Christophe Milhères
Managing Director
Startup Contributor

The Dynamic Duo of Business Models and Last-Mile Solutions

By Christophe Milhères | Wed, 07/14/2021 - 09:05

The situation that we’ve been going through since last year made one thing clear: The world does not stop and will always look for a way to continue moving forward. The best example is the commercial ecosystem, which suffered at the beginning of the pandemic. In Mexico, more than a million small and medium-sized companies (PYMES) could not withstand the onslaught of a prolonged closure of physical stores and disappeared.

What stands out is that many of the businesses that didn't survive the closure of spaces had not incorporated some type of technology that would help them organize their processes and optimize and make their sales more efficient. These losses left behind an important lesson: technological evolution arrived unexpectedly and there is no going back for surviving businesses that must now implement digital tools and solutions to face this new era.

Fortunately, it seems that the lesson has been very well learned by the commercial sector because it has been able to adapt quickly to a couple of phenomena that acquired unprecedented importance: e-commerce and last-mile logistics.

In the last four years, e-commerce in Mexico has registered a double-digit increase, offering a development opportunity to thousands of companies, particularly small and medium-sized businesses, and this has been accentuated as a result of the pandemic, accelerating the growth of electronic commerce and, more importantly, democratizing access to economic opportunities for the country's SMEs. According to figures from the Mexican Online Sales Association (AMVO), e-commerce posted growth of 81 percent in 2020 compared to the previous year.

However, this progress is not exclusive to electronic commerce; it is the result of working together with a fundamental ally: logistics services powered by technology. The digital universe requires  correct operations in its supply chains, making the logistics field a key factor and the best partner for online sales.

New consumption habits and the digital transformation have triggered logistics solutions. Currently, there are last-mile delivery apps that can provide immediate and on-demand deliveries. The combination of this with e-commerce results in the ideal alliance to consolidate a virtual economic model based on omnichannel commerce and fast, optimized and traceable shipments in real time, strengthening the positive perception of the user to buy again in digital stores and combining it with physical channels, ensuring that this is not a passing trend or that it will decrease as soon as the shops reopen. In fact, today, we cannot understand one without the other.

Now that we are experiencing a historical and unprecedented boom for digital economy models, logistics represents an essential tool for any type of business to survive and grow, as it gives them certain advantages in an environment of great competition, ensuring quality and safety in the supply chain from the moment the product leaves the warehouse and closes the operation through an efficient, traceable and safe immediate delivery to the hands of the final consumer or even the retailer. This closing of the cycle is accomplished through the last mile.

During the first year of the pandemic, delivery application data showed that nearly 80 percent of the increase in deliveries came from small and medium-sized businesses, making last-mile platforms and logistics services essential, strategic partners to improve distribution chains in this type of business. What does this tell us? Simple, that the benefits of the last mile can be used by all industries and all businesses.

The advantages and differentiation points between traditional deliveries and those that take advantage of technology are remarkable. We are talking about reduction of operating costs, efficiency in delivery times, better customer experience through improved interaction capacity, greater variety in the vehicle offer, real-time tracking, route optimization and service customization according to the needs of each industry.

In addition, there is a determining factor in the success and growth of the last mile, and that is that these services can be outsourced; they can be left in the hands of a specialized technology company, significantly reducing costs and the need to own a fleet. Other companies have even eliminated commission costs for shipments such as food and beverages, charging only delivery per mileage.

For companies, the team made up of e-commerce and last-mile deliveries means a new opportunity to empower and grow their businesses to a more digitalized level. Distribution chains are not only for companies with large production lines, they also work to grow retailers and entrepreneurs.

Logistics solutions extend to almost every type of industry. Due to the high demand for services, the use of delivery apps helps provide companies with an alternative in their deliveries, enhancing their growth and foray into the digital ecosystem.

The projection for last-mile logistics is promising. Today, more people are connected and the number of internet users will continue to grow by the minute, and these people have realized how easy it is to buy something and receive it at home easily, quickly and safely. The pairing of e-commerce and technology-enhanced logistics is leading the way in disruptive business models that will ensure the age of the digital economy flourishes

Photo by:   Christophe Millheres