Despite—or perhaps because of—the headaches involved, two recent reports paint a bright future for big and bulky last mile.
According to a report published January 18th by Market Research Guru, “The global Last Mile Delivery for E-commerce of Bulky Item market size was valued at USD 17008.09 million in 2022 and is expected to expand at a CAGR of 8.85% during the forecast period, reaching USD 28296.36 million by 2028.”
In the U.S., a report from Armstrong & Associates published December 28th predicted that big and bulky last-mile delivery will be a “high-growth 3PL segment” over the next several years.
On the flip side, in April of last year, DispatchTrack published the findings of its consumer survey that provided some key insights into customer concerns related to the big and bulky delivery experience.
Here, we’ll dig into the sector a bit with highlights from two of the reports—as well as six key last-mile delivery trends predicted for 2023.
The Armstrong & Associates Report
For its report, Making it Count: Big and Bulky Last-Mile Delivery in the United States, 3PL market research firm Armstrong & Associates (A&A) partnered with the National Home Delivery Association (NHDA) to study the “Third-Party Logistics (3PL) Big and Bulky U.S. Last-Mile Delivery Market segment.”
The report defines big and bulky last-mile delivery “as the transportation of big and bulky shipments (not parcel) from an origin to a destination within the United States where they will be used or consumed. These can be business-to-business (B2B) or business-to-consumer (B2C) shipments.”
Noting that last-mile e-commerce orders are typically shipped “as small packages and transported by parcel carriers,” the firm says that e-commerce product categories such as furniture and appliances are “growing in significance.”
“Third-party logistics providers with fleets of independent contractors and freight brokerage operations deliver many last-mile orders,” A&A says. “In addition, Less-than-Truckload (LTL), Last-Mile, Household Goods, and Truckload (TL) carriers are expanding last-mile services for big and bulky items to accommodate the rapid growth in e-commerce retail sales.”
The pricey challenges of big and bulky last-mile are also described.
“The final transportation leg for an e-commerce order—the last mile—may be short, but it can also be extremely costly,” A&A says. “Transportation costs for a shipment from a distribution center or fulfillment center to a customer’s doorstep can account for 30%–40% of the total cost of transportation. Last-mile provider revenue per shipment is low by traditional LTL standards and averages less than $90 per shipment. Total shipment revenue varies depending upon the value-added services performed at the time of delivery. A whole bedroom delivery and setup can generate $250 while a less service intensive shipment may only generate $50.”
Still, A&A’s research led to some optimistic predictions:
“The 3PLs analyzed had last-mile delivery revenues from $7 million to $1 billion and represent approximately 40% of the estimated $9.3 billion U.S. Third-Party Logistics Big and Bulky Last-Mile Delivery Market.”
“A&A estimates the U.S. 3PL Big and Bulky Last-Mile Delivery Market experienced a compound annual growth rate (CAGR) of 18.2% from 2017 through 2021 and will have a CAGR of 11.8% from 2022 through 2025.”
“These projections make Big and Bulky Last-Mile Delivery one of the fastest growing 3PL segments over the next three years,” A&A says.
The DispatchTrack Report
In an announcement about its 2022 Big and Bulky Last Mile Delivery Report released April 20th of last year, DispatchTrack, which describes itself as “the leading solution provider of right-time delivery management software,” said it uncovered “mounting frustration with the home delivery experience.”
The study, conducted in March 2022, was based on a survey of 1,606 American consumers.
“According to the data, one in two big and bulky deliveries were rescheduled at least once,” DispatchTrack said. “Strikingly, for consumers, rescheduling wasn’t as problematic as missing a scheduled delivery time window.”
Study findings captured the potential impact on brands:
“The vast majority of consumers (61%) indicated they’re unlikely to purchase from the same retailer again if the order didn’t arrive on time.”
“Two-thirds considered ‘on-time’ the best aspect of a positive delivery experience and yet, the study found nearly half (44%) of deliveries weren’t delivered on time.”
“Notably, one in three consumers considered an early delivery to be inconvenient.”
“Half of the consumers surveyed blamed their negative delivery experience on lack of communication with the retailer or delivery company.”
“Nine out of ten consumers indicated they want the ability to track the delivery status of big and bulky orders, yet one in three were unable to do so.”
The study also explored consumer sentiment related to sustainability and environmental impact.
“…half of consumers consider the environment when making big and bulky purchases,” DispatchTrack said. “Nearly three-quarters (71%) indicated they would consider it more strongly if retailers made it easy to understand the environmental impact of various delivery options.”
“When it comes to big and bulky purchases, last mile delivery is a monumental challenge for brands and customer retention today,” said Satish Natarajan, DispatchTrack co-founder and CEO. “I do think consumers are giving brands some slack because they know the supply chain is in crisis and delays happen. However, the data strongly signals that consumers aren’t as forgiving when it comes to communication, including order tracking. Retail customers want to know where their order is and when it’s being delivered – and they want it delivered on time, which isn’t early. Brands that can deliver on that promise are much better positioned to retain customers and win market share.”
6 Key Trends for Last Mile Delivery in 2023
Though not necessarily related to big and bulky, DispatchTrack recently released another report describing six key trends “that will redefine last mile logistics in 2023” that may also apply.
DispatchTrack says those six trends include:
The C-suite and boardroom are taking a keen, and direct, interest in last mile delivery. “Heads of logistics will increasingly report to the CEO as fulfillment joins sales and marketing among the most critical aspects of running a successful business. Not only will they report to the top, logistics professionals will also have a seat at the table and more involvement in the business strategy from the start. …”
Companies will re-evaluate their delivery tech stacks with an eye toward optimization and sustainability. “… Companies will re-evaluate their current delivery stacks and look towards best-in-class software that can both optimize all aspects of last mile operations to maximize cost-efficiency and scale dynamically as demand grows. Optimization is also key to a superior delivery experience which will become even more integral to customer loyalty and market growth.”
B2B customers will expect a more B2C-like experience. “Businesses, much like consumers, are looking for greater certainty and transparency when it comes to delivery. … Organizations serving the B2B market must be prepared to meet precise delivery time demands and guarantee that products will arrive exactly when their customers expect them.”
Sustainability actions are stronger than words. “There’s been a lot of buzz around sustainability and companies are taking it seriously. … But many companies have gotten by with greenwashing rather than making true, actionable commitments to environmental change. It’s unrealistic for businesses to be 100% sustainable from day one. What’s important is making progressive improvements year over year in a way that is attainable through strategic business plans…”
There will be a focus on perfecting the last mile with an emphasis on accuracy. “… To ensure that deliveries make it to the right place at the right time, logistics leaders will employ more sophisticated routing engines that leverage artificial intelligence and predictive analytics to drive greater accuracy, making delivery promises a reality.”
Optimization becomes mission critical. “… In the current volatile market, successful businesses will find solutions that help delivery operations run more efficiently – despite the size of the fleet or number of drivers – while reducing costs and providing the best possible customer service. We’ll see an emphasis on trimming waste and finding new efficiencies across the board.”
“Post-pandemic economic realities and pressing issues, like climate change, are driving forces in business today and pushing accountability to the highest levels of leadership,” Natarajan said. “As a result, the C-suite is taking a much closer look at all aspects of their operations, with a new focus on how delivery directly impacts customer satisfaction, profits, and corporate social responsibility. With that in mind, there are some significant shifts on the horizon that will impact the logistics market, particularly the last mile, as we look to 2023 and beyond.”