Making the Last Mile Pay

One of the biggest tests of agility for the consumer products and retail industries currently is last-mile delivery and associated services (e.g. returns).

These services are now so pivotal to the customer experience that they are determining brand choices as never before.

Achievements in getting products efficiently to the warehouse now need to be matched by equivalent improvements in getting goods to (and from) consumers.

It is a challenge that has been seized widely and zealously.

Such is the level of competition among retailers and logistics companies to ‘go one better’ that consumers have become spoiled by the available options.

Next-day home deliveries, once the pride of Internet sellers, are now expected as a given.

To differentiate anew, leaders have had to up their game with same-day or ‘on-demand’ services - from drone deliveries to advanced ‘click and collect’ options using nearby convenience stores, intelligent lockers in underground train networks, and even drop-offs to consumers’ cars.

But all of this responsiveness and customer-centricity comes at a high price.

Consumer research suggests that although customers expect their increasingly demanding needs to be met, they are not prepared to pay more for the improved level of service.

Rather, it is down to the suppliers to earn their business by keeping up with the market.

This presents retailers with an almost impossible challenge. If they cannot match their competitors and satisfy consumers’ soaring expectations, they will lose business. But if they try to cover all bases they risk their profitability.

All of this is creating the need for new, dynamic collaborations and partnerships.

As discussed in a major report, Rethinking the Value Chain, from Capgemini in conjunction with The Consumer Goods Forum, there is no one-size-fits-all solution
that will balance customer expectation and cost optimization. Particularly given the many variables at play in the last mile – based on geography, demography, labor
laws, local preferences and demand for add-on services.

Soaring demand for ‘mass customization’ renders traditional logistics and associated metrics irrelevant. Yet revamping entire supply chains is a massive, costly and
impractical prospect for bricks-and-mortar retailers whose supply models were crafted to support a linear path to purchase.

Taking these many challenges into account, the following white paper examines the latest innovation in last-mile services and explores how companies can harness the opportunities, and keep customers happy, without undermining their businesses - or promising more than they can deliver.