Drones or delivery bots? The future of the last mile

In a time where e-commerce has become a mainstream shopping channel and sellers are adopting an increasingly customer-centric approach, the infamous ‘last mile’ has become a key differentiator for many companies. New technological possibilities, paired with the dynamics of the digitalizing retail market, lead to new delivery methods including drones, unmanned vehicles and bike couriers. It is the customer demand that is (re)shaping the last mile, concludes McKinsey in its latest report,  Parcel delivery: The future of last mile.

The availability and cost of delivery options is one of the major decision-making criteria for online shoppers. In order to better understand the trends ahead of us, McKinsey conducted a survey of more than 4,700 respondents in China, Germany, and the United States and found that price is still the main priority when choosing a delivery option. 25% of consumers said they would be willing to pay extra for same-day or instant delivery.

However, 70% of surveyed shoppers said that the cheapest option would be their preference. This means that the cheaper or free alternatives to fast delivery will continue to play a major role.

Moreover, McKinsey predicts that by 2025, 80% of all deliveries are going to be done by unmanned vehicles. The pace at which this trend spreads, however, depends a lot on the dynamics in individual markets. In regions with higher labour costs, for example, the net gain of unmanned delivery is higher, and so is thus the incentive, concludes the research organization. Ik dense urban areas, bike couriers will most likely play an important role for fast delivery services.

Download the full report on which this article is based, Parcel delivery: The future of last mile (PDF–13.9MB).

Image credits: McKinsey