Ecommerce Success Is Killing The Economics Of Cheap Home Delivery

In years past, most parcel packages were shipped to warehouses and facilities in bulk, allowing sellers and parcel companies to achieve economies of scale. The greater volume delivered to the same or fewer destinations, the more cost savings could be achieved per package.

But today, growth in e-commerce continues to accelerate direct-to-household purchase volumes. Shipping to more individual locations has reduced distribution scale for sellers, increasing per-unit ecommerce order fulfillment costs.

Reducing these costs can go a long way towards sustaining the new status quo of faster shipping across more widely distributed destinations. Achieving this without passing on cost increases to customers through price hikes will likely require a sharper focus on leveraging data to optimize delivery networks. As use of algorithms and forecast accuracy increase, it will become easier to plan for weekly and seasonal volatility, choose optimal routes, appropriately utilize facilities and assets, and shift personnel around as needed to bring down the cost of last-mile delivery.

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