The growth of ecommerce is fast changing Australia’s traditional retail landscape―for instance, online retail sales in Australia have grown by 14 per cent annually over the past three years. At a major conference last week, a last-mile expert forecast that out-of-home deliveries will solve important logistical problems for retailers, carriers and consumers alike. As a result, out-of-home deliveries will very soon make up a significant component of the last-mile market.
Marek Rozycki, managing partner at Last Mile Experts, a consultancy group based in Europe focusing on all aspects of ecommerce and last-mile logistics, and former vice president of Amazon Logistics Europe, spoke on the topic in his keynote address at the Hubbed ‘Future of PUDO Conference’ in Sydney last week.
In his presentation, Rozycki explained that the cost of the last-mile accounts for approximately 41 per cent of supply chain costs. With many consumers already feeling that home delivery methods are outdated, parcel collection point networks such as Hubbed are growing because they guarantee successful first-time deliveries and increase delivery density to collection points―both reducing costs for carriers.
“Out-of-home delivery is becoming crucial for the delivery sector because it offers a virtually guaranteed first-time delivery solution,” says Rozycki.
“It is also increasingly important to the overall consumer experience because is it currently the only way to manage massive volume growth without excessive service failures and costs.”
He outlined how the increasing failure by legacy players to address problems with the last mile has led newcomers to disrupt the market, both domestically and internationally. He anticipates the three areas of out-of-home deliveries that will grow in Australia will be lockers, collection point networks, and click and collect services.
With regards to lockers, some experts are already pointing to the IT and physical security issues such as power outages, and their vulnerability to hackings, intrusion, vandalism and robbery. Some overseas industries are already addressing physical security issues with innovative technologies such as video cameras, movement and vibration sensors.
Collection point networks, with their proximity to consumers, familiarity and simplicity of use, will see significant growth. For example, Hubbed, after launching in Australia in 2014, has grown to 2,000 locations around the country within five years, has recently launched in NZ and is set to launch in several Asian markets this year. Rozycki says that a significant part of Hubbed’s success is its carrier agnostic approach and easy-to-use network processes, systems and tools for consumers and retail operators.
He believes in-store click and collect offerings also have plenty of space to grow, especially as consumers become increasingly environmentally driven in their choices and embrace greater control and convenience. By giving customers what they want, e-tailers can also build loyalty and drive income. In fact, the research shows that almost two-thirds of customers spend more when they use click and collect.
“The customer expects higher levels of service and choice when it comes to ecommerce,” David McLean, founder and CEO of Hubbed, says.
“They are demanding more control post the purchase experience and this obviously includes delivery and collection. This, coupled with the demand for more environmentally friendly options, means that sustainable shopping now extends to sustainable shipping. Pick-up drop-off (PUDO) and collection points, such as Hubbed, which has more than 2,000 locations nationally, support this process from the get-go.”
Rozycki shares seven international trends in last-mile delivery that he forecasts may soon be seen in Australia:
1 In-store click-and-collect ‘drive-thru’. Rozycki forecasts continued growth for click and collect parcels in the future, especially at major supermarkets or grocery stores. In some cases, employees will bring the packages out to individuals waiting in their cars or a specified pick-up location via a ‘drive-thru’ type model.
2 Smart locks that power in-home and in-garage delivery. Delivery drivers might soon be able to leave parcels in the home, garage or other secure locations via smart locks. For this type of delivery, homeowners would be notified when the delivery driver has arrived, and they would provide permission for them to access the property to make the delivery.
3 In-fridge delivery. Would you let delivery drivers enter your home to place food deliveries in the fridge? Maybe not. However, Rozycki believes that this method of delivery will become possible via smart locks and drivers with cameras, allowing the consignee to see what is happening throughout the delivery.
4 AGVs (robots). Robots, or ‘bots’, are being tested in various places but will still take time to be used at scale.
5 Leave with a neighbour or ‘safe drop’. This method can be utilised in cases where a parcel is being delivered to the home, when the customer is out. In these instances, the customer can elect to have their parcel left with a neighbour or a pre-determined location that they deem is safe.
6 UAVs (drones). Delivery providers are already utilising drones for specialist deliveries. As with AGVs, it will take time before this happens at scale.
7 3D printing. This would allow consumers to have suitable products 3D printed at local access points, which will have the potential to “drastically reduce the movement of freight in urban areas”, says Rozycki.
