BIGrowtec
BIGROWTEC
CONSULTING PVT LTD
" 'Idea to IPO' MSME scaling experts"
Last-mile delivery
Background
According to a new report, the last mile delivery market in India is expected to reach US$ 6-7 billion by 2024, following a parallel trend with markets in the US and China where the penetration has attained >10%.
According to a report by RedSeer, a Bengaluru-based market research company, last-mile delivery in India comprises retail, e-commerce, FMCG, and other categories. Among segments, FMCG represents the highest share in the market followed by e-commerce.
What is Last Mile Delivery?
Last mile delivery refers to the very last step of the delivery process when a parcel is moved from an e-commerce seller or warehouse, for example from Amazon to its final destination- a person's residence or retail store. This is the most critical step in the delivery process and the one that sellers want to ensure as quick and efficient as possible. Furthermore, last-mile delivery performance has become the most important component in the relationship between E-commerce vendors and end consumers, as it may either develop or break the bond, which has a direct impact on the client’s re-ordering choice. Customers now have a plethora of online purchasing choices to choose from. As a result, e-commerce merchants put pressure on last-mile service providers to improve their performance.
What is the “Last Mile Delivery Problem”?
By now, we’ve established that in e-commerce an efficient last-mile delivery process is essential to keeping customers happy. Moreover, while tier-1 cities will continue to be the largest contributor, driven by the overall e-commerce sector, tier-2, tier-3, tier-4, and remote villages are expected to have a higher growth rate compared to tier-1 cities, due to increased services of online players in these areas.
The paradox is that while the customers want shipping that’s free and fast, it also happens to be the most expensive and time-consuming part of the shipping process.
How easy it is for customers to find an alternative place to shop, but, companies can’t afford to disappoint them. This means companies have to foot that cost and focused on the promptness of last-mile delivery. And that right there is the last mile delivery problem.
Last mile shipping can account for 53% of a shipment’s total costs. Companies typically take about 25% of that cost themselves, but this price is increasing as supply chain inefficiencies are becoming more and more costly. Optimizing last-mile delivery can result in significant savings for eCommerce and online retailers, especially as the number of eCommerce shipments across most industries continues to skyrocket
Scope of the last-mile delivery hub
The future of eCommerce in India is enormous, and the ever-increasing penetration of smartphones will only add impetus to the growth. Online selling and purchasing offer innumerable benefits to both sellers and buyers, and these advantages are also the reasons for the rising scope of eCommerce. As of 2017, the total value of the e-commerce business in India was USD 40 billion, according to IBEF, and it is expected to hit USD 200 billion by 2025. By 2030, it is expected to reach US$ 350 -400 billion i.e. 30 lac crore rupee!!- huge.
Yes, considering India's huge population, vast area, ten thousands of remote villages, fast economic development, and most importantly very fast e-commerce sector familiarization increase the scope for the last mile delivery hubs- business opportunity is immense.
Consumers' buying behaviors have changed, especially when it comes to online shopping. E-commerce, online shopping, doorstep delivery, and same-day delivery shall be normal and habitual by 2025 even in remote areas. Because today’s consumers expect a variety of quality products for cheap rates- and free and fast delivery.
The Problem
By now, we’ve established that in e-commerce an efficient last-mile delivery process is essential to keeping customers happy. Moreover, while tier-1 cities will continue to be the largest contributor, driven by the overall e-commerce sector, tier-2, tier-3, tier-4, and remote villages are expected to have a higher growth rate compared to tier-1 cities, due to increased services of online players in these areas.
The paradox is that while the customers want shipping that’s free and fast, it also happens to be the most expensive and time-consuming part of the shipping process.
How easy it is for customers to find an alternative place to shop, but, companies can’t afford to disappoint them. This means companies have to foot that cost and focused on the promptness of last-mile delivery. And that right there is the last mile delivery problem.
Last mile shipping can account for 53% of a shipment’s total costs. Companies typically take about 25% of that cost themselves, but this price is increasing as supply chain inefficiencies are becoming more and more costly. Optimizing last-mile delivery can result in significant savings for eCommerce and online retailers, especially as the number of eCommerce shipments across most industries continues to skyrocket
Our Solutions
NationWide Last mile delivery hub network is the solution.
But in reality, a route could be several miles long and with only a few deliveries in total in that area, especially in rural areas. That means a lot of time and gas spent on only a few deliveries. Similarly, in heavily urbanized areas, the congestion of traffic can use up just as much time and gas, even though the drop-offs are closer together.
Today, e-commerce companies, online stores, home delivery merchants, drop shippers, online wholesalers, and shipping companies are facing the problem (in the last mile) of delivering goods and services- equally, in rural areas and congested town areas. That is why too many e-commerce companies limited their delivery to selected cities only- not entertain orders even from tier 2 and tier 3 cities. 90% of e-commerce companies do not offer services in village areas. It is due to remoteness, long traveling, nonviability and unprofitability, lack of proper road connectivity, climate change, etc.
But, it is not viable to set up own warehouse/delivery hub for each e-commerce company in every location. So, the solution to solve the last mile delivery problem of 1000+ online vendors and e-commerce companies is to set up a local network of small warehouses and remote delivery hubs across the edge of the city limits and in remote villages- we do that. So, in this emerging LMDP network, comes 1500 LMDPoints across Kerala. And each LMDPoint should handle the parcels of and for 500+ e-commerce vendors and online merchants from across India- in that assigned area.
LMDHub business opportunity
In this last-mile delivery service company, the duty and responsibility of each last-mile delivery point (LMDPoint) is to provide last-mile delivery support for 500+ online vendors, online wholesalers, and e-commerce companies from across India. I.e. each LMDPoint receives parcels from 500+ vendors and delivers them to end customers- residents, institutes, or stores in the assigned area.
Each LMDHub warehouse or delivery hub shall have a space of 150-300sqft depending on the area on the edge of your city or village. Simply, each delivery hub in the city edge or remote area handles the final mile delivery of and for 500+ e-commerce stores and online vendors, for that assigned area. This is a great low-cost local business opportunity for small business seekers. Each LMDPoint need to buy or hire a few scooters, autos, vans, or trucks to deliver the parcels to the customers' doorsteps.