Last Mile Delivery and Other Trends In Order Fulfillment

Apr 7, 2021 | Blog, Fulfillment

As online shopping grows in popularity and ubiquity, retailers and logistics providers have tried to find innovative ways to fulfill consumer expectations. While order fulfillment is still the backbone of retail businesses, today’s customers want fast delivery times. Thus, the main challenge for businesses is to deliver fast while keeping costs low.

The modern customer’s expectations of fast delivery come from online retail speed. By choosing products and finishing purchases with the click of a single button, they get into the mindset that their purchases should be delivered quickly. That’s why ensuring your product arrives at the customer’s door as soon as possible is essential to maintaining customer satisfaction.

Order fulfillment starts when the customer puts the order in and finishes when the item arrives at their door. For most companies, the final leg of the fulfillment process, often called last mile delivery, is the most challenging and expensive.

Keep reading to learn more about last mile delivery and how you can use it to optimize order fulfillment.

Understanding Last Mile Delivery

Last mile delivery is the final part of the order fulfillment process, where a product leaves the warehouse on the way to its final destination: the customer’s home, in most cases. The key challenge of last mile delivery is to ship items as fast as possible while keeping expenses down.

Last Mile Delivery in eCommerce 

Last mile delivery can make or break an eCommerce retailer because the customer can find other stores that offer faster or cheaper shipping if you don’t fulfill their expectations. Unfortunately, last mile logistics are expensive – sometimes taking up more than half your logistics costs. 

Online retailers and third-party logistics (3PL) companies usually face a dilemma regarding last mile delivery. To offer free or low-cost shipping, they must pay for delivery out of pocket or impose order minimums to cover costs.

Factors That Influence Last Mile Delivery

When you shop online, you may notice a gap between your item being marked “out for delivery” and arriving at your doorstep. This gap and lack of transparency signify an inefficiency in the last mile delivery process.

The last leg of order fulfillment operations usually involves an independent shipping carrier delivering the package from your warehouse to the customer. Several factors influence how long this process takes, such as:

• Shipping company or 3PL provider size
• Number of orders it handles daily
• Carrier pickup frequency
• Distance between fulfillment center and recipient
• Area characteristics (e.g., rural or urban regions)
• Number of deliveries/stops along the route

These hindrances to last mile delivery are usually out of your control and influence shipping times differently. For instance, smaller 3PL companies in rural regions may pick up items every two or three days, while larger logistics providers in urban regions typically schedule multiple pickups daily.

Last mile delivery is becoming necessary as eCommerce gains more ground in the United States. Moreover, the increased popularity of the free shipping movement means more pressure for you to foot the bill or implement minimum purchase amounts to reduce expenses.

Recent Last Mile Delivery and eCommerce Trends

The eCommerce scene is constantly evolving, so online retailers and 3PL companies have to change along with it. Adapting to the latest industry trends lets you capitalize on new opportunities and optimize your fulfillment strategy according to consumer demand. 

Here are some eCommerce and order fulfillment trends you should watch out for:

• Crowdsourcing and gig economy
• Instant order fulfillment
• Rise of USPS carrier services
• In-house shipping carriers
• Last mile delivery upselling
• Smart and predictive technology
• Fulfillment networks
• Real-time package tracking and delivery updates
• Autonomous delivery vehicles
• Predictive shipping

Let’s dive into each trend and see how they can influence last mile delivery and other aspects of your business.

1. Crowdsourcing and Gig Economy

Crowdsourcing and gig-based delivery services have been rising these past few years. In addition to transport, companies like Uber and Postmates offer delivery jobs to their independent driving partners. While this system is less predictable than traditional route-managed delivery systems, it’s a flexible alternative that companies can use whenever they need something delivered quickly.

2. Instant Order Fulfillment

Thanks to the ubiquity of the Internet and online retail, people can find the products they need within minutes. As the purchase process becomes faster, customers expect fast delivery, resulting in high demand for same-day, one-day and two-day shipping.

As an online retailer or 3PL provider, you most likely use warehouse management software to assist in order fulfillment. However, even the most advanced software has limitations. You must work extra hard to provide same-day order fulfillment if you work in fast-moving industries like pharmaceuticals or food & beverage.

3. Rise of USPS Carrier Services

While private shipping carriers like UPS and DHL are still the most popular shipping choices for online retailers and 3PL companies, the United States Postal Service is also gaining some ground in this field. The USPS has started delivering eCommerce packages to compensate for declining traditional mail deliveries.

USPS often offers free package pickups, making them a strong choice for retailers and 3PL companies who want to save money.

