-commerce at shoe retailer Clarks and fragrance business Penhaligon’s and is currently working as an e-commerce and digital consultant. In addition to his experience at retail giants such as Clarks, he’s witnessed first-hand the challenges of last-mile delivery for SMEs with his UK artisan food and drink business, Elston & Son.
In some cases, he reports, parcels were damaged during transit but neither he nor his customers were notified. It was only by proactively checking delivery progress himself that he’d discover a problem. It was then up to him to contact the customer and update them. “There was no automated notification process that there was an issue. I had to go and pull the information, it wasn’t pushed to me,” he says.
“I would look and see that it had been returned [by the carrier] because it had been damaged, but it would have been much better if there had been an automated notification that said: ‘I’m sorry, this parcel has been damaged and we are returning it to you.’”
Transparency should be a key focus for last-mile operators, according to Geopost’s van Spellen. “It’s sharing every scan and the whereabouts of every parcel, as well as potentially notifying them [the retailer] if something is going wrong along the way, to allow them to inform their customers,” he explains. “Things can go wrong everywhere, so seeing it and then communicating to the right stakeholders is a key development area.”
A range of delivery options
Sam Holden, chief commercial officer at Yodel, agrees that reliability and security are top priorities for retailers in their choice of last-mile delivery provider, but believes that it’s also important to ensure a range of delivery options to give customers maximum choice.
“Being able to provide flexibility and convenience for end consumers – such as offering the option to collect parcels from local stores rather than via home deliveries – is an increasing priority to ensure high levels of customer satisfaction,” she says.
According to DHL’s Hunter, retailers also look to their last-mile delivery partners for information about consumer preferences in markets they don’t know so well. “E-tailers rely on us and our expertise because we are an integral part of their customers’ customer journey,” he explains. “As a logistics partner, you help your customers understand which shipping options are preferred in a specific market. Do people prefer home delivery or do they lean toward delivery to a parcel locker? It’s not just about offering a variety of options but also understanding the preferences in each market.”
Rebekah Ahmadi, head of final-mile development at Evri, argues that retailers’ priorities can vary based on factors such as their size, the delivery proposition they’d like to achieve and how they pick, pack and despatch. “For many UK-based clients, service stability, peak capacity and competitive pricing are top priorities,” she explains.
End consumer experience
Retailers also want their last-mile delivery partners to reflect their own values. “Every parcel that we deliver actually has two customers – the one sending it and the one receiving it,” comments Geopost’s van Spellen. “We have a physical interaction on a daily basis with the customers of our customers and that means that everything we develop in technology and in the interactions that we facilitate is literally aimed at both customers for each parcel.”
The Geopost SME survey highlighted the crucial role of the driver in this, with 77% of SMEs saying that they considered the driver to be at the core of the delivery experience.
Tim Jones, director of marketing, communication and sustainability at DPD, believes that a good doorstep experience is essential. “It has to be right first time – on the right day, at the right time and in perfect condition,” he confirms. “They’re the foundations. If that happens, we see that there are two great things for retailers – it drives up repeat orders and it minimizes contact. It’s about having professional, well-trained drivers that are uniformed, in a smart, clean van, and that understand the industry. We always keep in mind that we’re not delivering a box – it’s somebody’s present or an item they’re excited about.”
Technology’s role in tracking
This excitement and the need for certainty for consumers means that technology to enable detailed tracking is also important. Yodel offers a two-hour delivery window, full tracking capabilities with a driver map, delivered images, in-flight divert options and email or push notifications through its customer app. “These efforts are essential in providing our consumers with a more transparent, well-informed delivery experience,” says Holden.
Customer apps are increasingly being used by last-mile delivery partners to improve the services they offer. In the Geopost survey, 75% of respondents mentioned that the ability to interact with a carrier via an app was important to them. At DPD, end consumers using the app have access to additional tracking and interactive services, developed in response to consumer feedback.
“One of the things customers said was, ‘The one-hour notification is great and we can follow the driver but it would be brilliant if we got a message telling me I’m next,’” explains DPD’s Jones. The company has also introduced ‘more time needed’, another service exclusive to the app, which allows customers to notify the driver that they need additional time to get to the door.
Ahmadi believes that Evri’s investment in an efficient, user-friendly delivery app means the company has been able to streamline the delivery process for couriers, leading to improved productivity and accuracy. “This, in turn, has contributed to a more efficient and reliable last-mile delivery experience for customers,” she comments.
Ahmadi also believes that notifications help to reassure the customer: “Our accurate, real-time estimated delivery times enhance customer satisfaction and reduce anxiety. Our proactive notifications send timely updates about delivery status, delays or required actions – such as signatures – keeping customers informed and engaged.”
Technology can also be used to improve routing efficiency by providing couriers with real-time performance data through service quality dashboards and informing them of their remaining stops to enable better time management. And it can provide alerts when something is seen as a deviation from the norm, allowing remedial action to be taken.
