The international shipping pressures amid the COVID-19 outbreak have created an uncertain landscape for selling and purchasing goods. The supply chain’s last mile, or the movement of goods from a distribution center to their final destination, has emerged as both a growing opportunity and a hurdle for companies to meet evolving consumer demand.
How are companies adapting their strategies to capture the growing last-mile delivery business, while mitigating bottlenecks in the domestic delivery infrastructure?
With the rapid institution of stay-at-home orders and lockdowns in the U.S. starting mid-March, consumers have flocked to e-commerce to buy goods while practicing social distancing, resulting in increased sales. For example, Amazon Prime memberships increased 10% between March 16 and March 30.
Despite staggering unemployment increases and consumer spending declines in the month that would follow, it appears that the surge in e-commerce has continued as consumers adjust to a new normal. According to data firms Emarys and GoodData, e-commerce revenue and orders were up 36% and 54% respectively in the first week of April.
With the demand for online ordering having extended past the casual Amazon Prime order or pizza craving, companies have already started to adapt their operations to the growing e-commerce and local delivery market. For example, Uber has introduced a new extension of its Uber Eats platform to transport convenience items and grocery goods in some markets. Wholesale food suppliers have also seized this market opportunity by partnering with e-commerce platforms to allow online ordering, then delivering food directly to consumers.
Furthermore, companies with innovative technological solutions have also stepped up to meet heightened consumer demand for contactless delivery. California-based startup Nuro has ramped up operations of robotic delivery vehicles, after receiving approval from California’s Department of Motor Vehicles to test driverless delivery as a means of addressing the last-mile challenge of increased delivery needs.
Pressures have emerged in the ability to fulfill consumers’ orders in a timely and safe manner. To meet personnel constraints, businesses have already engaged in increased hiring, with Amazon announcing the need for 100,000 more warehouse workers and Dominos searching for 10,000 additional delivery drivers.
Businesses that are now operational face the additional challenge of keeping their workforce healthy while meeting customer needs. In fact, Nielsen found high correlation rates between e-commerce surges and localities with higher confirmed cases of COVID-19, adding to the need to consider workforce safety.
Micro-fulfillment centers have emerged as a possible way to shift order processing closer to the consumer, while also reducing on-site staff to avoid the possibility of outbreak. More recently, UPS announced the launch of their new Warehouse Execution System, which relies on supply chain software to enable faster order intake and fulfillment, as well as minimize manual intervention during this initial process.
Companies and consumers continue to adjust to new last-mile logistics options during the current COVID-19 pandemic. As more options come online and, inevitably, consumer budgets grow tighter, it will be interesting to see which services have staying power in the post-pandemic world.