India’s e-commerce sector is experiencing significant growth, expecting to reach revenues of INR 4,416.68 billion by the end of 2024, with a CAGR of 18.6%. This rapid expansion is propelled by the country’s increasing internet penetration, now exceeding 900 million users, and the rising trend of mobile shopping, with over 82% of online purchases made through smartphones. The surge in digital payments, estimated to reach INR 8,734 trillion by 2026, is further driving the transition towards online retail. In response to consumers’ emphasis on convenience, speed, and personalized shopping experiences, e-commerce companies need to enhance their logistics and supply chains to meet these evolving demands. Businesses that can effectively adapt to these changing expectations are well-positioned to succeed in India’s flourishing e-commerce landscape. The Indian E-COM market is illustrated in the image below.

Graph: E-Commerce Revenue Growth in India (2019-2024)

The Importance of Last-Mile Delivery in ECOM

In e-commerce logistics, the “first mile” encompasses tasks like collecting products from suppliers or warehouses, order processing, packaging, and label generation. Ensuring a well-managed first mile guarantees the smooth and timely dispatch of shipments. The “middle mile” handles the transportation of goods between distribution hubs in different regions, employing strategies like route optimization, cross-docking, and real-time tracking to enhance delivery speed and cost-effectiveness.

The “last mile” represents the final phase of delivery to the customer’s doorstep, where seamless operations are crucial for customer satisfaction. This stage involves scheduling, tracking, and providing a branded customer experience. It integrates mid-mile visibility, real-time monitoring, and ePOD (electronic proof of delivery) as depicted in the image. Moreover, fostering customer loyalty by consistently meeting delivery promises, prioritizing sustainability, efficient returns management, and gathering customer feedback enriches the overall logistics experience, building trust and brand loyalty.

Challenges in Last-Mile Delivery

It’s clear that last-mile delivery in the e-commerce sector faces some significant challenges related to logistical inefficiencies, high costs, customer expectations, and environmental concerns. Addressing these challenges requires a strategic approach and innovative solutions. Here are some suggestions to help mitigate these issues:

Despite the promising growth of the e-commerce sector, last-mile delivery faces several significant challenges:

• Logistical Inefficiencies

Inadequate infrastructure and complex urban layouts lead to delivery delays. Many regions in India lack proper road networks, making it challenging for delivery agents to navigate efficiently. As a result, e-commerce companies struggle to meet delivery deadlines, affecting customer satisfaction.

• High Costs

Last-mile delivery often accounts for a significant portion of the overall delivery cost. Research indicates that last-mile logistics can comprise about 28% of total shipping costs. This financial burden can adversely affect profit margins for e-commerce companies, compelling them to seek innovative solutions.

• Customer Expectations

With consumers increasingly expecting faster and more reliable deliveries, companies face mounting pressure to meet these demands without incurring higher costs. The rise of same-day and next-day delivery options has raised the bar for delivery speed, making it imperative for businesses to enhance their last-mile operations.

• Environmental Concerns

Increased delivery traffic contributes to pollution and congestion, leading to growing concerns about the environmental impact of last-mile logistics. As sustainability becomes a priority for consumers and governments alike, e-commerce companies must adopt greener practices in their delivery processes.

Solution by using Advanced analytics and GenAI in multiple phases

In the first phase, we employ Multi-Criteria Decision-Making (MCDM) to evaluate and select optimal Pickup and Delivery Points (PDPs). Choosing the right PDPs influences costs and service quality significantly by the application of SWARA which is described below we can easily achieve it.

SWARA  i.e Step-Wise Weight Assessment Ratio Analysis

SWARA is a core algorithm in this phase that ranks and weights criteria for evaluating potential solutions:

• Ranking: Decision criteria are ranked based on expert judgment.
• Weight Assignment: Relative weights are assigned through pairwise comparisons.
• Normalization: Weights are normalized for balanced decision-making.

SWARA criteria for last-mile delivery include:

• Availability: Accessibility of pickup points for customers.
• Accessibility: Ease of reaching these points via eco-friendly transport.
• Environmental Impact: Potential to reduce carbon emissions.
• Security: Safety of goods stored at these points.
• Regulatory Compliance: Adherence to legal and environmental standards.

Using SWARA, companies prioritize PDPs based on sustainability, accessibility, and customer satisfaction.

Once criteria weights are established, COCOSO i.e. Combined Compromise Solution evaluates each pickup point using these weights, combining the weighted sum and product of criteria scores for a comprehensive ranking.

Benefits of SWARA-COCOSO:

• Comprehensive Evaluation: Ensures decisions are based on multiple well-weighted factors.
• Reduction of Subjectivity: Provides clear weights and objective evaluations.

Next, in the second phase, companies can focus on optimizing vehicle routes using the Vehicle Routing Problem with Service Options (VRPSO). VRPSO enhances traditional routing by accommodating customer preferences for service options:

• Home Delivery: Direct delivery to residences or workplaces.
• Self-Pickup: Customers collect packages from designated PDPs.
• Shared Pickup Points: Customers share a PDP, reducing costs and environmental impact.

Optimization Techniques:

• Mixed-Integer Linear Programming (MILP): Optimizes routing while considering constraints.
• Metaheuristic Algorithms: Techniques like Tabu Search and Simulated Annealing efficiently explore solutions for large-scale routing challenges.

Integrating GenAI into combined phases, it enhances customer interaction and automates several processes. GenAI can manage customer inquiries, provide real-time updates on deliveries, and facilitate communication between customers and logistics teams. By automating routine queries and responses, GenAI allows human agents to focus on more complex issues, thereby improving overall efficiency and customer satisfaction. This seamless integration of AI not only streamlines operations but also fosters a more responsive and personalized customer experience.

Benefits for All Stakeholders

Implementing advanced analytics and GenAI in last-mile delivery provides significant advantages for various stakeholders:

E-Commerce Companies

• Cost Reduction: Optimized routes and demand forecasting help lower operational costs. By minimizing delays and improving resource allocation, companies can enhance their bottom line.
• Improved Customer Satisfaction: Faster and more reliable deliveries foster customer loyalty. Satisfied customers are more likely to make repeat purchases and recommend the brand to others.

Consumers

• Convenience: Real-time tracking and automated interactions create a seamless shopping experience. Customers appreciate being informed about their orders, leading to a more positive perception of the brand.
• Transparency: Consumers receive timely updates, enabling them to make informed decisions about their purchases.

Delivery Partners

• Efficiency: Data-driven insights improve delivery processes, allowing for better route planning and resource allocation. This efficiency reduces the workload on delivery agents.
• Reduced Workload: Automation of customer interactions allows delivery agents to focus on their core tasks, improving productivity.

Environment

• Sustainability: More efficient routes and reduced traffic congestion contribute to lower emissions and a smaller carbon footprint. As e-commerce companies adopt greener practices, they can appeal to environmentally conscious consumers.

As India’s e-commerce landscape evolves with increasing demand for efficiency and personalized customer experiences, businesses use advanced technologies to stay competitive. Valiance Solutions provides cutting-edge solutions combining Advanced Analytics and Generative AI (GenAI) to optimize operations. For improving last-mile delivery with predictive analytics to offering personalized shopping experiences with AI-driven insights, Valiance helps businesses reduce costs, enhance customer satisfaction, and streamline decision-making. Partner with Valiance to take your e-commerce operations to the next level with intelligent, scalable, and future-ready solutions.