The increasing popularity of omni-channel retailing has created many challenges for transportation and logistics providers servicing retailers. This has forced transportation operations to think outside of the box and make significant changes to their service offering portfolios. Omni-channel retailing has made fulfilling customer orders efficiently and cost effectively much more complex with a variety of new distribution strategies. E-commerce orders grew 47% between 2009 and 2014 in comparison to only 6% at brick and mortar store locations. E-commerce sales are expected to reach $2.3 trillion by 2017. This shift in retail channel utilization has increased the order fulfillment needs and associated labor costs. Retailers are evaluating existing distribution networks to verify they can handle the added volume and are seeking out additional delivery solutions as a supplement. In many cases, these additions are in the form of local and regional distribution centers. Rising shipping costs have also been a significant challenge for last mile delivery as they account for approximately 28% of total transportation costs. Shippers have many options for counteracting rising shipping costs including: intermodal freight utilization to link logistics clusters, shipment consolidation with crossdocking, primary delivery channel elimination and click-to-collect/ parcel locker centers to consolidate parcel drop-offs. Governmental regulations have also created problems related to last mile logistics, both in the US and abroad. Regulations such as vehicle size and weight limitations, parking policies and noise restrictions. To avoid these issues some transportation operations are investing in smaller delivery vehicles for use in local regional delivery operations. These vehicles are typically more compliant with imposed noise and size restrictions. In areas where even these smaller vehicles are not an option some logistics providers have started to offer bike delivery and contracted one-time delivery services through businesses such as Uber. Demand for up-to-date order information has also become an issue for many omni-channel retailers. Customers now want to know when their order has been accepted, processed, shipped and delivered. In order to provide this level of detail omni-channel supply chains are implementing inventory management software such as WMS with customer relationship management capabilities to provide real-time information to customers. In order to provide a positive final impression on consumers retailers must focus on last mile logistics. Focusing on these potential solutions can help retailers to improve the effectiveness, efficiency and cost of last mile delivery operations. Learn more from Datex experts now at marketing@datexcorp.com or www.datexcorp.com .

1. WHAT IS LAST
MILE DELIVERY:
PART 2: ADAPTING TO
RETAIL & E-COMMERCE
ORDER FULFILLMENT
CHALLENGES

2. What is Last Mile Delivery?
• Last Mile Delivery is the movement of goods from a retailer’s
transportation hub to the final delivery destination – consumer
homes – with the goal of items being delivered as fast as possible.
• The growing demand for fully integrated omni-channel retailinghas
forced retailers and their transportation and logistics partners to
adjust to a new series of challenges encountered.
• The challenges will force transportation and logistics businesses to
think outside of the box and make significant changes in their
portfolio of delivery offerings.

3. Evolution of Last Mile Delivery
The addition of the last mile delivery methods pictured above are in response
to the added complexity that comes with omni-channel retailing. Logistics
businesses worldwide have battled a variety of challenges in order to make
these methods successful.

4. Last Mile Delivery Challenges:
e-Commerce Growth
2009 Future2014
Brick & Mortar eCommerce
• Surveyed retailers reported that between 2009 and 2014 e-Commerce sales
skyrocketed with an increase of 47% compared to that of brick and mortar
locations which saw an average 6% increase. E-Commerce is expected to
reach $2.3 trillion by 2017.
Brick & Mortar vs. eCommerce Revenue
Growth

5. Last Mile Delivery Challenges:
e-Commerce Growth
• This shift in retail channel utilization poses problems for retailers:
how to manage increased order fulfillment requirements and the
associated costs.
• The solution? Evaluate current shipping capabilities to determine
whether or not your delivery network can handle the additional
volume moving forward. If not, search for alternative delivery
solutions to incorporate into your distribution network.
• This may be in the form of smaller localized distribution centers,
outsourcing in appropriate areas or more creative solutions such as
drones or click-to-collect locations.

6. Last Mile Delivery Challenges:
Rising Shipping Costs
• Last Mile Delivery is often the least efficient leg of the supply chain,
contributing to nearly 28% of total transportation costs. This is referred
to as the “last mile problem”.
• How can you reduce shipping costs?
1. Utilize intermodal freight channels to link logistics clusters. Some lower
populated areas can not justify dedicated logistics centers and rail
transportation can help to connect first mile and last mile logistics. This can
help to reduce or eliminate the cost of OTR transportation.
2. Consolidate shipments using crossdocking. Many carriers report low load
factors - the ratio of average load to total freight capacity. Consolidating
more LTL deliveries into fewer FTL deliveries can help to reduce last mile
delivery costs.

7. Last Mile Delivery Challenges:
Rising Shipping Costs
• How can you reduce shipping costs?
3. Eliminate primary delivery channels such as UPS, FedEx and USPS by
shortening delivery routes with strategically placed distribution centers.
Traditional distribution operations may have only 3-5 facilities where last
mile DCs may have anywhere between 8-12.
Shorter delivery routes help to reduce fuel costs associated to last mile
delivery and avoid the ever-increasing shipping rates of the primary carriers.
4. Offer click-and-collect centers or parcel lockers for delivery. This helps to
consolidate multiple direct-to-home deliveries into a single drop off.
$$$

8. Last Mile Delivery Challenges:
Government Regulations
• Many municipalities, both US and abroad, face limitations within
residential areas such as weight & size limits, parking policiesand
noise restrictions. This can pose problems in regards to size of
vehicles, delivery times and other issues.
• How can you remain compliant? Many transportation and
logistics businesses have invested in smaller delivery vehicles foruse
in local regional delivery. These smaller vehicles typically make less
noise and comply with size and weight restrictions.
Some businesses have also shifted delivery times to evening hours
to avoid daytime noise regulations.

9. Last Mile Delivery Challenges:
Overpopulation
• Countries such as China, India and the US have densely populated
urban areas that make last mile delivery more difficult. In some
cases, motorized vehicles are not a feasible option and alternatives
must be explored.
• The solution? Amazon Now is one example of how retailers can
efficiently fulfill orders in these densely populated areas. With this
service local courier businesses complete last mile delivery services
on behalf of the retailer. These businesses act as one-time
contractors on an as-needed basis. In areas where motor vehicles
are prohibited, last mile delivery by bicycle is also being used.
These types of services are best used for small and lightweight
packages.

10. Last Mile Delivery Challenges:
Information Visibility
• Customers now expect detailed information regarding their online
orders including when their order has been accepted, processed,
shipped and delivered. Tracking and communicating details about
these orders throughout the multiple steps of the omni-channel retail
supply chain can be complex.
• How can you gain cross-channel supply chain visibility?
Many retailers and their supply chain operators are implementing
inventory management software or warehouse management
software to track inventory data throughout the supply chain.
These systems, if built to fit your retail operation, can provide full
audit trail data capabilities to both you and your customer. This will
help to satisfy customer demand for full visibility into order status.

11. Conclusion
• With e-Commerce revenue expected to reach $2.3 trillion by 2017,
retailers and their transportation networks must be capable of
adapting to changes in both volume and customer expectations.
• Last mile delivery is the last touch point with consumers and plays a
vital role in customer satisfaction and loyalty. Focusing on the
potential solutions outlined can help your retail operation improvethe
effectiveness, efficiency and cost of last mile delivery operations.

12. Contact Us
Sources:
https://www.mitchellsny.com/blog/overcoming-last-mile-logistics-challenges/
http://www.colliers.com/-/media/Files/Global/ResearchReports/Colliers-From-First-Mile-to-Last-Mile-Global-Logistics
http://logisticsviewpoints.com/2015/04/01/e-commerce-growth-brings-last-mile-headaches/
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