5 Key Trends That Will Drive the Growth of India's Last Mile Logistics Industry in 2023 The future growth of every successful brand depends on how it shapes its last-mile delivery based on the key trends

As we set foot in 2023, consumers continue to make purchases largely from the comfort of their homes. Recent predictions state that retail e-commerce sales worldwide will reach a mammoth 6.3 trillion dollars in 2023, compared to 5.7 trillion dollars in 2022 and 4.2 trillion dollars in 2020. Consumer spending is still resilient against all the inflationary pressures and the growth in retail e-commerce sales, which collectively signals that last-mile delivery is right on its path toward normalcy.

The future growth of every successful brand depends on how it shapes its last-mile delivery based on the key trends.

Here are some of the most important last-mile delivery trends that will drive the growth of the industry in 2023:

Sweeping wave of Omnichannel Retailing

For a long while, fulfillment in retail was largely binary. Either the customer had to order their items online or buy them from physical stores. But today things have changed drastically, thanks to omnichannel retailing. It is a process where businesses integrate all the channels to provide seamless shopping experiences to their consumers. For instance, a customer can buy his/her preferred item online and pick that up from the store (BOPIS). In this, both offline and online channels are closely integrated.

Businesses in India are keen to capitalize on the shopping boom of omnichannel. An India Phygital Index survey in 2022 revealed that retailers derive 13% of their sales or US$11.2 billion from omnichannel retail and it has potential to grow five times to US$ 55 billion by 2027. By investing in omnichannel capabilities, businesses can improve delivery control, speed, flexibility and cost. It cuts unnecessary time for the product to move across intermediaries like brand mother warehouse, and makes last-mile logistics more efficient.

Driver empowerment to be the key theme in 2023

One thing that is common for drivers across all these geographies is they are unhappy or dissatisfied from the immense pressure of making on-time deliveries daily. In a survey, delivery service drivers in the US rated their career happiness 2.6 out of 5, which puts them in the bottom 9% of careers.

In India, delivery personnel are majorly part of the gig economy. They struggle with extended working hours, job insecurity, dismal pay, and inadequate facilities. Especially, in metros like Delhi, Mumbai, or Bengaluru, delivery drivers are under a constant pressure to deliver orders on time. During time-crunched situations, they work for more than 12 hours at a stretch. This situation gets worse when there is massive traffic, and when customers, who are used to on-time deliveries, feel frustrated and constantly call and ask the status of orders. When drivers are dissatisfied and underproductive, they fail to provide a delightful delivery experience for customers. This leads to loss of customer trust and cuts down business growth. Hence, the focus on 2023, will be to make drivers happy and empower them.

Increased focus on sustainability

With more consumers preferring to order from platforms that practice sustainable measures, we can expect that there will be an increased focus on sustainability in the logistics and supply chain industry in 2023. According to a Gartner study, 87 million metric tonnes of CO2 emissions result from empty miles. This can be significantly reduced with new delivery-linked checkout, route optimisation, automated shipping and fleet optimisation tools. In the New Year, we will see more use of new-age tools to boost sustainability, increasing profitability.

AI/ML and advanced technologies to become mainstream

Logistics and supply chain players have started acknowledging the immense growth potential due to adopting the latest technologies like Artificial Intelligence (AI), Machine Learning (ML), advanced analytics and the Internet of Things. We can expect that in 2023, these technologies will become more mainstream. The adoption of new-age technologies will enable supply chain providers to achieve better results. As most industries aim for automation to reduce human errors and improve cost-efficiency, these technologies would drive further growth in the sector.

Direct to Consumer (D2C) - Path to build a stronger customer base

SaaS (Software as a Service) products have become a boon for businesses willing to get their D2C presence with higher levels of convenience, flexibility and sustainability. It helps D2C businesses handle, monitor, manage and optimize varying economies of scale that last-mile logistics demands. So, 2023 will be a year of D2C brands strengthening their last-mile delivery and expanding their D2C presence.

The Takeaway

The logistics and supply chain industry is key to global commerce. In the New Year, logistics companies are expected to leverage technologies like AI, ML, automation, IoT and advanced analytics with a renewed zeal to handle emerging challenges. As businesses move from a survival mindset to a growth one, a data-centric approach and delivery optimisation with cutting-edge technologies would put this industry on a rapid growth path in 2023.