NEW research from DS Smith has revealed e-commerce businesses across the UK and Europe are seeing last-mile delivery costs continuing to rise by up to 90%.
The firm has launched the Last-Mile Delivery: the Future Unpacked. The report findings are based on survey research among 550 decision makers. Respondents were segmented into three categories of Traditionalists, Pragmatists, and Innovators, as a methodological tool to differentiate between those who prioritise relationships with long-term value chain partners and known processes and those who are actively seeking out new collaborations and solutions through continuous innovation.
The report reveals how outgoing costs around couriers, returned items, and products that have failed to arrive or experienced damage during transit, have risen significantly within the last year. 39% of e-commerce retailers surveyed experienced double-digit rises in overheads because of supply chain challenges.
In addition, 84% of e-commerce businesses experienced cost increases around the last mile of deliveries during the same period, and 84% of respondents believe increases are likely to continue to rise over the next year, with 50% anticipating this trend to double.
DS Smith said the coordination of last-mile planning and strategy is anticipated to have a significant impact on the profit and loss of e-commerce businesses, and almost 39% of those questioned reported lower profits as a consequence of operational challenges. A further 35% have increased delivery fees charged to the end consumer to cover these costs, and 35% have increased the price of their products.
The Last-Mile Delivery: the Future Unpacked details how the rise in delivery costs is impacting on other trends within the e-commerce market. 27% of businesses are cutting back on sustainability initiatives to decrease their spending, and many are reviewing their short and long-term operations strategy. 59% are reviewing their returns policies, while 57% are managing future forecasting by imposing minimum order values for deliveries.
DS Smith added that the emerging trends in last-mile logistics and delivery costs is thought to be compounded by rising consumer expectations around customer service, sustainability, packaging, timing, and flexible options. Almost 75% of survey respondents reported that their customers expect to receive newly purchased items in sustainable packaging.
71% of these consumers expect to see options for the tracking of deliveries and communications, and 69% expect to see flexible delivery times, alongside 67% that anticipate sustainable delivery options.
The report reveals that some e-commerce businesses feel they have not been able to fulfil expectations in the current climate, and less than 39% claim to have satisfied expectations around sustainable delivery options. 36% are concerned they have not met customer expectations around the costs of delivery, and only 30% feel they have met customer expectations around flexibility of delivery times.
DS Smith explained that the findings suggest e-commerce businesses benefit from collaboration and external support when it comes to optimising and developing value and supply chains, and that a wider longer-term commitment to innovation is the best overall approach to finding solutions and staying ahead of trends.
The report also outlines how e-commerce businesses that are open to new ideas and regularly review their approach are more likely to forecast and manage potential issues or challenges. 65% of those businesses with an innovative mindset are conducting regular supplier reviews for cost savings and 59% are using third-party planning and co-ordination to reduce overhead costs throughout their supply chain.
Olivier Cottard, global e-commerce and industries director, DS Smith, said, “Amidst this period of transition and fast-changing trends, leading companies are developing innovative and effective ways to improve their e-commerce and supply chain models without compromising on customer service. The message from our survey is clear – innovative companies that are more open to new ideas, and which regularly review their set-up around last-mile delivery and explore new ideas with packaging suppliers, are better able to cope with the significant challenges that the e-commerce sector faces and in a better position to meet the demands of tomorrow.
“Equally, those with an ambitious and innovative approach have a greater strategic advantage in terms of finding ways to protect their supply chain costs and either meet consumer demands, or excel above expectations.”
