For retailers and restaurants, cracking the code to last-mile delivery is one of today’s biggest opportunities—and most complex challenges. Nearly three years after the pandemic accelerated delivery demands, all data points to ongoing and significant growth in this area. By 2025, the global online food delivery market alone is expected to be $192.16B.
In the retail world, the same-day delivery market in the US is expected to grow by USD $9.82B from 2020 to 2025. Same-day delivery is the new two-day delivery, and over 50% of shoppers aged 18-34 expect it. While this puts the pressure on retailers to jump through ever-higher hoops, the good news is that more than 60% of consumers say they’re willing to pay extra for added convenience.
For all these reasons and many more, the power of last-mile delivery to boost brands and bottom lines will define winners and losers in the years ahead. When done right, it’s a huge strategic asset with the power to improve conversion rates, increase new and return customers, and fuel innovations that increase competitive advantage.
But getting it right requires lots of moving parts, along with fundamental organizing and operating decisions. So how can your company make the most of the fast-growing value of the last mile?
As you plan for growth, take stock of your significant latent asset: the best existing set of health data for patient populations of anyone in the health ecosystem. This trove of data has untapped potential to move
the industry from transactions to health.
Making strategic use of this valuable data can help health plans make the transformation from simply executing transactions to advancing holistic health across four key capabilities:
Data-driven capabilities to grow from within
Delays can cost sponsors
for each day
that a trial delays a product’s development and launch.
Health plan data enables you to understand who is not getting care that could, and who is getting inpatient care but could
use virtual health — and maybe even prefer it.
of clinical trials
are delayed or closed
because of problems
of potential patients live
more than two hours away
Clinical trial populations typically are not (e.g., ~72 percent white), according to a report from the FDA.
of U.S. adults have ever seen
an advertisement for one.
As you plan for growth, take stock
of your significant latent asset: the best existing set of health data for patient populations of anyone in the
Guiding members to primary and preventative care
Currently, health insurers provide most care guidance to members with chronic or especially complex-chronic conditions. Going forward, leverage your data in the healthcare ecosystem more broadly and lead the way in guiding members in a significantly enhanced primary and preventive care regimen.
Particularly for longer-term members, the payer’s claims data can serve as a treatment baseline — or more importantly, gaps in treatment baseline. For example, a female member who has no claims for mammogram services can receive a notification or “nudge” to get this preventative service which could include an explanation of the reason as well as a scheduling link. Similarly, a member who has been diagnosed with diabetes but shows no subsequent activity around blood sugar or blood pressure monitoring can receive a communication directing them to a diabetes center and comprehensive treatment program. Health plans can connect this primary and preventive care role into an omnichannel strategy (see below) that makes it easy for members to connect anytime, anywhere to get healthcare guidance tailored to their personal needs.
Building on your wealth of member data and relationships, health plans might take inspiration
from the “safe driver” apps offered by many automobile insurers. These programs are popular with consumers for linking safe driving to rate savings. Drivers adopt behaviors that are a win for members, insurers and public safety. Health plans can develop similar approaches that encourage healthy behavior through branded programs.
Early interventions lead to better long-term health for the individual, while lowering the total costs to the healthcare system, payer, and the payer’s employer clients. For health plans, prompting interventions provides potential patient flow to providers which can foster stronger partnerships and relationships with providers and other organizations. In a holistic healthcare model, you can become a more valued
partner with providers to deliver better health outcomes at lower costs.
Every last-mile success begins with knowing your customers. What matters to them most? How are you staying in touch with them as their needs and expectations evolve?
While speed is the primary driver in last-mile delivery, customers also want a seamless experience that meets their expectations. For example, consumers are increasingly looking to buy from companies that build sustainability into their products, packaging, shipping and delivery.
Think holistically about how you’ll deliver a customer experience that reinforces your brand from the moment a product leaves your hands to the moment it arrives in the hands of your customers. Tastes and priorities change fast. Keep listening—and ensure you stay nimble enough to adapt quickly based on what you learn.
Make the last mile part of a holistic customer experience
As your mobile channel grows, be sure to maintain a holistic view of all customer touchpoints and how they impact each other. This insight will help you understand how all your customers are experiencing your brand—whether they're at a brick-and-mortar location, their desktops, or on a mobile device. It takes a 360-degree view to make the most of every channel and be sure that channels aren’t working against each other.
Never underestimate the value of giving your customers a direct digital connection for self-service custom orders. As custom orders play a growing role across a variety of services industries, a mobile channel strategy that leverages the right digital touchpoints is key to creating a positive experience that increases customer loyalty and employee satisfaction.
Over the last two years, COVID-19 dramatically accelerated the use of virtual health, which had been slow to catch on before the pandemic. Since 2020, many people have become familiar with the process, feel comfortable with the online relationship, and appreciate the convenience of “seeing” their providers without leaving home.
Payers can play a valuable role in the continued growth and evolution of virtual health without taking on the risks and expense of buying a virtual company. The possibilities range from partnering with providers to communicate and interact in a virtual manner to internally building the products that virtually expand the provider network particularly in areas with high cost and reimbursement rates.
Again, health plan data enables you to understand who is not getting care that could, and who is getting inpatient care but could use virtual health — and maybe even prefer it.
Improving opportunities for virtual health
You can do a lot to generate demand and drive high-volume custom orders to your user-friendly mobile channel:
Create higher demand for custom orders on mobile
Keep the big picture in view
Building on your wealth of member data and relationships,
health plans might take inspiration from the “safe driver”
apps offered by many automobile insurers.