4. In-House Shipping Carriers

Some retailers and logistics providers save money by using their own company vehicles and offering in-house delivery services. While cheaper, this shipping method is only viable in your company’s immediate area.

5. Last Mile Delivery Upselling

Most retailers already upsell on their product pages, but some are adopting last-minute upselling. With predictive technology, companies can guess what other products customers might want and offer them at checkout.

Some companies take upselling even further and stock their delivery vans with items the customer might want, so they can sell an additional item in person. Because this upselling method hinges on impulse purchases, it’s mostly implemented in food delivery.

6. Smart and Predictive Technology

Modern technology benefits both sides of the eCommerce coin. Customers know where their items are at all times through real-time tracking, and they can even monitor their status through temperature and humidity sensors.

Meanwhile, smart technology predicts the weather for retailers and 3PL providers to ensure that perishable and easily-damaged items aren’t compromised.

7. Fulfillment Networks

One of the best ways to improve delivery times and offer same-day delivery is to expand your fulfillment center network. Amazon, which is capable of two-hour deliveries, is one of the prime examples of great fulfillment center usage.

While most fulfillment center networks aren’t as big as Amazon, many companies rent warehouse space out in major cities to provide faster delivery.

8. Real-Time Package Tracking and Delivery Updates

Modern customers expect to receive orders quickly and track the entire shipping process. Fortunately, tracking technology makes real-time product shipping updates possible, giving your customer base complete visibility from when their item ships to when it arrives at their door.

9. Autonomous Delivery Vehicles

The availability of delivery drivers dictates shipping times. Since drivers are human and labor shortages happen, you can’t expect them to deliver goods 24/7. However, recent developments in self-driving cars and drones might mean that 24/7 delivery will eventually be a thing.

There are many gray areas regarding regulations and rules, but there’s also potential in self-driving delivery vehicles. Amazon has already invested $530 million into self-driving cars. Additionally, Amazon debuted the Amazon Scout delivery drone in 2019, with trials as recent as 2020. 

10. Predictive Shipping

Reducing delivery times is the most common way to decrease last-mile shipping costs. But what if there’s almost no delivery time at all?

Major online retailers like Amazon are trying predictive shipping, which anticipates product demand based on consumer shopping habits. These companies often use predictive algorithms to determine high-demand seasons for certain items (e.g., fireworks leading up to the Fourth of July) and pre-ship items to local warehouses in anticipation of these demand spikes. This cuts down on delivery time and cost because the products are already halfway there.

Distributor Storage With Last Mile Delivery

Distributor storage is an integral part of last mile delivery. Most fulfillment companies or last mile delivery providers have a network of fulfillment centers where they store your products before shipping them out to customers.

When picking a 3PL provider, look for one with a good spread of fulfillment centers so you can offer high delivery speeds anywhere in the country.

Top Last Mile Delivery Companies

Last mile delivery companies ship items from fulfillment centers to customers. Different companies offer different benefits, so choose wisely. 

Here are four great delivery companies used by many businesses and 3PL providers:

FedEx

FedEx is one of America’s biggest shipping companies, delivering packages all over the planet. It’s one of the best options if you’re looking for fast package deliveries and detailed shipment trackers. 

However, FedEx’s rates are often higher compared to its peers.

UPS

UPS is another favorite among online retailers because it offers weekend pickups and deliveries. This company also provides same-day and next-day deliveries, which are indispensable for when your customers need their purchases delivered quickly. Moreover, UPS offers a high-volume discount if you’re shipping many packages simultaneously.

But while UPS offers affordable rates for small packages, you may need to pay extra fees and surcharges for heavier items.

DHL

DHL’s global presence means you can easily ship anywhere in the world. DHL also boasts great customer service with quick issue resolution and free pickup fees.

However, DHL doesn’t have a strong American presence compared to its counterparts, so finding a DHL office stateside may be a little more challenging. 

USPS

USPS is one of your best options for small and lightweight packages, thanks to its low rates. With Saturday delivery and free home pickups, USPS is perfect for new online retailers who can’t spend too much on shipping.

Unfortunately, USPS doesn’t have a strong tracking system, so customers might not get full shipping transparency. Its customer service has also gotten a bad rap because of numerous unresolved issues.

How ShipHero Improves Logistics and Fulfillment

ShipHero is one of the best 3PL companies for eCommerce business owners. We outsource order fulfillment for over 5,000 stores to boost their shipping times and foster growth. 

Here’s why you should choose ShipHero as your 3PL.

Distributed Fulfillment Centers

Keeping your entire stock in one warehouse may lead to high fulfillment costs and shipping delays. At ShipHero, we use distributed fulfillment centers to store your products at warehouses across the country. When your store receives an order, we forward it to the nearest fulfillment center to ensure faster and cheaper delivery.

