Limitations in Last Mile E-commerce Delivery

Last mile product delivery is an important part of the supply chain of a product, and when it works perfectly, it can make the relationship between retailers and their customers. But when last mile process doesn’t work efficiently, then it can make the better co-ordination between retailers and their customers flow. Nowadays many companies are implementing different strategies and plans reduce costs and improve operational efficiency to last mile delivery. In the present competitive scenario, to it is very important for companies to be ahead of their competitors. Even though nowadays last mile delivery acknowledged by online shopping customers, still there are problems in this process and these problems results into low operational efficiencies and low service level. According to Morganti, E.et al (2014) , highlighted problems from the point view of consumer and carriers. Considering the point of view of customers, it is recognized that they have a problem of availability at the delivery point. Many times, they are not available at home. Sometimes when there is a day of shipment arrival, they have to stay at home forcefully due to unpredictability of delivery arrival time. Also, customers face the problem of high delivery cost and long delivery time. From the carrier’s point of view, carriers claimed the high delivery cost due to delivery failure and long delivery cost.

According to Park and Regan (2004), the important factor that has huge impact on home delivery process is unavailability of customers at home. Most of last mile delivery companies already inform to their customers about tentative range of shipment arrival time, but it is the time when most people are at work place. So, delivery fails because shipment arrival time is during regular working hours. For small packages, another option can be mail boxes but for medium size and big size shipments, it results as a delivery failure. As a result, it is concluded that near about 30% of small shipments which are dispatched to customer’s homes fails to deliver in first attempt.

There are other cases for the food delivery system. In this process online senders and receiver can agree on prior time window for delivery but even in this case also there no assurance that till the time of delivery, customers will be at home. But according to basic model of last mile delivery such prearrangement can increase less flexibility of carrier’s fleet operations. Such phenomenon can cause high operational cost for retailers and logistic service providers.

There are many external factors which creates huge impact in last mile delivery operations. Considering the environmental effect of last mile delivery it is shown that transportation of shipments in a various types of service vehicles can cause economic, social and environmental impact on urban environmental balance and infrastructure. Punakivi et al. (2001) discussed other problems of last mile delivery such as failed deliveries and the ping pong effect. Ping pong effect states that the situation when customers and carriers agree the delivery on specific time, but customers don’t show up for delivery. Such activities increase environmental cost.

The development of last mile delivery has led to some new challenges for logistic service provider. Considering the challenges which are discussed in the above literature review, it is clear that last mile delivery operation is the most crucial operation. It assigns to a delivery stage that reaches till end customer. As cost of last mile delivery is 50% among the whole logistics process. It is the cost for every shipment but still the operational efficiency is low. As we discussed in literature review, the major factor for the delivery failure is unavailability of delivery receiver, so it is necessary to find an alternative option for this problem. As the customers play an important role in the ordering process from ordering the product to last mile delivery process, their preferences and requirements have largely has impacted the delivery service where delivery services should perform according to customers’ expectations or else last mile services lose their evaluation value. As a result, poor performance of deliver can affect customer’s perception about ordering something e.g. online shopping. Finally, it is concluded that the problems in last mile delivery should be solved in a way that integrates with customer’s needs.