Buying behaviours of consumers, especially e-shoppers are constantly changing along with the growth in volumes, and adding cost pressures for e-commerce companies. Products that shoppers order online have to be delivered to their home, office or any other designated address. More often than not the delivery addresses are located in congested urban areas, and that’s where the real challenge lies. The end of the logistics chain is famously known as “Last Mile Delivery”, which is referred as the movement of products from a warehouse or transport hub to a delivery address.
The last mile accounts for a large portion of transport costs and involves a lot of complexities. The factors such as variation in delivery routes, time taken for loading/unloading docks, and low size of loads, all influence both cost and speed of delivery.
An increasing number of traditional retailers are taking the opportunities that omnichannel trading offers, but are struggling to manage the fulfilment process. A recent report by Barclays shows that the surge in online shopping is likely to generate more than 1.35 billion deliveries a year by 2018.
Now, the question is, “Are e-commerce companies ready to take on the challenge of dealing such high volume of deliveries?” In this context, last mile innovations like parcel lockers or smart lockers have the potential to resolve this persistent issue.
A Prominent Market Shift
It is projected that by 2018, online sales of clothing items and footwear will be the leading category chosen by e-shoppers that will make up more than 20 percent of all deliveries. Other items would be food, music/film media, and then books.
Although a majority of consumers still prefer home deliveries, it is expected that other delivery methods like automated parcel or click-and-collect lockers are likely to witness phenomenal growth, and improve the retailers’ margin. The Barclays report consolidates this fact by projecting that by 2018 click-and-collect or self-service lockers will be the predominant method of delivery.
The Cost Factor – Reverse Logistics
E-commerce companies provide free return facility to consumers of their online orders without too much hassle and additional costs. However, the scale of returns is a cause of concern for retailers as they are adding up more costs and bringing down the revenue margin. An article published on ‘Entrepreneur India’ website reveals that one in three online purchases is returned. Specifically for online apparel purchase, the rate of return is nearly 40 percent. Again, automated parcel lockers can help online retailers save a significant amount of logistical costs.
Many e-retailers in Europe and North America are ahead of their competitors by providing consumers with flexible options for ordering online and picking up the items from collection lockers. The innovation of parcel lockers and their implementation has already revolutionised and taken a giant steps forward breaking free from the traditional delivery methods.
Even though it is early days, the buzz about “uberization” of the last mile is already resonating in the e-commerce industry. Even in India, keeping up with the dynamic consumer minds and increasing expectations, Smartbox has brought automated parcel terminals by collaborating with leading eshops like Oriflame and Shopclues.
How E-retailers can get the best out of Smart lockers
As smart lockers have emerged as an excellent alternate, e-commerce companies can formulate a meticulous strategy to meet their delivery needs. By carrying out detailed analysis with in-depth reports and business analysis tools, companies can review its delivery history and determine the areas where smart locker services are available. This approach will help them save last mile delivery hassles and costs.
A survey named ‘Pulse of the Online Shopper’ shows that 93 percent of shoppers put in some efforts while shopping online to get free shipping. It is also a fact that consumers frequently modify their online shopping and delivery preferences based on value-added advantages ranging from low or free shipping to lenient returns policies. By taking into account Smart lockers, online retailers can re-assess their shipping methods and reduce shipping charges.
Studies also prove that nearly 58 percent customers abandon their e-shopping carts as shipping costs were higher than they expected, and others abandoned for having qualified for free shipping. Considering these instances and keeping e-shoppers needs and delivery preferences, retailers can offer them flexible shopping options like collection points or lockers in convenient locations to pick their ordered items through a digitally secured method.
As the Last-mile delivery solution brings in complexity, influences product’s sales margins, and aggravates the “shipment density dilemma,” retailers struggle to get over. This is why implementation of smart lockers can help maximize delivery density to ensure profitability.
Automated Parcel Locker in India – Will it end Last Mile Delivery Woes?
Automated parcel lockers can be highly beneficial for both online retailers and consumers considering the logistical roadblocks and obvious cost reasons. With the introduction Smartbox, there is likely to be a paradigm shift from the traditional shipping or delivery methods.
Simply put, smart lockers make the delivery process more streamlined by reducing the burden of carrying cash for cash on delivery (COD) and introducing card swipe on delivery (CSOD). Each locker is equipped with credit/debit card terminals, where consumers, after putting phone number and one-time password (OTP) can swipe their debit or credit card to make payment on the spot.
Click & Collect innovations and smart lockers are expected to be an integral part of urban consumers’ daily lives in India. The reason being, modern logistics and retail markets are evolving at a fast rate based on e-shoppers’ buying behaviours, need of advance shipping methods, and expectations for better customer service. Overall, India has got a step closer to actualise the concept of “smart shopping” and “smarter living.”