Shipping Discounts

ShipHero has negotiated shipping discounts with carriers like UPS, USPS, FedEx, DHL and more. This lets us pass the discounts on to you, so you spend less on shipping.

2-Day Delivery and Overnight Delivery Capabilities

Want to build brand loyalty on par with Amazon and grow your market share? ShipHero lets merchants offer 2-day and overnight delivery to help compete with Amazon FBA sellers and other major retailers.

Conclusion

The solution to last mile delivery challenges is not one-size-fits-all. An online retailer or third-party logistics provider may find that a combination of improved technology and analytics could be the solution to rising last mile delivery costs.

There’s no singular solution for last mile delivery issues and challenges. However, using the right technology and analyzing relevant data helps your company develop the best cost-saving measures.

No matter your line of business, last mile delivery is an integral part of it. Always watch the trends and developments to capitalize on new cost-saving opportunities and measures.

ShipHero is a leader in order fulfillment. Contact us today to learn how we can help your eCommerce store. 

Last Mile Delivery for eCommerce FAQs

What is eCommerce order fulfillment?

eCommerce order fulfillment encompasses the entire process of taking your product from the factory floor to the customer’s doorstep. Order fulfillment involves your supplier, warehouse manager, 3PL providers and shipping carrier.

What is the difference between drop shipping vs order fulfillment?

The key difference between drop shipping and order fulfillment is the party handling the order. With drop shipping, orders are delivered directly from the manufacturer or supplier. With order fulfillment, purchases are handled by the merchant or 3PL providers.

What are the bottlenecks in the order fulfillment process?

There are many bottlenecks in the order fulfillment process, like inaccurate orders, long packing times and courier delays. To eliminate these bottlenecks, examine your order fulfillment process and identify the cause before engineering a solution.

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About ShipHero: We make it simple for you to deliver your eCommerce. Our software helps you run your warehouse, and our outsourced shipping solutions eliminate the hassle of getting your products to your customers. With over 5,000 brands and 3PLs relying on us daily, we’re here to help with all your logistics needs.

Let us know how we can help you today by scheduling a call HERE.

Cyber Monday 2018: Which Carriers Shipped the Most & Where it Went

Dec 4, 2018 | Blog, Fulfillment

Every year, consumers drag themselves out of a post-Thanksgiving stupor to hit the stores for Black Friday. With some stores now opening as early as noon on Thursday and offering online promotions through the following Cyber Monday, Thanksgiving has become one of the biggest commercial holidays of the year.

According to Amazon, the five shopping days starting with Thanksgiving itself, nicknamed the “Turkey 5,” broke U.S. records this year with consumers purchasing millions more products than they had the year before. Adobe Analytics experts have revealed that e-commerce sales alone hit a record $8 billion this Cyber Monday alone, making it the biggest shopping day in U.S. history.

Sales figures are the most obvious way to capture a glimpse of the commercial significance of holiday shopping days like Cyber Monday, but it paints a limited picture. To grasp the true scope of this shopping extravaganza, it is interesting to view the shipping data for Cyber Monday purchases.

Let’s take a closer look at some of the sales data for Cyber Monday 2018 and how it correlates with data from the top shipping carriers in the U.S.

A Deeper Look at Cyber Monday 2018

While some families spend their post-turkey hours settled into their easy chairs watching Thanksgiving Day football or sleeping off their third helping of pumpkin pie, others load the kids into the minivan as soon as they finish their last bite and head out to hit the mall.

And then there are the online shoppers. Those savvy savers who avoid the long lines, taking advantage of holiday deals from the comfort of their La-Z-Boys.

According to Adobe Analytics, Thanksgiving Day shopping totals about $3.7 billion online with Black Friday sales totaling over $6 billion. The real money is spent on Cyber Monday – what Adobe has dubbed “the largest shopping day in US history.” John Copeland, head of Marketing and Customer Insights at Adobe announced that Cyber Monday sales topped $7.9 billion with $2 billion coming in from smartphones, an all-time high.

Financial figures aside, Amazon recently released a report of the types of products that sold on Cyber Monday 2018. Across the “Turkey 5,” Amazon customers alone ordered more than 180 million items. On Black Friday alone, customers ordered over 4 million toys and electronics through the Amazon mobile app and customers around the world purchased more than 18 million toys and over 13 million fashion items over the course of the weekend.

Not only did Cyber Monday 2018 reveal a record number of sales, but Akamai has released data on conversion rates for mobile and desktop devices. Conversion rates for mobile devices averaged 2.72% with desktops averaging around 5.12%. Bounce rates were up as well, with mobile devices bouncing 34.71% and desktops 25.74%.

