Customer-obsessed businesses are upping their last-mile game

Brick and mortar behemoth, Target, is calibrating its last-mile logistics to keep itself at pace with the shifting trends in consumer behavior. The eighth-largest retailer in the U.S. market opened a sortation center in Minnesota last year to strengthen its last-mile capabilities. In April 2021, Target announced that it’ll combine its Shipt delivery service with the technological prowess provided by Deliv and Grand Junction to speed up deliveries.

Target has seen a 235% rise in same-day service and that’s why online fulfillment is a high priority for the organization. The retail giant is planning to invest $4 billion annually in the next few years to enhance its delivery services.

It’s not just the retail heavyweights that are sharpening their focus on online fulfillment, regional supermarket companies like Stop & Shop and Raley’s are improving their last-mile game to woo internet shoppers. Last year, Raley’s converted its closed store in Sacramento, California to a dark store — an e-commerce fulfillment center to meet the spiraling pick and on-demand deliveries. Stop & Shop increased its pickup location in July to 50 last year to support its growing e-commerce business.

The business has been booming for hyperlocal delivery platforms in the U.S. since the pandemic. This is largely being fueled by on-demand grocery and the rise of dark kitchens. Food ordering and delivery platform DoorDash saw its revenues go up by 226% to $1.92 billion from January to September 2020 when compared to the same period in 2019.

On-demand grocery platform Instacart raised $265 million in March 2021, putting its overall valuation to $39 billion. The lucrative hyperlocal delivery business helped Uber to offset its losses with the pandemic hitting the mobility market hard. Uber’s Q2 2020 results showcased a hefty growth of 113% in Delivery Gross Bookings year-over-year compared to 54% year-over-year in Q1 2020. The ride-hailing app increased its delivery service to more than 400 cities across the U.S. in July 2021.

SaaS platforms have taken over the management of last-mile deliveries to make them efficient. These tech platforms provide a whole gamut of features for the shippers and the end consumers with everything accessible from an app or a web browser.

By leveraging these tools, the world’s largest pizza delivery chain increased its fleet productivity by 200% and brought down delivery time by 27%. Another U.S.-based e-commerce company increased its on-time delivery by a whopping 96%.

Dark kitchens, which grew during the pandemic, have driven last-mile delivery businesses in recent times. Dark kitchens not only serve consumers with food that they love but also aim to provide those food packages quickly and that’s where companies providing last-mile deliveries come into the picture.

Euromonitor states that dark kitchens could grow to $1T globally by 2030. The market research firm noted that till July 2020, the U.S. was home to 1,500 dark kitchens. Leading the pack is DoorDash with their launch of DoorDash Full Kitchens. California-based ghost kitchen, Kitchen United, tied up with supermarket giant Kroger in August to serve on-demand restaurant food to customers.

Drone deliveries have not gone mainstream yet but their benefits are not lost upon businesses dealing in last-mile deliveries. Drones can be used to speed up last-mile deliveries, save costs and resources. They are being rapidly seen as an eco-friendly alternative.

There’s a bunch of companies in the space of commercial drone delivery. The most prominent names are Wing, Amazon Prime Air and UPS Flight Forward.

Even though there are several regulatory roadblocks, it is estimated that the drone industry will grow from $22.5 billion to $42.8 billion globally by 2025.