The importance of the Last Mile

Insight DIY’s Steve Collinge discusses how companies are being more creative with the final stages of the delivery process, including using new technologies and supply chain models to be more competitive and memorable.

Consumer buying behaviours and expectations of businesses have changed significantly over the last ten years, particularly when it comes to purchasing Home and Garden products online.

Today, most consumers expect home delivery to be fast and free and they are often unaware of the supply chain challenges, the high-cost and the impact on sustainability.

To remain competitive, retailers and merchants in the Home Improvement Industry need to find new and innovative ways to improve efficiency, at the same time as meeting those customer demands. This makes the Last Mile delivery one of the most important focus areas for companies in our industry.
Last mile delivery refers to the very last step of the delivery process when a parcel is moved from a transportation hub, whether that’s a distribution centre or store to its final destination, which could be a consumer`s home, a retail outlet or a collection locker.

It also happens to be the most expensive leg of the entire journey that goods take from being manufactured to reach their ultimate destination. But despite the costs, with so many competitors offering free or low-cost shipping, companies simply cannot afford to not be in this race. According to a recent article from the US, Last Mile shipping can account for as much as 53% of the total shipment cost and companies typically absorb around 25% of this cost themselves.

As a result, businesses have begun racing to develop new technologies and experimental supply chain models to increase parcel volume, expedite deliveries, and delight customers – all while trying to cut their costs.

With the established benchmark being Amazon Prime, who else is innovating in this space and what are the most innovative businesses in the UK doing about getting their products to customers faster?

Wickes & B&Q

The pandemic, store closures and lockdowns forced the leading Home Improvement retailers to revisit their supply chains and to make some rapid, game-changing decisions. As lockdown demand during Spring 2020 pushed their existing supply chains to breaking point, one of the key decisions they made, was to move to a store fulfilment model. No longer relying on a central point to ship online customer orders direct to homes, Wickes began using couriers and transport companies to collect orders from stores and deliver to local customers.

Following the success of this model, during 2021 Wickes reconfigured 50 of their highest-volume Home Delivery and Click and Collect fulfilment stores to create 50,000 square feet of additional storage space without affecting store ranges or compromising the store format. Many of these initiatives are already being rolled out across their business.

Kingfisher followed a similar path with their UK and French stores and at a recent ‘Teach In’ event, they shared a presentation on Speed and Convenience and how their store-based model achieves faster and lower cost last mile fulfilment. The chart below explains how they’ve moved from 58% of online orders being picked from store to 89% this year, all of which means they can offer customers a wider range and faster Last Mile delivery.

Collecting from store not only has the benefit of faster availability, but Kingfisher discovered that many of their customers prefer to collect their orders from store (87% of online orders across Kingfisher are now click’n’collect), as they often have other purchases to make. This has a dramatic positive impact on the cost of the Last Mile, saving Kingfisher millions of pounds and delivering speed and convenience to their customers at the same time.

Screwfix Sprint

In August 2021, Screwfix launched Screwfix Sprint, a new 60-minute delivery service, exclusively available through their Screwfix app. Less than twelve months later and with over 9,500 products available for delivery, Screwfix Sprint is now available across 275 stores and reaches 40% of the UK population with the aim to reach even more tradespeople. Whether they need a tool or multiple items, with no minimum spend and a set fee of £5 per delivery, the company says that customers can easily purchase the product they need via the Screwfix app and get it delivered straight to their location within 60 minutes.

To check if Sprint is available in an area, the customer just has to turn on their location services, select delivery address, add the products to their basket, and check out that the order will be delivered in 60 minutes. This development seriously raises the bar for the Last Mile delivery within the trade market and means Screwfix can delivery faster than Amazon and almost any of their competitors.

The Self-Driving delivery robot

Launched in 2014 by Skype co-founders, Ahti Heinla and Janus Friis, Starship Technologies operates in several cities across the world and completes tens of thousands of autonomous deliveries every day. Starship robots are advanced autonomous devices that can carry items over short distances. Their delivery platform enables a new era of instant delivery that works around the customers schedule at much lower costs with parcels, groceries and food delivered directly from local stores. Once ordered the robots’ entire journey and location can be monitored on a smartphone.

In 2018, they launched in the UK in partnership with the Co-op, initially in the city of Milton Keynes and have since extended their coverage to the counties of Northampton, Cambridgeshire and Bedfordshire.

The Starship autonomous vehicles outside a Co-op in Milton Keynes.

The entire delivery platform is both energy and cost efficient and can be used for a large variety of tasks. Starship’s robots are powered by zero carbon electricity, with an average delivery consuming as little energy as boiling a kettle to make just one cup of tea. Not something I can see working all that well for the Home and Garden industry, but in comparison to more traditional delivery services, for groceries, packages and food, deliveries can be made at a fraction of the cost.

Going Electric

When you think about it from a Sustainability perspective, most current examples of Last Mile delivery have a negative impact on our planet. Replacing consumer visits to stores with thousands of vehicles up and down the country delivering one or two items to our homes. These items then wrapped in multiple layers of cardboard and other packaging is a significant backward step and is conveniently ignored by some retailers when they discuss their Sustainability Strategy and plans to achieve Net Zero Emissions by 2030.

Rows of newly manufactured Amazon Prime Ford E-Transit electric delivery vans ready to be shipped to deliver products with less emissions

The solution? Many retailers are focusing their efforts on reducing packaging as well as moving to electric vehicles. Amazon has long been looking for ways to reduce costs and improve the efficiency of its delivery operation, particularly in terms of ‘Last Mile’ deliveries to customers in cities. Switching to electric vans cuts fuel costs and ensures Amazon vehicles are not affected by low emissions zones increasingly being established by many cities.

Last mile doesn’t of course only refer to deliveries to consumers, in the trade market Travis Perkins have recently invested in a new fleet of 26-tonne trucks, designed to support the Group’s ambitious carbon reduction target. The fleet will run on the latest Euro VI Step E diesel engine technology – engineered to reduce emissions and help save fuel without compromising performance – and with the capability to run on Hydrotreated Vegetable Oil (HVO).

The latest investment from Travis Perkins in a fleet of low emission delivery vehicles.

Conclusion

Whether Trade or Retail, there’s no doubt that in the last two years, the Last Mile Delivery has become one of the most important battlegrounds for the leading Home Improvement retailers and merchants. To keep pace, companies are being forced to change their supply chains, invest in new technology and test and learn about new ways of getting products to their customers. As the market continues to soften, how many of these businesses will continue to be able to invest and offer these free services at the significant cost to both their bottom line and the environment, will be very interesting to see.

Steve Collinge is an international speaker, influencer, retail commentator and is Managing Director of Insight Retail Group Ltd and executive editor of Insight DIY. You can follow Steve on LinkedIn and Twitter.