Cyber Monday Shipments by Carrier

Every holiday season, retailers and customers rely on shipping carriers to get their purchases where they need to go. Shipping carriers hire countless seasonal employees and offer extra initiatives like Sunday delivery to help manage the increased load. They also release shipping deadlines to help consumers make sure their domestic and international shipments arrive in time for the holiday.

During the holiday season as a whole, shipping carriers struggle to keep up with the growing number of holiday sales and the challenge peaks on major shopping days like Cyber Monday. While private carriers like FedEx and UPS shoulder a significant portion of the holiday load, the United States Postal Service takes the biggest piece of the pie.
Here is an overview of the percentage of Cyber Monday 2018 shipments divided by carrier:

• USPS – 56%
• FedEx – 20%
• UPS – 9%
• First Mile – 9%
• DHL – 6%

Cyber Monday Shipments by Country

Though Cyber Monday is widely regarded as an American commercial holiday, online purchases made on this day travel around the world. According to 2018 Cyber Monday shipping data, the majority of purchases made in the U.S. were shipped domestically but another 9 international shipping destinations made the list. Here is an overview of Cyber Monday 2018 shipments divided by country:

• United States – 94.62%
• Canada – 2.34%
• Great Britain – 1.26%
• Australia – 1.03%
• France – 0.26%
• New Zealand – 0.15%
• Ireland – 0.06%
• Japan – 0.03%
• Singapore – 0.03%
• Korea – 0.02%

Cyber Monday Shipments by State

The beauty of online shopping is that customers can purchase from any online store no matter where they are physically located. Some states carry a larger piece of the pie, of course, based on factors such as population and demographics. Here is an overview of the percentages of Cyber Monday 2018 shipments divided by state:

• TX — 13.50%
• CA — 11.30%
• NY — 6.20%
• FL — 5.40%
• IL — 4.70%
• PA — 3.40%
• OH — 3.10%
• GA — 3.10%
• NC — 2.70%
• NJ — 2.60%
• MI — 2.50%
• VA — 2.40%
• WA — 2.30%
• TN — 2.10%
• MA — 2.10%
• IN — 2.00%
• MO — 1.90%
• AZ — 1.90%
• CO — 1.90%
• MN — 1.60%
• OK — 1.60%
• AL — 1.60%
• MD — 1.60%
• LA — 1.50%
• SC — 1.40%
• WI — 1.40%
• KY — 1.30%
• OR — 1.20%
• UT — 1.10%
• IA — 1.00%
• CT — 1.00%
• AR — 1.00%
• KS — 0.90%
• MS — 0.80%
• NV — 0.80%
• NE — 0.70%
• WV — 0.50%
• ID — 0.50%
• NM — 0.40%
• NH — 0.40%
• ME — 0.30%
• HI — 0.30%
• DE — 0.30%
• ND — 0.30%
• RI — 0.30%
• MT — 0.30%
• SD — 0.30%
• DC — 0.20%
• WY — 0.20%
• AK — 0.20%
• VT — 0.20%

Each year, more brick-and-mortar businesses close their doors or take their sales online to meet their customers where they are. Modern technology has made it easier than ever for consumers to find the products they want without setting foot outside the comfort of their own homes.

As holiday sales break records year after year, however, one thing remains constant – someone has to deliver those millions of purchases. Shipping carriers make use of modern technology themselves to streamline the shipping process, and they take steps to prevent holiday delays as much as possible. FedEx hires 55,000 seasonal employees each year, and UPS hires some 100,000 over the period of several weeks while also increasing hours and extending shifts for regular employees to manage the increased holiday load.

The world of consumerism is constantly changing, and it falls on the shoulders of shipping carriers like USPS, FedEx, and UPS to carry the burden of that change. Even as the world changes, however, U.S. consumers will still expect their packages to arrive on time and shipping carriers will do their best to meet these demands. 3PL software companies like ShipHero help your business find the best and cheapest carrier shipping options.

*Data based on an analysis of over 100,000 shipments during Cyber Monday 2018.

Shopocalypse: Rise of the Returns, Challenges in Ecommerce Fulfillment Services

Oct 7, 2020 | Blog, Fulfillment

Ah yes.
The instant dopamine rush of seeing your name on that big, brown package sitting on your doorstep. You pick up the box and scurry inside, grab your trusty pair of scissors, open the box and… it’s not what you ordered. Dang.