When custom orders
fail to deliver
3 of 3
2 of 3
1 of 3
If your POS system doesn’t offer a quick solution to accommodate a long line of custom orders, employees will find workarounds in their effort to satisfy the customer. Such ad libs cause data issues downstream that can distort sales insights, leading to inventory and financial forecasting challenges. Inaccurate order placement leaves you without a clear picture of what’s selling, and where to take your business and offerings next.
Frustrated employees and high turnover.
In companies with high-volume and highly customized orders, poor intake experiences lead to employees struggling with a key part of their jobs. In today’s tight labor market, high turnover can make custom order training extremely challenging and expensive. Many companies have a higher percentage of new employees than ever, with scarce institutional knowledge about customization. Frustration at the employees level inevitably translates to the customer experience—and can lead to even more employee turnover.
Negative customer experiences.
While customers turn to digital channels for better control of their custom orders, their experiences are often less than intuitive. Uncertainty about the final product runs high—especially if employees have to ad lib parts of the order fulfillment process along the way.
And problems at the order-intake stage often lead to disappointments at delivery.
Companies that rely solely on their own frontline workforce to take and fulfill custom orders face common friction points and problems.
Delivering on Your Brand &
Delighting Your Customers
Leverage market segmentation and geo-targeting to identify which customers are most likely to transition to mobile.
Consider redirecting marketing dollars toward mobile adoption efforts. There are many levers you can apply to move traffic, redirect channel usage, and identify customers most likely to use your mobile experience.
Leverage in-store signage and store employees to help educate customers on the ease and convenience of mobile devices and your mobile channel.
Make your mobile web and PWA (progressive web app) experiences just as robust as your app, so that customers have a great experience in any digital channel regardless of where they choose to engage.
Answers to questions like these will help you design the best last-mile delivery system for your company.
It’s also worth considering whether you want to handle it all in-house (“first-party delivery”) or partner with a company that specializes in this increasingly important channel (“third-party delivery”).
Most companies that excel at full first-party delivery have always had delivery in their wheelhouse. As delivery becomes increasingly demanding and complex, more companies are putting it in the hands of a third party. Partnering with a dedicated pro saves you from operational and staffing complexities while giving you the ability to quickly leverage proven delivery systems, expertise and talent.
And third-party companies can do much more than deliver. Testing is essential in this channel. The right third party can offer quick and innovative ways to experiment, from trying out new menu items to exclusive retail products and promotions. It’s a good way to get feedback straight from your customers before scaling up. Joining a third-party marketplace can also expose you to new customers, who may become repeat customers. According to DoorDash, 75% of users say they’ve tried a restaurant for the first time by ordering on a third-party app.
One size does not fit all
The last-mile delivery system you choose will affect the technology you need, from in-house solutions to an array of connected, off-the-shelf options that require minimal investment. Think across the entire customer experience and leverage your technology investments accordingly.
For example, many companies in retail and restaurants are now in the process of choosing new POS systems. A system with the right third-party integration can funnel everything—in-store operations, first-party off-premise operations for ordering, and third-party delivery– all through the same system. This makes it easy for employees to use without it easy for employees to use with little disruption or change to their current roles.
The near future is filled with a wide array of new technologies that can help you meet customers where they are—from ghost and virtual kitchens in the restaurant world to drone technology, immediate parcel delivery, AI, and robotics in retail. And as new technologies are developed, they fuel new consumer expectations for speed, reliability and transparency, all of which require nimble adaptation.
Another note on testing: You can have all the best technology, but you have to know what you’re testing for in order to gain useful information. While this may seem obvious, it’s often overlooked. Define what you want to learn and ensure that your mechanisms actually let you learn it. Keep in mind that test design and feedback mechanisms can often require more work than the output itself.
New technology fuels new innovations—and expectations
AT A GLANCE
of American consumers order takeout or delivery at least once a week.
Every last-mile success begins with knowing
Companies are increasingly organizing to structure their teams for effective last-mile delivery. Younger, smaller companies tend to start with lean, highly matrixed teams. As enterprises grow, we see more cross-functional teams with more dedicated resources. At the far end of the spectrum, some large companies go as far as to have dedicated business units resourcing this as a distinct channel focused on ongoing testing and innovation.
For the sake of efficiency and impact, align your last-mile organization with the way you allocate resources. Do you have resources set aside, or do you need to seek funding for each initiative? Would it make sense to have a dedicated business unit with greater decision-making ability? Are your goals aligned with other channels in the customer journey?
As you look outward and forward, look inward, too. Stay in touch with the needs of your internal teams. Pay attention to employee sentiment toward changes in your order and fulfillment processes. Are your in-store teams taking time away from commission-based sales to pick and pack online orders for shipping? Are you aligning incentives for your salesforce so they see the value of taking on these new responsibilities?
Structure operations to deliver for your people, too
In the days ahead, companies can win or lose in the last mile. It’s an ever-more critical step in a shopper’s buying journey. We recommend getting started by clarifying your goals, focusing on what matters to your customers, then selecting the right delivery system—one that delivers on your brand every step of the way.
Go the distance to deliver on your brand
of consumers abandon online shopping carts due to delivery times that just aren’t fast enough.
use third-party delivery services at least twice a week
Restaurant Online Ordering Statistics
online ordering is growing 300% faster then in-house dining.
While there’s no one right way to crack the last-mile challenge, we see that as more of an opportunity than a barrier. Think about what you are trying to accomplish, then tailor your approach to fit your strategic goals. Consider:
BACK TO Insights
What are your strengths and weaknesses? How can you address any gaps between where you are now and where you want to be?