By 2021 more than two billion people across the world will become digital shoppers. In the U.K. the number of online shoppers is projected to increase from the current 45.36 million to 49 million by 2021 with close to 87 percent of purchases being made online.
Evolving customer expectations
With a rapidly evolving retail landscape, consumers’ increasing expectations with respect to fast delivery service and efficient returns process are the challenges that face the e-commerce industry. The phenomenal growth of e-commerce entails a strong focus on customer-centricity in what was once a business-oriented delivery market. E-commerce businesses are recognizing the significant impact of last-mile services on customer perception that in turn creates differentiation in the highly competitive market, leading to business success.
Technology innovations in last mile delivery
Technological advances in last mile delivery are shaping customer expectations with regards to speed, delivery options as well as a choice of products. Autonomous delivery vehicles (ADV) in the coming years are expected to dominate last mile delivery. While electric vehicles and unattended delivery technology are set to give last mile delivery a make-over in the short term, in the near and long terms, semiautonomous vehicles and robots are expected to completely take over last mile delivery.
Eco-friendly the way forward
Environmental concerns are one of the key factors that are influencing last mile delivery technology innovations. Eco-friendly electric vehicles that help reduce greenhouse gas emissions are already beginning to make their mark in e-commerce.
One of the businesses which have made a commitment to sustainable operations is the Ikea Group. The group which owns 366 stores across the world, is all set to change over to electric vehicles for last mile delivery in Amsterdam, New York, Los Angeles, Shanghai and Paris by 2020. By 2025, Ikea aims to achieve “zero emissions home deliveries” at all of its stores across the world.
To facilitate the transformation, Ikea will also provide charging stations access in 30 markets by 2020. The move follows Ikea’s first store opening in Hyderabad in India which is entirely powered by solar energy. Last mile delivery in Hyderabad is driven by e-rickshaws which are charged with renewable power derived from 4000 solar panels that have been installed on the roof of Ikea stores.
While 20% of the store’s vehicles are fully electric, the remaining 80% will also be converted to fully electric by 2025.
An alternative technology for last mile delivery was also explored and adopted by UPS (United Parcel Service). In 2018, UPS announced a tie-up with technology firm ARRIVAL to develop 35 state-of-the-art electric vehicles that would be launched in Paris and London on a trial basis. While these vehicles have zero tailpipe emission, they also feature Advanced Driver Assistance Systems (ADAS) which help reduce driver fatigue while improving safety.
UPS has showcased its commitment to electric vehicles as far back as in the 1930s while it currently operates more than 300 fully electric vehicles and 700 hybrid vehicles across U.S. and Europe.
Drones, smart lockers and droids
According to a recent McKinsey study, three delivery models are expected to shape last-mile delivery in the coming years. These include autonomous ground vehicles such as drones, parcel lockers (e-grocery) and bike couriers or droids. While autonomous vehicles are slated to deliver almost 100 percent of items.
Robots which are integrated into warehouse operations at Amazon are now undergoing trials in last mile automated delivery as well. Named Amazon Scout, the delivery robot is currently being trialled in the U.S. while Alibaba in Shanghai has developed ’G Plus’ a driverless delivery robot which apart from a 3D map-based navigation system, facial recognition and storage locker. Apart from the robot, Alibaba also announced the development of a smart storage locker that consumers can install on the apartment door. Enabled with facial recognition and smart sensors, the locker will enable consumers to control the temperature of food by using their smartphone.
Consolidation the key
While private drones are being tested by Amazon in the UK, Kroger in Arizona is exploring autonomous vehicle delivery for groceries. Self-driving vehicles and autonomous tractor trailers are expected to dominate freight delivery, signalling a key trend of consolidation in the industry while bringing about a cost-effective logistics solution.