Winning Last Mile in Australia
A recent survey by the Australian Bureau of Statistics reveals that Australians are feeling more time-poor than ever, with 45% of women and 36% of men feeling “always” or “often” rushed, or “pressed for time”. Instantaneous access, instant gratification, and the “always on, always open” economy place the emphasis on speed, for consumers in all market sectors.
eCommerce has taken care of this to a certain extent, but buyers of goods both online and from physical stores ultimately face the same issue: taking actual delivery of their purchases. That last step before a product reaches the hands of the purchaser is known as the last mile - and in a complex and competitive market, it’s a significant factor in gaining customer loyalty.
Organisations that get it right know that a winning last mile not only presents the consumer with exactly the items they want, exactly when and where they’re wanted. It should also provide the means and the technology to make this possible as an interactive process. That means giving customers the ability to make choices during transit, such as alternative locations and delivery times, and tools to keep precise track of the status and location of each delivery.
This isn’t an easy task, and businesses in Australia face particular challenges in making last mile delivery an asset to their brand.
Last Mile Delivery Challenges In Australia
Across the Asia-Pacific region, eCommerce businesses of all sizes and types face a common dilemma. Having invested time, energy, resources, and creativity in developing, marketing, and selling their products, organisations then lose control of the fulfilment process during last mile delivery. This leaves the fate and reputation of their brands in the hands of a third party courier, who may or may not give satisfaction to the consumer.
In Australia, the challenges to last mile delivery are particularly acute. The country is enormous, with couriers typically needing to cover vast distances in order to reach a specific location. The population density is low, with widely separated communities that increase the need for delivery services to have to cross those great distances. This in turn increases the costs of delivery, and the risk of loss or damage to goods during transit.
The problem isn’t being helped by the predominance of Australia Post, which enjoys a virtual monopoly on parcel delivery in the country, and therefore has little incentive to innovate - or even to speed up its services.
Elsewhere, traditional logistics providers such as StarTrack, DHL and FedEx struggle to provide sufficient last mile capacity. As a result, Australian retailers have been slow to offer same-day delivery.
Little wonder then, that Australian businesses are seeking viable alternatives for their last mile deliveries. In recent times, a number of organisations have come up with innovative and profitable solutions.
The ICONIC Warehouse Fulfilment Centres Are Putting Automation Technology To Work, In A Sustainable Manner
In 2016, online fashion retailer The ICONIC struck a $2 million-a-year industrial lease, allowing it to occupy a warehouse the size of three football fields, on the western side of Sydney. And in 2018, the brand invested in an integrated ASRS (automated storage and retrieval system) and tray sorter technology, which allows orders to be fulfilled in as little as ten minutes.
As of December 2019, The ICONIC has expanded its Yennora fulfilment centre in Sydney by 8000 square metres (sqm), bringing the site’s total footprint to 28,000 sqm, and total fulfilment space across its two storeys to 46,000 sqm.
This new expansion has been dubbed Yennora 2, and increases The ICONIC’s inventory capacity by 1.55 million units. It increases the overall capacity to more than 3.75 million units, making Yennora 2 the largest online fashion fulfilment centre in the country. The warehouse is capable of serving more than 50,000 customers per day.
The ICONIC has also committed to a number of sustainability targets, including steps to reduce the environmental impact of the company’s operations and delivery by 2022. Measures to achieve this include using packaging that’s 100% recyclable, the installation of solar power in the warehouse this year (to be fully operational by 2022), and offering all consumers zero or low-emission delivery options at checkout.
Woolworths Group (FMCG) Overcomes The Barrier Of Time, At Its Micro Fulfilment Centre
The new dynamic of retail requires a sophisticated combination of store networks and multiple online channels, including marketplaces and social media, with the physical store playing a key role in customer fulfilment.
(Image source: Insidefmcg.com)
In late 2017, Woolworths rolled out its ‘Pick Up’ service at more than 670 stores throughout Australia. More than 4,500 personal shoppers were put to work, picking and packing groceries for customers who order online, then come into the store for pick-up.
