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These 4 Solutions Are Accelerating Last-Mile Delivery

Last-mile delivery is likely a top trend on every e-commerce retailer’s mind this year, but as the continued adoption of online shopping brings about rising delivery costs and consumer expectations, they can’t afford to skimp on technology investments.

The last-mile delivery ecosystem is shaking out with four major innovations, according to a recent report from Coresight Research. These technologies include autonomous delivery robots, buy online, pick up in-store (BOPIS) and curbside pickup, smart lockers and visibility tools.

According to automation solutions provider Honeywell, last-mile delivery costs are by far the most expensive link in the supply chain, accounting for 53 percent of total shipping costs. So while any short-term investments in these platforms may be daunting, they could relieve some of the long-term ramifications that could plague retailers as delivery networks continue to expand.

Autonomous delivery robots

Coresight cited a report from Robotics Business Review indicating that adopting autonomous robots can slash the cost of last-mile deliveries from $1.60 per human delivery to 6 cents per delivery.

Deborah Weinswig, Coresight founder and CEO and author of the report, recommended that retailers theoretically compare costs and return on investment of their existing delivery options with that of robotic deliveries to see if they should be adopted. Further, they must conduct trials in their localities to determine consumers’ feeling and acceptance level of robotic deliveries and which SKUs are most suitable for this delivery method.

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One of the latest success stories of autonomous delivery, Starship Technologies, raised $17 million in January 2021, and revealed that it achieved a milestone of 1 million autonomous deliveries that month, representing a 900 percent increase over August 2019. The company has more than doubled its fleet of delivery robots to roughly 1,000 in 2020, with plans to add “thousands more” in 2021. Starship recently partnered with grocer Save Mart Companies to autonomously deliver from its flagship store in Modesto, Calif.

Retail examples are few and far between for autonomous delivery, with many still in the pilot phase. In 2020, Amazon expanded Amazon Scout, six-wheeled, cooler-sized vehicles built to deliver small packages, to two new U.S. markets: Atlanta and Franklin, Tenn. And Walmart, CVS and Kroger have all developed various delivery iterations with robotics startup Nuro, which raised $500 million last year.

Although autonomous delivery is poised for growth, challenges largely stem from government regulations, according to Weinswig.

“Regulators have shown a willingness to cut red tape and allow robot fleets to help consumers who had Covid-19, but there are currently no federal guidelines for autonomous delivery robots, with each U.S. state making their own rules, creating a lot of ambiguity,” Weinswig said in the report. “While some states have formalized regulations for the deployment of autonomous robots in real-world applications, others have not put in place any regulations to test autonomous vehicles, making it difficult for the technologies to be rolled out nationwide.”

BOPIS and curbside pickup

Prior to the pandemic, avoiding shipping costs was the biggest reason shoppers said they wanted to use BOPIS or curbside pickup, with 64 percent citing this reason, according to a January 2019 NRF survey. But a lot has changed since then. In 2020, BOPIS and curbside pickup became arguably the most rapidly deployed services in retail as essential stores imposed distancing limits and catered to shoppers who didn’t want to enter stores.

These services paid significant dividends for the retailers that implemented them. Merchants offering BOPIS and curbside options increased their digital revenue by an average of 49 percent year over year in 2020, according to financial services provider Comprar Acciones. Comparatively, those that did not offer the services saw a digital sales increase of only 28 percent on average.

Coresight highlighted several retailers readjusting and refining their approaches to smoothen out the process with tech integrations, such as Lululemon, American Eagle Outfitters and Ulta Beauty.

While American Eagle launched its BOPIS/curbside services last May upon reopening stores, its partnership with locations technology provider Radar in September provided flexible geofencing functionality to support trip tracking for curbside pickup. Much like American Eagle, Ulta Beauty launched curbside pickup early in the pandemic, but has since integrated GPS and geofencing technology that automatically alerts the associate when a customer is on the way to the store.

And in September, Lululemon launched a virtual waitlist technology that texts consumers when it is their turn to enter the store or perform pickup, returns and exchanges outside the store. Customers can use the waitlists to schedule appointments.

The future seems bright for BOPIS. Coresight cited data from an August 2020 survey from e-commerce technology provider CommerceHub, saying that 67 percent of U.S. shoppers are likely to continue using curbside and in-store pickup even when the pandemic subsides.

Smart lockers

Smart lockers essentially serve as complements to BOPIS/curbside services, but are rarely deployed across retail, or in public, in the U.S. Universal pickup points at public places are more common in European and Asian countries, the report says. These lockers are often placed in convenient locations such as stores, public transportation centers like train stations and residential areas.

Once a package is delivered into a smart locker system, recipients are automatically notified that their package is ready for pickup. Consumers can access these lockers through various electronic means such as by scanning a barcode, RFID tag or their fingerprint.

Lockers can handle multi-temperature product storage, eliminate wait lines and reduce required manpower to fulfill orders. The one drawback to lockers is that even though come in different sizes, they generally cannot fit very large packages, which limits their use.

But overall, their convenience and labor-cost benefits are well ahead of any automated last-mile services options.

“With the selection of appropriate locations, parcel lockers and kiosks can provide significant economic benefits to retailers in terms of reduced labor and last-mile shipping costs and, with consumers seeking contact-light shopping experiences during the pandemic, have the potential to be adopted on a greater scale than we have seen so far,” Weinswig said.

Amazon’s locker system is the only one that has gained significant traction in the U.S. so far, with more than 10,000 nationwide as of September 2019. Walmart has launched more than 900 in-store “pickup towers” that offer a similar service. Lowe’s is now actively looking to build momentum as well, with the home improvement merchant rolling out parcel lockers to more than 1,700 stores by the end of March 2021.

Visibility tools

Of course, these three technologies don’t fulfill their potential without all parties being able to access where and how a delivery is playing out.

The Coresight report cited an April 2019 Digital Commerce 360 study, which found that 93 percent of U.S. consumers stated that they want to stay up to date with the delivery process—from in-transit status to final arrival date. Another 47 percent in the survey said they would not order from a retailer with poor delivery visibility.

Given this need for visibility, Coresight anticipates continued growth in the number of retailers investing in technologies that offer order tracking functionality and give real-time order status to consumers.

“Dealing with customer complaints or inquiries about delayed or misplaced parcels is very costly in the long run,” Weinswig said. “Allowing customers to track their products at every stage of the delivery process is a powerful way to increase customer retention and boost purchase frequency. We expect to see continued growth in the number of retailers investing in technologies that offer order tracking functionality and give real-time order status to the consumers.”

The report gave four examples of last-mile visibility tools that have improved the communication side of the experience. Amazon now provides a visual MapTracker that shows how many stops a delivery driver has to make before reaching a drop-off destination. Customers are notified via text message or email when a package is delivered at their residence or alternative pickup location, such as an Amazon locker.

FedEx’s InSight tracking tool enables users to track their shipment without a tracking number, while real-time visibility solutions from FourKites provide shoppers with data including location, estimated time of arrival, temperature/light exposure and shipper load locations.

Additionally, Pitney Bowes recently launched same-day delivery capabilities and its cloud-based SendPro Online sending platform in December, enabling customers to access rates, track shipments and monitor spend for all shipping activities across carriers and services.