2021 brought many disruptive influences – from the pandemic and Brexit border concerns to the Suez canal blockage and driver shortages. In this piece Rob van den Heuvel, CEO at Sendcloud, predicts how last mile delivery will change in 2022.
1 Revolutionising the last mile thanks to robotisation and new ways of delivery
Every second 3248 parcels are shipped worldwide, and if the forecasts are true, we can expect the global parcel volume to double by 2026. Keeping up with growing parcel volumes and consumer demands requires a modern approach; thus adopting new technologies and clever solutions is essential. For this reason, a growing segment of retailers and carriers are starting to experiment with robotic delivery in the form of self-driving vehicles, drones and autonomous delivery robots.
Even though it might sound like science fiction, practical implementations are twinkling on the horizon. E-commerce giant Amazon already invested close to 530 million dollars in self-driving car company Aurora to change the way we deliver. But they are not the only ones. Closer to home, UK tech company StreetDrone says driverless delivery vans could be operating on UK streets by 2023 and is set to run a trial with Oxford City Council.
Although delivery robots are still in their early stages, we will have to get used to the fact that in the near future we will see the delivery man disappear. Even now, we are seeing the face of the delivery person less and less often due to the rise of parcel lockers.
2 Flexible delivery becomes the norm rather than the exception
It is no surprise that consumers are becoming more and more demanding. Consumers nowadays want to choose themselves where, when and how an order is delivered. As a result the demand for same day delivery is rapidly growing and it is estimated that same day and instant deliveries will reach a combined share of 20-25% of the entire last mile delivery market by 2025.
67% of UK shoppers say that flexibility in delivery is key to them. They want to decide where, when and how to receive an order themselves. Couriers are increasingly meeting this demand by offering flexible delivery options.
Take, for example, the rise of on-demand delivery services such as Zapp, or look at traditional couriers such as Royal Mail who are testing Sunday deliveries. If retailers want to engage their customers in the long term, they must embrace these kinds of flexible delivery options.
As a result, we expect carriers to focus more on consumer-centric technology in 2022 as well. In response to huge parcel volumes, carriers have been pushing hard to expand their delivery capacity in 2021, investing heavily in staff, warehouses and their fleet. However, in order to meet the desire for flexibility couriers will have to rethink their operations in order to put the customers’ needs first.
3 Address intelligence is becoming key for successful deliveries
With the growing volume of parcels, missed deliveries are becoming an increasing problem. Not only does it cause frustration for both consumers and delivery drivers when a parcel cannot be delivered, it also comes at a significant cost. Big data can help to make the last mile more efficient and increase the chance of a successful delivery.
To balance cost-to-serve, parcel companies should be in control of the delivery costs on a customer level: which deliveries and customers actually bring profit? ‘Address intelligence’ can help to identify alternative delivery (and returns) networks and options for specific areas. For example, in the city centre of London the majority of houses are empty during the day. Therefore it doesn’t make sense to send a delivery guy during business hours. Based on ‘address intelligence’ it could be more efficient to offer evening delivery instead.
An easy way to implement ‘address intelligence’ is identifying early in the buying process how the customer wants to receive their parcel. Already in the checkout, retailers can check how the customer wants to accept a parcel, to make sure the logistical processes can be adjusted accordingly. By doing so, both online retailers and carriers can adapt their supply chains to become more efficient.
4 The Green Deal forces companies to structurally invest in sustainable delivery
Green delivery has been a hot topic for years now. However, with the signing of the European Green Deal in July 2021, the search for green delivery methods is more urgent than ever. In the Green Deal, the UK government has a legal duty to achieve net zero greenhouse gas emissions by 2050. One of the ways to achieve this ambitious goal is to reduce the emission of delivery trucks by 50 percent.
Not entirely surprising, then, that many carriers are investing massively in making their operations more sustainable. For example, DHL invested in its first electric trucks this year, and DPD wants to deploy only vehicles that emit little or no CO2 in 25 of the UK’s largest cities by 2025. However, there is still much to be gained when it comes to making delivery more sustainable, so it is only logical that this trend will continue in the coming years.
5 Race against the clock: redefining the importance of delivery time
2021 was definitely the year of the flash delivery driver. Parties like Zapp, Getir, Flink and Gorillas advanced massively in European cities. Their promise? Within 10 minutes your groceries are at your doorstep. Millennials are using this service en masse, but meanwhile there are many concerns about this type of delivery. For example, how sustainable is flash delivery and is this method of delivery at all desirable?
At the same time we see that consumers are generally becoming more patient when it comes to the delivery time of online orders. While consumers in 2020 expected their online orders within a maximum of 4 days, they are now willing to wait up to 5 days. Apparently consumers want certain orders in a foreseeable time, while in other cases they are quite patient. This offers food for thought in the year ahead of us: what determines what delivery time is expected?
6 Delivery subscriptions are on the rise
With Prime, Amazon was one of the first to come up with a delivery subscription: for a fixed amount per month or year, consumers can enjoy all kinds of benefits, including discounts on shipping and premium delivery options. Nowadays the subscription model is offered by a growing number of retailers, such as Asos with Premier Delivery and Zalando with Plus. And not without reason, as delivery subscriptions are proving to be a golden move to engage consumers in the long run and boost conversions.
With consumers ordering more and more online, delivery subscriptions are only getting more tempting. After all, the more you order, the greater the benefit. Consequently, by 2022, delivery subscriptions promise to play an increasingly important role in the shipping strategy for online retailers. Although we are now seeing subscriptions only at larger retailers and marketplaces, it will be a challenge for small retailers to respond appropriately.
Written by Rob van den Heuvel, CEO at Sendcloud