January 2020 | News | Takeaways

Crossing the Final-Mile Finish Line

Tags: Retail, E-commerce, Last Mile Delivery

Retailers continue to invest in fast and convenient final-mile solutions.

Total e-commerce revenue in 2020 will reach $3.52 trillion, growing year-over-year at nearly 19%, according to global tech market advisory firm ABI Research. This explosion is forcing retailers to find faster and more convenient modes to reach the final mile.

Retailers will likely trade profits to continue investments in the e-commerce explosion. This growth depends on faster and more convenient modes to reach the final mile and yard. This includes the increase of one-day delivery and seven-days-a-week delivery in 2020 to reduce "click-to-door" time and combat the Amazon effect.

Online and in-store businesses are increasingly converging, with brick-and-mortar retailers serving as hubs closer to the customer and online stores directing package delivery to retail outlets. Investments will likely grow in buy-online-pay-in-store options.

China's e-commerce giants Alibaba and JD.com are more focused on growth through lower-tier cities, using fast-growing Pinduoduo's playbook to reach millions of people in rural areas. Singles Day, China's shopping holiday, will surpass all U.S. retail holidays in 2020 and beat 2019's record-setting $38.4 billion for Alibaba alone.

Retailers need to address their increasing costs and consumer expectations through new business models and optimized transportation and logistics methods. Amazon felt the financial pressure with North American margin compression in 2019 as it grew investments in its next-day Prime delivery service. Other retailers are forced to expand their shipping options and reverse logistics to compete.

Self-driving vehicles will not join in the race to the final mile any time soon. Despite some media coverage, little driver-free commercial usage is underway beyond closed-course operations in the United States.






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