Learning from the best: E-commerce & last mile
E-commerce might very well be the biggest success since (and due to) the digitisation era. According to Eurostat, 69% of all European internet users has purchased goods or services online in 2018. But how does this industry impact mobility?
Western Europeans shop online the most (70% and up have ordered online in 2018) whilst only 20% to 30% of Romanians, Bulgarians, Turks and Montenegrins clicked the “buy now” button. Most people spend between €100 and €500 every three months, up to 20% of 25-to-54 year olds even spend over €4,000 per year (Eurostat). Conclusion: e-commerce is big business.
E-commerce businesses, such as Amazon, know that the customer experience is essential to grow their customer base. Customers don’t rate their experience based on the average of the service experience, but on the peaks: Amazon is as good as its worst delivery. On the customer service side, the parameters can be controlled by the etailer (e-commerce retailer), but the main area of dissatisfaction – and therefore the main obstacle for growth – is one that we know all too well: last-mile delivery.
Parallels with mobility
In addition to the pressure from consumers who want their parcel on time at the correct address, e-commerce is adding Prime services and deliveries of perishables (e.g. food) to the equation. In other words, deliveries are not only “planned”, but become “immediate” in some cases.
This brings us to users of mobility services: their needs are also immediate. Someone is walking around, it starts raining and the person orders an Uber. For the user, it’s not acceptable that the Uber driver will confirm the ride an hour later – it needs to happen within a 5-minute threshold.
How e-commerce deals with last mile deliveries
Maybe we can learn some lessons from the e-commerce business? Here are some trends that are positively affecting on-time delivery:
- Smart tech and sensors: connecting last-mile deliveries with external elements, which can be traffic, weather, conditions of the delivery location, make last-mile deliveries easier to plan and execute.
- Form factor: gone are the days of the truck or the van. Micro-vehicles, drones and robots are increasingly used to deliver parcels. Autonomous vehicles and drones are said to deliver up to 78% of all parcels to customers (McKinsey) within a couple of years.
- Warehousing: a shift in traditional warehousing has led to the development of urban warehousing, rather than distribution centres outside the cities. Alternatives to urban warehousing are mobile warehouses (or pick-up points) or convenience store pick-up points.
- Predictive software: preparing to deliver goods before the client has ordered them, is what software can do for e-commerce. If consolidated, the e-shop has enough data, based on consumer behaviour, to stock up articles close to the future consumer.
- Gig economy versus legacy carriers: solutions such as UberRUSH and GrabDelivery are based on one principle, i.e. rather than sending the guy to the destination, use the guy who’s already there.
How to translate this into mobility?
Smart tech and sensors
On a bright summer day, people like to cycle or walk, but on a rainy winter night, a taxi or hailed ride is more comfortable. Knowing the conditions of the last mile is essential: aggregators, such as ReachNow and Whim, can steer the mobility supply chain towards the most appropriate mode of transportation.
Micro-mobility, such as bicycles and scooters, take less space and are more mobile than cars. Not only are they easier to electrify, reduce noise and emission pollution, but they are also easier to fund, both for the provider and the user. In addition, they fulfil the modern city’s objectives of creating a friendlier city environment.
The principle behind warehousing is not to find an alternative mode of transportation, but to reduce the need for transportation. Similarly, for corporate mobility, the question needs to be asked: is a trip to the office really necessary? Various alternatives, such as WeWork space, home office and digital conferencing can, and should, replace part of the employees’ trips.
The future fleet anagers are no longer negotiating OEM agreements. They will spend their time analysing how asset usage can be maximised and selecting mobility vendors that can deliver what the employees need. The heatmap of employee movement will become an important tool for the mobility manager, as it will determine the supply chain and incentivise the vendor to fill in the gaps between offer and demand.
Last mile is typically not filled in by public transport, but by local solutions that are readily available. Pooling and carsharing solutions are a good example of ready-to-use mobility.
Need for alignment
The parallels between the last mile challenges of e-commerce and mobility are obvious. Nevertheless, the commercial mechanisms are entirely different: the mobility industry hasn’t even approximatively the market size of e-commerce. Also, the e-commerce consumer is entirely aligned with the industry in the need for fast and reliable last mile solutions, which is not the case for mobility.
Mobility is a young industry, struggling with solutions as well as a customer base willing to pay for last mile options. Today, regardless of the parallels, it looks like the mobility industry is not benefiting from developments in the logistics industry, lacking the scale, the funding and the alignment between supplier and client.