January 2022 | Commentary | Last Mile

Last Mile Predictions and Priorities

Tags: Retail, E-commerce, Last Mile Delivery

Since COVID-19 shut down the world, the delivery industry as a whole experienced exponential growth. The rise of e-commerce platforms stretched last-mile delivery to its limits. The pandemic forced more people to consider delivery services and now consumers love the convenience. This preference for delivery over in-person shopping will continue into the future even after the pandemic.

The continued demand and expectation for last-mile delivery requires new solutions to optimize a strained supply chain. So what's next for the last-mile delivery industry in 2022?

The middle mile is next. FedEx, UPS, and USPS will look at automation and omnichannel solutions to fulfill the supply and demand needs of today's consumers. Expedited shipping is no longer a luxury, but an industry standard.

Micro-fulfillment (middle mile) strategies emerged as a leading solution, providing drivers more opportunities. Automation and technology help support middle-mile strategies while potentially offering drivers higher earning opportunities.

Delivery density will increase. With COVID-19, many industries pivoted to adapt to demand, which meant leaning into delivery. As a result, delivery density is increasing. With increased delivery demands, smart solutions like routed delivery and micro-fulfillment make drivers' lives easier.

Industries are beginning to utilize omnichannel strategies for their last-mile delivery needs. Businesses need to develop multi-pronged strategies to manage overflow that is common with third-party collaboration.

As independent contractors, drivers also have the opportunity to partner with more than one company for deliveries. This promotes more earning potential, better driver engagement, and overall work satisfaction.

The more retailers and delivery companies share drivers, the more they leverage the independent contractor ecosystem. Sharing drivers allows businesses to become more efficient with their third-party vendors and become more competitive overall.

Incentivize drivers. This year brought labor shortages across the board and delivery drivers were no exception. Businesses need to think about the infrastructure of a delivery program and who will handle the operations. When utilizing 1099 workers, businesses have to consider the entire process—from onboarding to accounting—as well as insurance and risk management needs.

Increasing driver retention is simple: Improve the 1099 HR experience. Offering drivers more opportunities, and daily versus weekly payouts helps improve the 1099 HR experience, thereby increasing driver satisfaction and retention.

1099-Independent Contractor evolutions continue. It's 50 states with 50 different tests. When California voted "Yes" on Prop 22, evolutions included minimum wage and insurance guarantees, which required more recruitment work for businesses. Several other states, such as New Jersey, are following suit and are primed to adapt their own regulations. These new rulings will impact the gig economy, insurance, taxes, and entrepreneurship.

Next year will continue the heated battle over the future of gig work in different states. The aftermath of the Prop 22 rulings affected both workers and consumers. Though there are some benefits to workers, negative impacts to consumers include delivery charges increasing, gas surcharges, and customer fees being renegotiated. This can cause decreased driver earnings as rates change behind the scenes. Ultimately, the customer experience suffers due to fewer drivers and longer wait times.

Looking ahead, the delivery industry isn't slowing down. Businesses need to consider making changes to stay afloat.






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