IMPROVING THE LAST MILE DELIVERY OF STARTUPS

A growing number of Last Mile and First Mile delivery startups are showing a
bright ray of hope for the logistics industry in India. Looking to create a value
ecosystem, these startups are focusing on working with sellers in organised
and unorganised sectors, becoming the link that improves their logistical
cost efficiency simultaneously. The first and last mile of product distribution
are very crucial to any retailer. The first mile refers to the movement of
products from a retailer to a courier service or to anyone who will take these
goods to their final users; and the last mile refers to this final movement of
products to their final users. Both of these aspects involve many processes
including storage, transportation, etc and can be addressed by an efficient
logistics industry.
In India, logistics is not only growing but also has tremendous potential
because of an ever-increasing demand. But, theres a lot left undone. In
India, despite of being a fast growing market, with a turnover of about $120
billion, logistics in the country has been riddled with inefficient traditional
practices and an acute lack of innovation. Around $45 billion are lost
annually due to these inefficiencies and at 13% of the GDP, Indias logistics
spend is second highest in the world

Figure 1: Logistics Performance India V/S Rest

The final struggle to get the product to its customer is known as the last
mile problem. Research shows that just 1% on the logistics players in India
are under organised sector, 75% of the commercial vehicles are owned by
small fleet operators, the result is a vicious cycle of inefficient utilization of
resources, corruption and suboptimal services. It is expected that the e-retail
is set to jump 72% in average annual spend by online customers.
So how do we go about improving the last mile reach of the Indian
startup ecosystem? The answer lies in technology; technological innovations
has opened the doors for completely new business models to develop.
New startups are being registered every day, but the question is how
many of them are penetrating tier 2 and tier 3 cities, the answer is quite
simple, isnt it! Let us look at reasons why the scenario happens to be like
this, despite a large chunk of Indian population dwelling in Tier 2 and Tier 3
cities.
a) Lack of infrastructure: There has been several collaborations and
several other efforts to change the scenario.
b) Payment collection: Online money transfer is still a mystery, cash
collection is messy, as a result cash on delivery in small towns are
not possible. Collaboration with micro finance institutions can be a
solution to improve the situation.
c) Problem to scale up operations: Due to vast range of demographics,
scaling up operations at a pan India level is very challenging, there
are political issues to local factors.

Technological disruptions:
i) Advance Algorithms and Analytics:

These algorithms open door for new processes such as:

Buyer pickup: With advanced forecasting analytics, and greater
visibility to in-store inventories, retailers can more easily offer
customers the option to order items online and pick them up from a
nearby store. Often this option will allow both retailer and customer
to save on shipping costs, and customers receive orders faster.
 Crowdsourced delivery: Peer-to-peer (P2P) and business-to-
consumer (B2C) companies using crowdsourcing provide individuals
a more flexible and possibly cheaper alternative to traditional
delivery providers such as the Indian Mail services
Seller arranged delivery: Once the delivery process becomes easier
to manage, retailers may choose to manage deliveries internally,
rather than rely on external delivery companies, as a way to save
costs and increase customer loyalty.

ii) Drones: It has been the latest buzzword in logistics, given its
benefits it is not surprising that many delivery providers are already
testing drone delivery. key advantages of commercial delivery
drones include speed, the ability to reach difficult terrain or remote
locations and fly over obstacles on the ground, and their reduced
environmental impact. To counter the limitation of drone delivering
to wrong door or address customers can include GPS location and
the photograph of the door, so that it becomes easier to find the
address

iii) Delivery Robots: Delivery robots are typically targeted for relatively
affluent and uncrowded suburban areas, gated communities,
assisted-living facilities, and campuses. In these settings, they
would be able to travel on sidewalks or bike lanes, programmed to
travel amongst pedestrians, bicyclists, and cars. Robots would
travel a short distance from a local hub or retail outlet to a receiver,
within 5 to 30 minutes. Customers would be able to schedule the
delivery using an Uber-like app and may also use a real- time
mobile app to track the robots location and unlock the goods upon
arrival. The robot would return to the distribution hub after each
delivery, or it could potentially carry multiple deliveries, each
located in a separate locked compartment.