Consumer demand for ever faster, more convenient delivery coupled with high expectations around sustainability creates a problem for retail brands. The truth is that current fulfilment practices, especially around rapid delivery, are far from eco-friendly.
Even before the COVID pandemic, the World Economic Forum (WHO) predicted that demand for urban last-mile delivery would increase 78% by 2030, leading to 36% more delivery vehicles in 100 cities around the world. According to this model, deliveries would directly account for vehicle emissions rising by a third.
The problem has been specifically pinned on the rise of next-day and now same-day delivery. While Amazon, which pioneered rapid fulfilment at scale, claims that its use of local inventory centres cuts down on journey distances for fast deliveries, the alternative view is that rapid fulfilment reduces opportunities to optimise truck space and consolidate journeys.
In addition to vehicle emissions, you can throw in the fact that a third of all solid waste in the US now comes from delivery packaging.
All in all, squaring the circle between fast, convenient delivery and ethical, sustainable values is not easy. But as we have seen, it is increasingly what consumers are demanding. ReBound’s research not only found that 80% of consumers would choose more sustainable delivery options if they were available, 75% also said they intended to shop online with companies who could meet that expectation.
Brands and retailers must view this as a market opportunity. For one thing, sustainability and environmentally friendly practices are an opportunity to grab market share back from Amazon. But as Amazon starts to clean up its act with massive new fleets of electric vans and major investments in renewable energy, the window for rivals to act is shutting fast. The question is, how?
One thing we know is that when markets start making specific demands, solutions are usually found. The WHO’s Future of the Last Mile Ecosystem (2020) report sets out 24 potential ‘interventions’ for making delivery more sustainable, grouped into solutions that are already in use, those that are just emerging, and those that are still at the concept stage (i.e. we’re not likely to see them deployed at scale for more than three years). Some examples in each category include:
Already in use
- Electric delivery vehicles
- Parcel lockers
- Dynamic re-routing
- Trunk delivery (i.e. using cars as ‘mobile addresses’ to cut down on delivery distances)
- Retrofitting of parking infrastructure to make it suitable for deliveries
- Load pooling (i.e. optimising space in delivery vehicles by making spare capacity available to multiple operators)
- Parcel shops (a step up from the parcel locker concept, and a way to potentially use retail real estate being vacated as physical footfall drops)
- Hydrogen Fuel Cell Electric Vehicles (H2 FCEVs)
- Autonomous vehicles (either with a ‘runner’ to deliver parcels to the door or with lockers for consumer collection)
- Drone deliveries
In the short term, electric vehicles and AI-powered intelligent and dynamic routing have significant potential to reduce the carbon footprint of deliveries. Dynamic routing boils down to real-time journey planning, using AI to plot the shortest and most efficient route.
Looking forward, it is easy to see how intelligent routing technology could evolve to coordinate pickups as well as deliveries, which is a step towards load pooling. We’re also seeing moves towards single vehicle fleets being used for multiple purposes, e.g. Uber running shared ride or food and parcel delivery services, which will help to reduce the number of vehicles on the roads.
Similarly, an increase in the use of parcel lockers for click-and-collect services can help to cut down reliance on delivery vehicles, especially if they are numerous enough and conveniently placed so people can easily walk to them. Options for increasing click-and-collect drop off locations leads onto parcel shops and making use of existing parking infrastructure, and then further down the line, electric autonomous vehicles.