As noted in Ti’s July 25, 2013 brief, Growth of big ticket e-commerce leads to enhancements withinwhite-glove delivery services, last-mile delivery services can vary
from just the typical delivery to including “white-glove services” such as unpacking,
set-up and removal of packaging and/or old merchandise.
With its acquisitions of 3PD and Optima Service Solutions,
XPO Logistics has moved into this “white-glove” last mile delivery
service. While the size of this market
remains fragmented and difficult to size, 3PD and XPO Logistics estimate that
shippers spend about $12bn on last-mile deliveries of heavy goods annually. The
growth opportunity of this market is evident in Optima Service Solutions’
latest revenue earnings for the 12-month period ending October 31 in which the
company reported revenue of $35.7m and has generated a 16% compound annual
growth rate over the past years. With this acquisition, XPO Logistics now adds
an additional 250 carriers to its already 2,000 plus last-mile carriers
obtained through its 3PD acquisition - thus, making the company one of the
largest US last-mile service providers.
As more retailers link their various sales channels and
outsource delivery services, IT solutions have become a key differentiator for
delivery services. For example, as mentioned in Ti’s July 25th brief
on this topic, Seko Logistics introduced its mobile proof of delivery (POD) app.
Optima Service Solutions has developed its own proprietary
technology, known as Evolution and it serves as the basis for its web-based
order entry, scheduling and service completion service. According to XPO
Logistics’ CEO Bradley Jacobs, this technology will be integrated into existing
3PD/XPO last-mile delivery technology.
Some retailers are also investing in IT solutions to manage
this process. For example, Sears recently announced it plans to utilize
Descartes’ home delivery IT solution. The cloud-based solution is comprised of
several modules including Descartes Reservations™ for delivery appointment
scheduling; Descartes Route Planner™ for route optimization, dispatch and
tracking; Descartes Mobile™ for wireless communications and mobile
applications; and Descartes Notifications™ for automated call-outs.
Last-mile delivery has become a competitive tool for many
retailers. Much like the reasons for adopting an omnichannel strategy,
retailers are looking to enhance the customer experience all the way into their
homes. So, while IT is an important differentiator, it is also used as a means
to improve upon this customer experience. Companies such as Seko Logistics, 3PD
and Optima Service Solutions have taken advantage of their IT capabilities by
emphasizing their customer service skills throughout the delivery process even
to the point of following up with customers after a delivery is completed. The
last-mile delivery market will need to watch carefully and emulate such
capabilities or risk falling behind.
