What COVID E-Commerce Growth Means For Last-Mile in 2021
With 2020 in the rearview mirror, companies are rethinking their supply chains and logistics operations while preparing for more double-digit e-commerce growth in 2021.
Persistent supply disruptions and a simultaneous e-commerce growth driven by the COVID-19 pandemic reshaped the global supply chains in 2020. Manufacturers, distributors, and retailers worldwide were impacted by this double whammy and spent much of the year shoring up their operational, logistics, and supply chain networks.
These efforts extended over into 2021 as companies faced new challenges and obstacles of doing business during a global pandemic.
As last-mile delivery trends continue to evolve, we are reviewing the supply chain and e-commerce glitches as a result of those challenges, and how digital technology is paving the way toward a better process.
Reviewing 2020’s e-commerce growth
In 2020, e-commerce was both the bright spot on the map and a consistent challenge for supply chain operators. While brisk sales translated into higher revenues for a number of industries, it also forced companies to rethink their logistics and transportation networks and processes to better support the increased volume and limited operating caused by the pandemic.
According to eMarketer, U.S. e-commerce sales exceeded $794 billion in 2020 and ended the year 32.4% ahead of 2019’s numbers. The surge occurred worldwide, with total retail e-commerce sales recording a 27.6% annual growth rate. Overall, the total value of online sales reached well over $4 trillion. In 2021, eMarketer predicts a 14.3% growth in e-commerce purchases worldwide for a total of $611 billion in additional e-commerce sales (over 2020’s numbers).
Last-mile logistics will continue to fuel e-commerce growth in 2021
Prior to-COVID, competition between online marketplaces was already conditioning consumers to expect same-day and next-day delivery as commonplace. That trend accelerated over the last year as more consumers shop online. This has put new pressures on companies forced to expand their logistics and transportation networks to meet rapid delivery demands.
With mobile devices becoming indispensable, consumers are using them to place e-commerce orders, warehouse workers use them to fulfill orders, and delivery personnel rely on them to for traceability and proof of delivery. Every corner of the e-commerce supply chain is touched by mobility in some manner.
With COVID placing new pressures on supply chains, organizations turned to the nation’s largest parcel carriers for help, and the proof is in the numbers: In a recent 2021 outlook, JOC said that both FedEx and UPS reported double-digit year-over-year percentage growth in small parcel volumes in 2020. U.S. parcel volumes are forecast to remain elevated as e-commerce continues its double-digit year-over-year growth over the next couple of years, U.S. parcel volumes are on track to increase by 8-10% in 2021 and then hit 100 million total packages delivered daily by 2023.
These upticks came at a price, mainly in the form of surcharges on certain types of deliveries. As they worked to meet the needs of the “digital demand” spike, parcel carriers found themselves delivering more residential packages than ever before. From school supplies to meal kits to furniture, the assortment of packages handled by UPS and FedEx expanded significantly. To offset costs of managing these shipments, carriers began imposing surcharges ranging from 30 cents to over $30 each for residential deliveries.
“The COVID-19 pandemic and related business closures accelerated growth in e-commerce and put the spotlight on residential last-mile deliveries,” JOC points out, “which are typically more time-consuming and, therefore, costlier for transportation providers such as FedEx and UPS than commercial deliveries.”
Emerging last-mile delivery challenges in the new year
With Statista expecting more than 2.14 billion people worldwide to buy goods and services online this year (up from 1.66 billion in 2016), companies are taking steps to ensure that their supply chains and logistics operations are prepared to handle the onslaught of online orders and that they’re well-positioned to serve a customer base now used to ordering everything online, from meals and apparel to cleaning supplies and furniture.
As a result, companies are focused on trying to fill the gap between their delivery hubs (e.g. warehouses, distribution centers, retail stores, etc.) and their customers. This challenge existed pre-COVID, but the issue became more apparent when demand for home deliveries and buy online/pickup in store (BOPIS) options boomed in 2020.
Companies are answering the call by building physical locations closer to customers (i.e., retailers have reworked their physical footprints to include:
- More distribution space (for fulfilling BOPIS orders).
- Experimenting with micro-fulfillment centers that are largely run by automation and robotics along with hyperlocal deliveries (catering to the immediate area).
- Utilizing more mobile technology to get orders processed, fulfilled, and shipped faster. Voice picking, for instance, helps increase the speed and accuracy of the order fulfillment processes and helps companies get the right orders to their customers faster and more affordably.
- Deploying additional mobile solutions with barcode scanners, barcode readers, and wearables to help speed up fulfillment and shipping processes out on the dock, in the yard, and across entire transportation networks.
- Putting more mobile devices and applications into the hands of truck drivers, who are using them to track their hours of service (HOS), record proof of delivery, capture signatures, take photos of delivered packages, and/or maintain a create a more “touchless” delivery experience during the pandemic.
These and other last-mile logistics strategies are being developed with a core focus in mind: meeting the evolving needs of today’s consumers, who are currently avoiding brick and mortar stores.
Putting last-mile delivery technology to the test
Technological disruption and innovation in last-mile delivery will continue to shape the way enterprise organizations meet demand. To remain competitive and responsive in the e-commerce-driven world, companies need advanced technologies that digitize and automate their supply chain and logistics functions. Focused on moving more products at a lower cost, these organizations are adopting technology that helps them increase the efficiency of their last-mile deliveries.
Some popular choices include technologies that minimize the amount of time spent manually planning out driver routes and that also support HOS compliance; tools that support electronic logging device (ELD) mandates while allowing companies to safely ramp up demand; and mobile warehouse management technology that supports more efficient order fulfillment.
Combined with TOUGHBOOK mobile computers, the application software, services, and their industrial-grade, reliable wireless connectivity modules, these innovations are helping companies address their logistics and transportation challenges in a world where, at least for now, the only “sure things” will probably be more uncertainty and disruption.