ShipHero – We Have a Full Range of Ecommerce Fulfillment Services to Handle Your Returns and Much More

Is there a bigger frustration in the shopping experience than having to return an item? Long lines, obscure policies, unhelpful employees, and where the heck did you put that receipt? And that’s just pre-COVID, back when you could go to the store and meet the perpetrators face-to-face.

And what’s more, in the age of rising e-commerce sales where shopping, browsing and just about everything is done online, approximately 30% of orders are returned, which translates to 3 in every ten packages you can expect to return. This figure rises to a whopping 50% for clothing retail. Not only that, those percentages only account for when the shopper purchases items for themselves, not as a gift. Oh, and speaking of…

Black Friday Cyber Monday shopping is right around the corner, with most shoppers reporting to start shopping in October. 2020’s holiday season will smash ecommerce delivery records and with delivery companies like UPS, USPS and FedEx already strained or at capacity, let’s talk about the returns aftermath.

Online Returns
National Returns Day is January 2nd, so don’t forget to get your mailperson something nice.

In case you weren’t aware, National Returns Day is known as the day in which American shoppers return the highest amount of packages back to retailers. In fact, Reuters stated that “UPS estimated that it processed 1.9 million Christmas returns for U.S. retailers on National Returns Day 2020 (January 2, 2020), equating to a 26% year-over-year increase.”

When compared to purchases made in a traditional brick-and-mortar retail location, purchases made online are returned three times more frequently. The major cause of online returns stems from a disconnect between what is advertised online versus what is actually shipped to the consumer, and the main culprit seems to be issues with how the product is portrayed, such as low-quality images or incorrect size and style comparisons for clothing. In fact, discrepancies in sizing with each manufacturer are responsible for more than half of all customers that are returning clothing items due to a wrong size or fit.

Considering that e-commerce sales revenue is growing 15 percent year over year, and the product return rate sits around 30 percent of sales, that leads to about 4 billion additional units that need to be delivered and shipped. Considering the effects of the pandemic, with delivery companies already at capacity and demand only increasing, you would assume that this has an impact on what companies accept for returns. But, you can just return them for free, can’t you?

The Cost of Free Returns
We as consumers have come to expect relatively liberal return policies from our stores. With Amazon Free Returns, Walmart Free Returns, Nordstrom, and L.L. Bean all having notoriously generous return policies, almost 32% of shoppers in the US reported that they would forego an online purchase if there wasn’t an offer of free returns.

The process of preparing returned products to be sold further diminishes profit margins, and the term ‘Free Return’ comes with a lot of hidden costs, either tacked onto the price of goods by way of margins, or fronted by the retailer for competitive reasons.

In order to successfully reduce the adverse effects that returns have on your e-commerce business without taking the margins hit of ‘Free Returns’, you need to know why, when, and how customers return items, especially during these uncertain times. This is where reverse logistics supply chain capabilities are able to help your business maintain inventory, reduce operational costs, and provide your customers with a phenomenal return experience. So, what is reverse logistics?

Reverse Logistics: The Solution to Returns
Reverse logistics supply chain is defined as the operations involved in the moving of product from the end consumer back to the seller or manufacturer for the purpose of satisfying returns, salvaging value, or recycling and disposal.

According to a 2020 report by Tech HQ, “The global reverse logistics market is forecast to hit US$603.90 billion by 2025, and businesses can save millions of dollars if reverse logistics management is implemented and done properly. With the expansion of the e-commerce industry emerging in parallel with the closure of many brick-and-mortar stores, retailers can expect to see a hike in return goods once the reopening of the sector begins.”

While brick-and-mortar retailers have the ability to leverage their COVID-19 solutions of contactless check-out and curbside pick-up and dropoff to handle the onslaught of returns, those without a physical location must handle this through delivery and fulfillment companies.

If you are an online retailer, this should signal to you that solving returns will absolutely be an essential component of your business if you want to properly maintain inventory, retain revenue, avoid exorbitant operating expenses, increase customer loyalty, AND increase your company’s sustainability and eco-friendliness.

The answer seems to boil down to a data-driven approach fueled by big data, and in some cases, blockchain.

Partnering with companies like Happy Returns and Returnly will allow e-commerce businesses to turn logistical challenges into business opportunities, as well as transform return policies and processes into a holistic returns strategy. This translates to understanding all aspects like why, how, and when customers make returns, and using a data-driven approach to optimize the return process.

Smart fulfillment companies like ShipHero leverage their partnerships with companies like Happy Returns as well as their expansive big data collection and analysis capabilities in order to forecast returns and plan accordingly, ensuring that your customers are happy, your margins are intact, and your company is sustainable. Check out ShipHero’s full line of ecommerce fulfillment services that can handle your company’s fulfillment, returns, and much more.