**London**: Research from DS Smith reveals a 90% increase in last-mile delivery costs affecting e-commerce in the UK and Europe. The report highlights escalating overheads, shifting consumer expectations, and the necessity for innovative solutions to navigate rising expenses and maintain profitability.
New research conducted by DS Smith has unveiled that e-commerce businesses across the UK and Europe are grappling with significant increases in last-mile delivery costs, which have surged by as much as 90%. This data emerges from the report titled Last-Mile Delivery: the Future Unpacked, which is based on survey responses from 550 decision-makers in the sector.
The respondents to the survey were categorised into three groups – Traditionalists, Pragmatists, and Innovators. This classification was designed to distinguish between those who maintain long-term relationships with established partners and those actively seeking new collaborations and innovative solutions.
Key findings from the report indicate that costs associated with couriers, returned products, and items damaged during transit have escalated considerably over the past year. Notably, 39% of the e-commerce retailers surveyed reported double-digit increases in their overheads due to persistent supply chain challenges. In addition, an overwhelming 84% of e-commerce businesses acknowledged rising costs related to last-mile delivery, with half of the respondents predicting that these expenses may double in the coming year.
DS Smith highlighted that the management of last-mile logistics will likely have a profound effect on the profitability of e-commerce companies. Nearly 39% of businesses indicated that operational issues have led to reduced profits. Moreover, 35% of those surveyed have increased delivery fees for consumers, while an equivalent percentage has raised the prices of their products to offset these costs.
The report elaborates on how the surge in delivery expenses is influencing various trends within the e-commerce sector. A significant portion of businesses, specifically 27%, are scaling back their sustainability initiatives to curtail expenditure. Furthermore, 59% of respondents are reassessing their returns policies, and 57% are implementing minimum order values to manage future deliveries.
Consumer expectations are also noted as a crucial factor affecting e-commerce operations. The survey suggests that current trends in last-mile delivery costs are exacerbated by heightened consumer demands for service quality, sustainability, and flexible delivery options. Approximately 75% of respondents reported that customers expect their purchases to be delivered in sustainable packaging. Other expectations include tracking options (71%), flexible delivery schedules (69%), and sustainable delivery methods (67%).
While these expectations are prevalent, many e-commerce businesses feel unable to meet them under current conditions. Less than 39% of those surveyed believe that they have satisfied consumer demands regarding sustainable delivery options, and concerns were raised by 36% of businesses about not meeting delivery cost expectations. Additionally, only 30% feel they have addressed customer demands for delivery flexibility.
Olivier Cottard, the global e-commerce and industries director at DS Smith, stated, “Amidst this period of transition and fast-changing trends, leading companies are developing innovative and effective ways to improve their e-commerce and supply chain models without compromising on customer service. The message from our survey is clear – innovative companies that are more open to new ideas, and which regularly review their set-up around last-mile delivery and explore new ideas with packaging suppliers, are better able to cope with the significant challenges that the e-commerce sector faces and in a better position to meet the demands of tomorrow.”
The report concludes that e-commerce businesses that embrace collaboration and external support for optimising their value and supply chains, along with a long-term commitment to innovation, are better equipped to face upcoming challenges and safeguard their interests in a rapidly evolving market. It also notes that 65% of those with an innovative outlook are conducting regular supplier evaluations for cost savings, while 59% are employing third-party planning to streamline their operations and reduce expenditure.
Source: Noah Wire Services
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