COVID-19 Proves to be a Shot in the Arm for Last Mile Delivery Market, Says Fairfield Market Research

Consumers increasingly want goods delivered to their doorstep and last mile delivery is the ideal solution as it completes the final phase of the supply chain – delivery from distribution centres to end-users. Technology has played a transformational role in urban mobility, making it leaner, more agile, and able to meet constantly changing customer expectations. The retail sector has had to accommodate the presence of ecommerce players who have changed the game with deliveries to far-flung, rural areas. The ecommerce sector is projected to grow in double digits over the forecast period due to a proliferation of smartphones and mobile connectivity, making last mile delivery the norm and not the exception.

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According to Fairfield Market Research, the global last mile delivery market is expected to be worth US$720.9 Bn by 2025, exhibiting a CAGR of 16.65% between 2021 and 2025.

Online Demand for Perishable Foods Ensures FMCG Sector Leads Last Mile Delivery Market

COVID-19 has disrupted global supply chains but has provided a silver lining for the home care and grocery sectors. As work from home mandates were implemented, consumers ordered their groceries and FMCG products online, seeking last mile delivery. The FMCG sector dominates the last mile delivery market and is anticipated to retain this position until 2025. There is massive online demand for perishable food and beverages and last mile delivery is a sure-shot way to assure product quality. It is predicted that this should continue for the foreseeable future as companies incorporate contactless payments and autonomous delivery into their long-term plans.

Companies and Customers Choosing Last Mile Delivery to Reduce their Carbon Footprint

As per the World Economic Forum, e-commerce deliveries rose 25% in 2020 with 10-20% expected to continue after the easing of COVID-19 restrictions. Consumers are citing environmental reasons as a reason for opting for last-mile deliveries and companies have ramped up their pledges to go emission-free. While delivery robots and drones will undoubtedly impact the last mile delivery market, data sharing and parcel lockers should also make its presence felt as the cost of implementing such initiatives decreases.

Double-digit Rise Likely in Last Mile Delivery in 100 Largest Cities in the Next Ten Years

The pervasiveness of online shopping has necessitated last mile delivery as companies must stand out from their rivals. Larger ecommerce companies even offer same day delivery in certain areas to increase customer satisfaction and loyalty. The World Economic Forum states that urban demand for last mile delivery in the largest 100 cities will rise by 60% in the next decade. Ecommerce eliminates the need to invest huge sums in brick and mortar stores and reduces overheads such as rent. This has aided companies in minimizing cost centres and maximizing the bottom line, directly benefiting the last mile delivery market.

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Massive Investments in APAC for Last Mile Delivery of Cosmetics and FMCG Goods

The Asia Pacific region is at the vanguard of mobile innovation and ecommerce giants such as Alibaba, Flipkart, and Tencent are global giants. Western companies have realized the importance of targeting Asian audiences and are investing heavily to cater to local tastes. The rising disposable income of millennials makes them desire last mile delivery for comfort and convenience. Sectors that are particularly strong in the APAC region are cosmetics, fitness equipment, and FMCG goods.

Retailers Entering into Alliances With Last Mile Delivery Companies to Reduce Bottlenecks

The last mile delivery market is characterized by cutthroat competition with few barriers to entry. Incumbents must enter into joint ventures, strategic partnerships, and mergers to bolster their presence and manage costs. Retailers have collaborated with last mile delivery players to overcome supply chain and logistical bottlenecks with models such as direct to customer garnering close attention. A few prominent players actively involved in the last mile delivery market are Cargo Carriers, CJ Logistics, CEVA Logistics, Concargo Private Ltd, DB SCHENKER, Interlogix Pty Ltd., DHL Paket GmbH, Estes Express Lines, FedEx Corporation, Kuehne + Nagel, Nippon Express Co., Ltd.