Using technology to enable in-flight parcel diversions can increase customer satisfaction and reduce failed deliveries, thereby also increasing the efficiency of the last-mile delivery partner. “The ability to reroute shipments while they’re already in transit is becoming increasingly relevant,” says DHL’s Hunter.
Continual innovation is key
Continual innovation of services is key. At Yodel, Holden says the company is growing its out-of-home network but also highlights a new collection service for SMEs sending more than 50 parcels a week, with a new account service that is similar to accounts held by large-scale high-street retailers. She also points to the launch of Xpect XXL – a delivery service for large items. “This latest expansion of our delivery portfolio better serves a range of needs from larger retailers to SMEs and mid-market e-commerce businesses,” she confirms.
At DPD, Jones says that innovation is a cornerstone of the business. “Innovation is something we have always been known for and are always trying to do,” he says, highlighting the company’s use of autonomous delivery robots to deliver to end consumers. “That’s a very exciting technology that’s now become available at a commercially reasonable rate.”
Such robots are currently in use at four of DPD’s UK depots (Lincolnshire, Raunds, Bristol and Milton Keynes), delivering up to 30 parcels a day to customers who live within a 1.6km radius. “We are seeing these robots as a useful way of serving areas close to our depots, and it’s a wow for consumers as well,” continues Jones. The trial will be rolled out to four more sites by the end of this year from a selection of 30 potential sites identified as suitable.
The sustainability factor
Innovation also needs to take into account sustainability, which is becoming another deciding factor for retailers when choosing last-mile partners. “The demand for lower-carbon solutions is growing,” says Ahmadi, who points out that Evri’s 14,000 parcel drop locations and fleet of electric vehicles can help reduce the number of miles per parcel.
“Retailers across the board are asking for more sustainable deliveries and are reporting on that as well,” confirms DPD’s Jones. “They are looking for us to report on the amount of carbon we’ve taken out of their footprint. This is a massively important area that can differentiate you if you are doing it well.”
According to Jones, DPD’s new carbon calculator replaces the carbon certificates previously issued to companies. Now they can access their carbon reduction statistics whenever they want. He continues, “It is extremely important for the logistics industry to provide this sort of information to the shippers.” DPD now operates around 4,000 electric delivery vans – around 35% of its entire fleet – and has HGVs running on hydrogenated vegetable oil (HVO).
Jones argues that although the main demand for sustainable options is coming directly from retailers keen to meet their ESG goals, the end consumers also want and welcome sustainable deliveries.
DPD sends green notifications to its customers to let them know their parcel will arrive on an electric vehicle, and plants a tree on their behalf when they have received 10 electric-fueled deliveries. “That was in direct response to consumer feedback saying, ‘It’s fantastic that our parcels are coming on an electric vehicle – I’d just like to know about it,’” Jones explains.
Ahmadi sums up what last-mile partners should be doing to win more business from the retail sector: “Logistics operators should be enhancing efficiency and reliability through technology investments, network expansion and sustainable practices. Improving customer experience by providing real-time tracking, flexible delivery options and excellent customer support is another key factor. Focusing on sustainability by investing in green logistics and partnering with sustainable retailers can also attract more businesses. Finally, leveraging data and analytics to optimize operations and identify areas for improvement is essential for success in the competitive retail logistics market.”
Right on track
How route optimization technology helps operators provide a better service to their customers
Efficient and reliable delivery, as well as improved sustainability, can be enabled by route optimization. “Route optimization is effectively unseen by the end customers,” explains Jason Fry, senior business development manager at RouteSmart.
Alongside delivery order sequence optimization, Fry says route optimization can be a game-changer: “Maximizing efficiency in fleet deployment significantly reduces fuel consumption and associated costs (such as vehicle maintenance) as well as an organization’s carbon footprint.”
Allowing for more deliveries per driver per day while still meeting specific time windows for deliveries helps to improve the customer experience. Route optimization can also increase delivery safety by eliminating dangerous turns and accounting for specific-side-of-street delivery, according to Fry.
It can also help last-mile operators manage the inevitable headache of fluctuations in order volume and delivery patterns. “Route optimization allows distributors to adapt more quickly while improving delivery accuracy and reducing missed deliveries, which a retailer is keenly aware of,” he continues. It also enables tighter delivery windows, while a reduction in costs potentially allows for free or lower-cost shipping options.
Fry admits that cost and legacy systems can be hurdles to overcome in implementing route optimization but says the investment is worthwhile. “Forward-thinking last-mile providers recognize that embracing these technologies is crucial to remaining competitive,” he adds. “Those who invest in route optimization, AI and other advanced technologies are seeing significant improvements in efficiency, cost-effectiveness and customer satisfaction.”
This article was originally published in the December 2024 issue of Parcel and Postal Technology International
