The last mile delivery market is poised to grow by $165.6 billion from 2023-2027, accelerating at a CAGR of 15.62 percent. Several factors drive the market, including a growing global e-commerce industry, premiumise goods and merchandise delivery services, and a large number of warehouses.
The future growth of every successful brand depends on how it shapes its last mile delivery based on the key trends. Here are a few last mile delivery key trends based on the report from Locus, a leading-edge technology company.
Pressure on drivers in the last mile to continue in 2023. Empowerment to be a key theme
A drivers survey in North America stated that finding qualified drivers is the biggest challenge in last mile delivery for businesses. The additional loads increase the time spent on the road and disturb the work-life balance of drivers.
A report states that Jakarta has been one of the worst cities in the world for traffic congestion, and an average driver starts and stops there 33,000 times a year. When it comes to India, the same set of problems exists.
During time-crunched situations, they work for more than 12 hours at a stretch. This situation gets worse when there is massive traffic and when customers, who are used to on-time deliveries, feel frustrated and constantly call and ask about the status of orders.
This leads to a loss of customer trust and cuts down business growth. Hence, the focus in 2023 will be to make drivers happy and empower them.
Sustainability in last mile delivery – Not a differentiator anymore
Sustainability in last mile delivery is cutting or minimising the ecological footprint in deliveries like carbon or greenhouse gas emissions. Overall, it means building a greener, more economical, and quick delivery system.
In order to make last mile delivery sustainable and quicker, businesses are bringing their fulfilment centres nearer to consumers. Big brands like Amazon, Walmart, Walgreens, and Instacart are investing in micro-fulfillment centres to speed up deliveries and make it greener.
An Accenture report mentioned that micro-fulfillment centres will minimise last mile carbon emissions between 17 and 26 percent by 2025.
In India, last mile emissions are increasing every passing year. A Stand.earth Research group report of 2022 mentioned that the last mile emissions per delivery are 285 gCO2, which is significantly higher than the global weighted average of 204 gCO2. This report also states that Indian cities like Delhi, Mumbai, Bengaluru, Kolkata, and Chennai emit more CO2 from last mile delivery than last mile emissions from France or Canada.
In 2023 sustainability will not be a luxury to showcase for businesses globally. It will be a mandatory need to win customers, and they will take incremental steps to achieve it.
The sweeping wave of omnichannel retailing
Omnichannel retailing is a process where businesses integrate all the channels to provide seamless shopping experiences to their consumers. For instance, a customer can buy his/her preferred item online and pick that up from the store (BOPIS). In this, both offline and online channels are closely integrated.
Businesses in India are keen to capitalise on the shopping boom of omnichannel. An India Phygital Index survey in 2022 revealed that retailers derive 13 percent of their sales or $11.2 billion from omnichannel retail, and it has the potential to grow five times to $ 55 billion by 2027.
By investing in omnichannel capabilities, businesses can improve delivery control, speed, flexibility, and cost. It cuts unnecessary time for the product to move across intermediaries like the brand mother warehouse and makes last mile logistics more efficient.
Hence in 2023, we will witness the sweeping wave of omnichannel retailing across the world.
Direct to Consumer (D2C) – Path to build a stronger customer base
Businesses are adopting this model to get a holistic picture of customer preference through data insights and leverage them to gain a strong customer base by creating personalised, end-to-end experiences.
The appeal of these businesses from consumers is on a global scale. A study stated that the US D2C online market will grow to $213 million by 2023, up from $128 billion in 2021.
The D2C market in the Middle East region has been making significant leaps in the past few years, thanks to a large number of young, savvy, digitally native consumers. This region has more than 28 percent of the population between 15 to 29 and is open to experimenting with newer brands.
D2C e-commerce is an untapped market in India, and many popular D2C brands are vying to make it big in 2023. In 2021, there were a total of 105 deals invested in D2C brands in India.
During the same year, India had more than 800 D2C startups operating in the country. By 2025, the D2C market in India will reach 100 billion US dollars, and this is threefold compared to 2020. 2023 will be a year of D2C brands strengthening their last mile delivery and expanding their D2C presence.
Robust investments in last mile Logistics Solutions With Advanced Analytics Capabilities and Artificial Intelligence (AI) to continue
An interesting global trend is the investments made in last mile logistics solution providers. A survey from CB Insights mentioned that from 2010 to 2021, on-demand last mile delivery platforms attracted $ 22.6 billion dollars worldwide, which was the highest during the period.
India’s last mile delivery market is moving in a similar direction to the US and China’s markets. The penetration of last mile delivery in India is more than 10 percent. Also, it states that India’s last mile delivery market size will touch $6-7 billion by 2024. The overall e-commerce shipments will grow to 5 billion by 2025 from 1.36 billion shipments in 2020.
With India’s private equity and venture capital investments in logistics technology worth over 1.45 billion U.S. dollars with 34 deals in 2021, the last mile delivery is expected to receive more push in 2023.
As businesses continue to rethink and redefine their last mile tech capabilities to improve their competitiveness, we expect to continue to witness a flurry of investments in last mile logistics solutions.
A Gartner study mentioned that by 2024, 50 percent of supply chain organisations will invest in applications that support advanced analytics and AI capabilities. An interesting global trend is the investments made in last mile logistics solution providers. A survey from CB Insights mentioned that from 2010 to 2021, on-demand last mile delivery platforms attracted $ 22.6 billion dollars worldwide, which was the highest during the period.