Two years later, after successful trials in Sydney and Melbourne, Woolworths announced the further roll-out of its on-demand grocery delivery service, Woolworths Delivery Now, in partnership with Yello. For a delivery fee of $19, the service gives over 300,000 shoppers in Brisbane access to grocery deliveries in under two hours, seven days a week, from six local supermarkets. Shoppers will be able to select up to 30 handpicked items, from a range of over 12,000 products.
Also in 2019, the US-based e-grocery solutions provider Takeoff Technologies struck a deal with Woolworths Group to open three automated micro-fulfilment centres over the course of 2020, at locations yet to be specified.
In a space of about 10,000 square feet, each micro-fulfilment centre will use a combination of robotics and other automation technology to move items closer to the picker, saving them the time it takes to walk up and down the aisles to locate products.
Brad Banducci, Woolworths Group CEO, says that "We see the future of online delivery as a mix of our large-scale fulfilment centres in major metropolitan areas and a localised approach that leverages the strength of our national store network."
Amazon Flex Extends The Uber Dynamic To Last Mile Delivery
Growing customer expectations are driving a need for retailers to “Uberise” their fulfilment models, providing cheaper and faster delivery options. The organisation that effectively pioneered the same-day delivery culture recognises this, and in December 2016, Amazon launched its first ‘Prime Air’ delivery – a system designed to get packages to consumers in 30 minutes or less, using drones.
(Image source: InsideRetail.com)
The system isn’t fully functional yet (there are issues over air traffic regulations to overcome), but the online retail giant has other tricks up its sleeve.
Amazon kicked off 2020 with the introduction of a new app called Amazon Flex, which offers users the opportunity to deliver packages under an Uber-like gig economy model. Initially available in Sydney and Melbourne, Flex will allow Amazon to expand its delivery network, increase delivery capacity at peak times, and speed up delivery times for consumers when the demand increases. Customers will use the same ordering processes they’re accustomed to, and be able to select from the same range of products.
Amazon Flex users download the app on iOS or Android, then sign up and complete a background verification process. Once verified, they can make themselves available for delivery 'blocks' of roughly four hours, during which they take packages from pickup points around Sydney and Melbourne to their end customers.
The system displays the minimum payment and estimated delivery time for each block, so that users can decide whether to accept it or not. Delivery partners get their pay on a weekly basis.
Deliveroo Brings A Last Mile Subscription Model To Food Delivery
Just like retailers, food delivery companies appreciate the need to provide a better customer experience, and induce consumers to spend more. That’s why the on-demand food delivery service Deliveroo has launched a subscription scheme called Deliveroo Plus in Australia, which gives users unlimited free delivery for a monthly fee.
Under the scheme, users pay a flat fee of A$18.99 (US$13.58) a month (about US$163 per year) to use the platform, instead of paying for each delivery. Currently, the company charges customers A$3.00 (US$2.14) per delivery. A company statement maintains that, “Customers who sign up could save up to A$25 [US$17.87] or more a month in delivery fees if they order from the platform regularly and will have access to special deals and discounts from their favourite food providers.”
Deliveroo has been testing the service in selected suburbs of Sydney before the official launch. Deliveroo’s subscription service is already active in Singapore (S$14.90 per month [US$11.00]) and Britain (£11.49 per month [US$15.05]), and has just launched in Italy (€9.99 per month [US$11.30]). So the model is a viable one.
However, with over 6,500 self-employed riders and links with more than 8,000 restaurants in Australia, Deliveroo Plus may need to lower its subscription rates or provide additional discounts and privileges to attract a user base large enough to make it profitable.
Benefits Of Winning The Last Mile
Whichever model you choose, optimising last mile delivery offers a considerable competitive advantage. Achieving same-day delivery and using mobile technology to enable consumers to specify their preferred times and places for receiving goods - and for tracking the status of their orders - makes for a greatly improved customer experience. And this in turn leads to more sales, a reduction in complaints, and greater operational efficiency.
Last mile delivery and fulfilment options will be hot topics at eTail Australia 2020, which takes place from 13-15 October, 2020, at the Sydney Harbour Marriott, Australia.
Download the agenda today for more information and insights.