With e-commerce volumes expanding rapidly and consumer expectations for immediate delivery rising, the “last mile” of fulfillment—from a warehouse or depot to the customer’s door—has become yet another front in the retail battle for customers. The final leg of a delivery can account for as much as 53% of total transportation costs. While the challenges are huge, there are ample opportunities for shippers and retailers, third-party logistics providers—and increasingly, a highly diverse group of non-traditional workers seeking employment.
E-commerce continues to grow as a percentage of overall retail. Global e-commerce rose from 15% of total retail sales in 2019 to 21% in 2021, according to Morgan Stanley. It now sits at an estimated 22% of sales, and Morgan Stanley predicts it could increase from today’s $3.3 trillion to $5.4 trillion in 2026. At the same time, however, traditional logistics is losing talent. Trucking companies in the United States suffered a record deficit of 80,000 drivers in 2021.
This is a tough situation for retailers, but it can be beneficial for anyone looking for the kind of flexibility and convenience that local delivery jobs increasingly provide, including parents of small children, non-English speakers, retirees, and students.
Here are a few of the trends that are making this possible:
To keep up with the record demand for home delivery, retailers are offering better pay and additional benefits—such as support for education and training—to attract more non-traditional employees. Many are also using incentives for hitting productivity targets, in the form of prizes and bonuses. These are the hallmarks of the “gig economy,” in which employees are paid per task rather than on a regular full- or even part-time basis.
Many retailers are creating a network of smaller delivery depots—including their own brick-and-mortar stores—to shorten the distance between inventory and customers’ homes. This puts more jobs closer to more people, particularly in denser population areas.
Given the challenges involved in last-mile delivery, many retailers may choose to outsource it to third-party providers. In fact, this industry has seen tremendous growth. In 2018, the last mile delivery market in North America was sized at $31 billion. It’s expected to grow to just under $51 billion in 2022. This can mean more local employment opportunities for underserved communities, and it also provides retailers more opportunities for favorable pricing—using supply chain management (SCM) capabilities to choose the best provider depending on factors such as route, vehicle size, etc.
One of the biggest logistical challenges of last-mile delivery is matching drivers with demand in real time. Here again, technology benefits retailers and employees alike. Drivers can submit their availability into a mobile app, and the logistics software pairs them with deliveries in the most efficient way possible. As a result, employees work when they prefer, and retailers aren’t paying anyone to wait for something to do.
Onboarding and training many part-time or gig employees could be a costly affair. Technology can step in to not only reduce cost, but also open the talent pool. Increased automation in warehouses and vehicles can make it easier for non-English speakers or those with disabilities to perform necessary tasks. What’s more, last-mile delivery needn’t include specialized vehicle training, licensing, or certification. Drivers can use small vans or their own vehicles to make their rounds.
Whether handled in-house or by third-party providers, last-mile delivery is a complex puzzle that requires advanced technology to provide optimal efficiency and customer experience. An end-to-end cloud logistics suite can provide the visibility needed to keep merchandise moving and customers happy.
Terri Hiskey is the vice president of SCM and manufacturing product marketing for Oracle, leading the strategic development and execution of supply chain and manufacturing-focused content, programs, and assets. She came to Oracle from Epicor, a global provider of ERP solutions for small and midsize manufacturers and distributors, where she led the manufacturing product marketing team. Previous to that, Terri spent nearly a decade leading various SCM product marketing efforts to promote Oracle’s product lifecycle management, manufacturing, maintenance, and order management solutions. Terri has more than twenty years of technology marketing experience focused primarily on helping customers efficiently design, build, and service innovative products for the right markets at the right time. Based in Austin, Texas, she holds a BA from The George Washington University and an MA from Suffolk University.