The demands of fast fashion are putting more and more pressure on the last mile. So, what’s the next trend in fashion delivery? Analysis from Dirk S van Doorn and Marek Różycki (Last Mile Experts).
In our never-ending need to satisfy customers’ wishes, demands and purchases online, we find more and more pressure being put on the last mile.
Well-known websites selling the latest fashion items online want to deliver garments to end-customers in record time. Initially, customers considered it excellent customer experience when a shipment arrived the next day. Now super-fast has become the norm in many geographies, with some sites promising delivery within hours of placing of the order.
This trend places significant pressure on logistics providers, who simultaneously seek to be efficient and cost effective. However, there are consequences beyond just holding on to your market share, either as an online purveyor of fashion or as a last-mile operator.
First of all, to maintain high service levels, sellers need to be closer to the markets they serve, which means being close to major population centers where land and warehousing – not to mention the labor force – is expensive. In addition, there’s the challenge of dealing with congestion and parking restrictions.
What does this all really mean for the last mile? It means last-mile costs will undoubtedly increase, but costs cannot continue to rise without being checked at some point by online fashion customers. Someone will need to absorb a higher delivery cost: the e-tailer, the customer, or both.
The question then arises, what can the last-mile providers and online fashion retailers do to contain costs?
From a last-mile provider perspective, deliveries going into the city center can be delivered to the fringes and to suburban consumers via access points. A recent example of this is Jumia, which created a partnership with Vivo Energy for customer collection points at petrol stations in Africa (read more here). Another option is APMs where consumers can pick up their shipments.
‘City logistics’ is another option under consideration, where a number of last-mile carriers get together and create a delivery platform that consolidates deliveries to specific geographic points within the city, either by using their own infrastructure and vehicles, or by feeding it into a carrier-neutral company in which the last-mile providers all have a stake. This minimizes congestion and pollution, and increases efficiency by having only one vehicle and driver delivering within a denser parcel delivery area.
Another option is charging a premium for super-fast (within three hours of ordering) delivery. The tech industry already applies this model where customers want a system to be up and running within two to three hours and the customer pays the premium for the two-hour delivery window of the required spare-part. The problem here is that the likes of Amazon are teaching customers to expect this for free.
There is also an opportunity of making the reverse flow more efficient by arranging for the platform to collect fashion items that didn’t fit, or when out-of-fashion items are returned. These items are then brought to a consolidation point for recycling or resale. Some high-end fashion items are even resold via platforms where the end customer has no objection to buying a previously worn item.
What will become more and more important is the size of the environmental footprint created by ordering online from an end-to-end process. Simply put, the environmental impact is disproportionately bigger than the actual order placed. We are already seeing some of the online providers using far more environmentally friendly packing in recent years. Some of the big players are being pushed to collect delivery boxes and some of the well-known last-mile players are actively looking at ways to recycle the boxes and satchels.
What’s the next trend for fashion?
The fashion industry and its consumers need to rethink last-mile delivery holistically. Some countries are well ahead in this approach, while others lag far behind. Nevertheless, it remains an opportunity for all providers to up their game and become more efficient.
Don’t miss the Parcel+Post Expo seminar!
Ian Kerr (Postal Hub Podcast) and Marek Różycki (Last Mile Experts and ex-Amazon) will be joined by world-class players in the out-of-home delivery world for an interactive seminar and workshop on PUDO and parcel locker networks on Tuesday, October 1 at the Parcel+Post Expo Conference 2019. The conference takes place at Parcel+Post Expo in Amsterdam this October. To register your interest in attending the workshop, click here.
Dirk S van Doorn is Last Mile Experts’ associated partner, Middle East & Africa.
Marek Różycki is managing partner at Last Mile Experts, specializing in CEP and e-commerce last-mile advisory.