Effects of e-Commerce on the Value Chain – Conquering the Last Mile

e-commerceThe research question of this thesis is to identify possible options to bridge the last mile and how this influences service and cost. The ABC methodology was used in order to identify the activities necessary and their cost drivers. The activities that are identified are handling and order picking, reverse logistics and the last mile delivery, with a strong emphasis on the last one throughout this thesis. The most important cost drivers are the delivery density, unsuccessful deliveries, delivery time windows and investments.

These are all discussed in the light of five possible set-ups: home delivery by the retailer, home delivery by a third party parcel delivery company, use of (un)manned collection / delivery points (CDP), use of (un)manned reception boxes at the customer’s house and the dual channel approach where the goods are sold online and collected at the nearest store.

They each have their pros and cons, and a model was developed and used to evaluate three scenarios. In the scenario of the online grocer, home delivery (albeit to a reception box) could prove cost effective, as well as the dual chain approach. In scenario two e-commerce is evaluated for a small retailer. The model indicated a dual channel approach, the use of CDP’s or a third party logistics provider could be a good idea. For scenario three, a pure online retailer who moves vast volumes was implemented. The cost differences here were smaller due to economies of scale and the retailer doing the home delivery themselves or via a third party were both found to be a good option. The use of CDPs could further drive the cost down.

Download full report via http://www.scriptiebank.be/sites/default/files/webform/scriptie/thesis%20Arne%20Somers_0.pdf

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