Last Mile Logistics
Australians are in the top ten in the world when it comes to spending on ecommerce and with online sales expected to exceed $32 billion this year, Australian businesses are beginning to realize that success in online retail selling is not all about your product and website. Customers want their goods as quickly as possible without having to pay exorbitant delivery fees, so having an efficient logistics setup is vital for all e-commerce businesses.
One of the most important aspects of logistics is the “last mile”. That is, getting the product from destination hubs like warehouses and ports to their final destination (the customer). Despite only having a relatively short distance to travel, the “last mile” of delivery can end up being as much as 28% of the total transport cost, hence it’s vital that businesses have systems in place to keep this cost as low as possible in order to keep their overall freight cost low. Amazon are the experts when it comes to the “last mile”, they have managed to not only provide delivery for a very low cost (free for a lot of orders) but can also provide same day delivery services for most of their products.
At the core of Amazon’s success is their commitment to customer service. Amazon offers same day delivery (free for most Amazon Prime members) for a majority of their products in the metropolitan US, which fits in with modern consumer expectations. Currently they don’t provide their same day delivery service in Australia, but once they’ve analyzed the most efficient routes and shipping locations in the country, expect Australian consumers to be buying and receiving their online goods on the same day.
Other retailers will need to offer their own speedy delivery services if they want to compete, and some major stores already have. JB Hi-Fi launched their own express delivery services just days before Amazon’s Australian launch, offering same day and 3-hour delivery within metropolitan areas
Statistics show us that high shipping costs are the number one reason for people abandoning their online shopping carts, so keeping your costs as lows as possible is vital to gaining new customers. Modern customers are demanding, even though they don’t want like paying for delivery, when they do, they expect to be able to track it’s progress and have it delivered on time. A heavily delayed delivery time or no delivery at all will usually stop someone from coming back to your website, with 59% of consumers saying wouldn’t shop with a retailer again if their delivery wasn’t on time.
New platforms like Shippit, who now work with around 90% of Australia’s top 100 retailers, help businesses by using algorithms to determine which courier is best suited to deliver a particular package in the quickest time and at the lowest cost. Australia Post have also partnered with several large retailers to provide its “Shipster” service, offering free delivery from major retailers for a small membership fee of $6.95 a month.
The launch of Amazon in Australia has already had an effect on courier companies, with newer businesses like Sendle and Zoom2U seeing a rise in demand for their services since the launch. As we continue to see an increase in online shopping, we will see retailers and couriers get better and more efficient when it comes to their delivery costs and methods. Businesses will need to have clear systems and plans in place for