Configuring the Last-Mile in Business-to-Consumer E-Retailing

What is it about?

Fulfillment strategies that offer consumers a consistent shopping experience across different channels and devices through a variety of last-mile delivery options have emerged as a powerful engine for growth in the retail sector. To thrive in this new environment, retailers need to (re)configure their last-mile supply networks to achieve better alignment between delivery responsiveness, product variety, and convenience. This article reviews multiple case studies of leading retailers across geographical regions, maps these retailers’ network configurations, and conducts consumer surveys to examine how retailers operate their last-mile distribution to cope with omnichannel demands. This study develops a typology consisting of four ideal forms of last-mile supply networks differentiated by the speed of delivery responsiveness and level of product variety. It proposes a set of prescriptive guidelines for retailers to undertake reconfiguration of their last-mile distribution.

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Why is it important?

------------------------------------------------------- Contribution to Academic Scholarship ------------------------------------------------------- While existing studies provide insights on how retailers can leverage new technologies and alternative last-mile delivery innovations to adapt to changing retail trends, none of them provide guidance on how to configure the last-mile delivery segment, which is ultimately responsible for getting products to the end-consumers. Our paper contributes to the academic scholarship by considering how the so-called last-mile supply networks (LMSNs) can best be configured. This research, presented in the form of a typology comprising four ideal types of last-mile supply networks, evaluates last-mile service options based on a retailer’s value proposition (in terms of product variety and delivery responsiveness). ------------------------------------------------------- Contribution to Management Practice ------------------------------------------------------- Retailers can use the so-called “SHOP” typology to map their existing LMSNs and assess their performance. The developed LMSN configuration canvas provides a prescription for retailers to configure and evolve their LMSNs in order to enhance consumer experiences. The research also helps managers balance resources across different last-mile configurations at a time when they are under pressure to innovate and keep pace with rising consumer expectations. They can achieve this balance through enhanced product-channel-consumer alignment rather than “one-size-fits-all” solutions that often result in poor delivery economics and bottlenecks when demand exceeds capacity. ---------------------------- Author Perspective ---------------------------- While both the academic discourse and debate among industry practitioners has been heavily focused on the technological and strategic implications of the transition towards omnichannel retailing, extant literature is missing a structured approach to identify the “right” LMSN configuration required to enable omnichannel fulfillment. From our interviews with retailers and our own experiences, we understand the configuration of LMSN to be one of the determinants for retailers’ business success as they pursue omnichannel strategy. We therefore felt a need to develop a structured approach to classify common last-mile configurations, and to offer prescriptions for choosing appropriate types given certain idiosyncratic firm-based characteristics in terms of product portfolio, consumer profiles, and business model.