The Rapidly Evolving Landscape

Innovation in the last mile delivery segment was already gaining powerful momentum years before the pandemic sent businesses and delivery services into overdrive. And today, although it seems like the pandemic has surpassed its peak, the focus on last-mile delivery by e-commerce, retail, and delivery providers is still quite intense.

Brandessence Market and Consulting expect the last-mile delivery market for e-commerce and online shopping to continue its rapid rise, growing at a compound annual growth rate of 9.29% from 2021 through 2027. And of course, this ongoing surge isn’t surprising to any of us.

We also know that last-mile delivery is the most complex and costly leg of a parcel’s journey, ringing up to about 41% of total supply chain costs. This means that technology, innovation, and an intensive focus on this area are required in order for e-commerce, retail, and delivery companies to provide a service that is competitive, meets the needs of the customer, and is profitable.

Adapting to today’s last-mile delivery market can help Posts thrive and command more market share in this vital leg of a parcel’s journey.

So, what are we seeing in the current last-mile delivery landscape?

Ultrafast Delivery Companies are Failing

Not surprisingly, ultrafast delivery services took off during the height of the pandemic. Customers had received everything from caution-based recommendations to strict mandates to stay at home as much as possible, but they still needed groceries and daily essentials. Thus emerged a convenient option for the delivery of everyday items in just 15-minutes.

Yet with the pandemic on the wane, the focus has shifted to other areas, and the glut of businesses that jumped into the ultrafast delivery fray are now failing for a few reasons:

• The market became saturated with several individual stores providing delivery and various delivery services.
• The costs have become too high to remain sustainable for customers, who frequently lose out on in-store sales and need to pay a tip to the delivery person as well.
• Venture capitalists have lost interest as the service has become less desirable.

Ultrafast delivery isn’t likely to disappear, but many participating delivery companies might sell, fail, or otherwise shutter operations, leaving a smaller number of larger services with more resources.

The Market for Urban Warehouse Space is Heating Up

The options for fast, profitable, customer-friendly last-mile delivery keep on growing, with numerous services available to postal operators such as PUDO. But one specific trend has everyone’s attention: urban warehouse spaces used for last-mile delivery. The intense focus on the last mile has e-commerce, retailers, and delivery companies looking for ways to keep inventory closer to the customer, and smaller warehouses in urban areas are a perfect solution.

Blackstone’s Mileway division built up an incredible portfolio of urban warehouse properties over the last few years with an eye toward dominating the last mile warehouse space. It was recently set to spin this unit off to a group of investors, but Prologis has recently put up a competitive counterbid to keep the suspense growing. In any case, this trend will only continue to grow with these two businesses and more to follow.

Customer Expectations Run High

Customers have high expectations for last-mile delivery. They want the perfect delivery, defined as one that is convenient, flexible, reliable, safe, and friendly. It might seem like a tall order to include everything, and competition is fierce. Fortunately, Posts are in a great position to exceed such high customer expectations.

Our annual Future of Posts survey revealed that 58% of respondents listed the last mile as one of their top three investments, which is excellent news since Posts are ideally positioned and have a huge advantage with their ability to leverage their existing network and depots located in prime, urban locations, with the potential to make deliveries even faster to customers.

Best of all, if they haven’t yet, Posts can adopt today’s most innovative last-mile technologies to anchor their place in today’s highly competitive space, using track and trace, optical character recognition (OCR), and other automation technologies while leveraging PUDO and retail networks to expand delivery capacity and more.

Is your Post ready to deliver last-mile results that help ensure satisfied customers and cost savings, while growing market share? If so, connect with our team of postal technology experts to suggest the best path forward for your Post.