According to the Market Statsville Group (MSG), the global last mile delivery software market size is expected to grow from USD 6,757.94 million in 2022 to USD 19,474.88 million by 2033, growing at a CAGR of 10.1% from 2023 to 2033. Some of the key factors driving the market growth include a surge in e-commerce industry operations, a rise in popularity of Omni channel retailing, increasing use of logistics-specific solutions, declining hardware & connectivity costs, and an increase in trading activities due to globalization. However, security concerns and the rise in the cost of operations are limiting market growth. On the other hand, the growth of the software as a service (SaaS) model provides a huge growth opportunity for the market. The last mile software can address some of the major challenges such as increased visibility, boosting customer experience and engagement, optimizing delivery routes, and customizing delivery locations, which are faced otherwise without the use of the software.
Last mile delivery software is referred to as typical software that enables companies in managing last mile delivery efficiently, transparently, and in a controlled manner. A variety of functions and capabilities that the software has include route optimization, digital/electronic proof of delivery, real-time tracking of shipment status, a collaboration between customer and delivery staff, and many others. Last mile delivery software provides the features to manage and streamline deliveries from the warehouse to the customers’ front door, for businesses. This task is performed by the software through route optimization, advanced dispatching, customer alerts, proof of delivery, and delivery analytics. Via this software, businesses can speed up delivery times as well as stay in constant communication with customers regarding the status of their deliveries. Mostly dispatchers and drivers use the last mile delivery software to provide efficient deliveries to customers and stay in contact with customers for further queries related to their item deliveries.
The need to adopt last-mile delivery software is being driven by the need to boost customer loyalty, optimize operational costs and curb manual dependencies. The need to craft new last-mile delivery models is becoming eminent with growing customer expectations. Across the industry, businesses are realizing the inefficiency of their traditional delivery models to drive same-day deliveries, on-time delivery, deliveries without contact, hyperlocal deliveries, curb side pickups, and white-glove services among others. Hence, to digitalize core logistics operations, adopting advanced last mile software is rapidly emerging as a key business enabler.
The impact of covid-19 was first felt in China due to its major role in global manufacturing (with Wuhan being the epicenter of the pandemic playing a significant role, having more than 200 of fortune Global 500 Firms according to International Finance Corporation). China is also a major consumer of global commodities and agriculture products. Disruptions to manufacturing in China rippled through global supply chains. Cargo was backlogged at China’s major container ports, travel restrictions led to a shortage of truck drivers to pick up containers, and ocean carriers canceled (or blanked) sailings. The resulting shortage of components from China impacted manufacturing operations overseas. Major industries around the world, especially logistics including last mile delivery, were affected.
COVID-19 created a significant impact on manufacturing operations as the governments of various countries highlighted the importance of health and safety, which increased the demand for intelligent solutions in manufacturing processes. Due to the remote working culture introduced in the industry, the usage of the e-commerce industry has increased as people are avoiding purchasing from brick and mortar stores. Besides, home delivery retailers offer their customers the opinion of picking up their packages at a location of their choice. The market share has shifted from B2B to B2C market at the formally business-oriented delivery market now also sees last-mile delivery services as a critical differentiator. For instance, Amazon flex has introduced reward programs for their on-demand delivery drivers. Gig workers can earn cashback, set preferred scheduling, access discounts, and get help navigating health, accidents, and life insurance. This will boost the drivers' confidence, which will positively impact on their services in less time. In addition, this incentive strategy will benefit the drivers and companies in terms of profits. Thus, the industry which has been disrupted due to the pandemic is coming to normal by learning from the pattern of the crises and adjusting to the new normal.
Today’s retailers are aware of the trends of the web, mobile devices, and social media among customers which have given them a wide array of new channels through which they can search and purchase products. To fulfill this behavioral demand of the consumers, retailers opt for Omni channel retailing. It describes the different strategies or methods that companies attempt to contain and leverage these multiple channels to improve consumer experience and create effective outreach. The increasing use of different channels by the customers is giving rise to retailers adopting Omni channel retailing. And to complete the delivery of the products to customers’ doorstep, last-mile delivery comes into role. With customers’ extensive use of technology and the need for a better online experience, the demand for last-mile delivery software is increasing.
Omni channel businesses target long-term shoppers, which means that they focus more on improving customer profitability instead of only on sales growth. While many retailers have been successful in manufacturing and selling products customers want to purchase, fulfilling customer orders promptly has proven to be more challenging. This is where the focus on the last mile delivery originated. The growing demand for fully integrated Omni channel retailing has forced the retailers and their transportation and logistics partners to evaluate distribution network capabilities and offerings, giving rise to the demand for software for last-mile delivery. Hence, Omni channel retailing will continue to be a driving factor in the evolution of last-mile delivery in the forecast period.
Digital transformation and automation of the logistics sector are proving to be a boon. However, it also means that the industry has become an easy target for cybercrime. As all levels of the supply chain are rapidly integrating with the cloud, there is an emergence of significant risk concerning cybersecurity. As the number of internet-connected devices is increasing, the amount of security risks to consumers and businesses is also increasing. Additionally, this sector is particularly vulnerable with the existence of various third-party vendors in the last mile delivery chain. Many companies currently lack a full understanding of how to manage the risks that come hand-in-hand with digital rewards.
Owing to the rapid adoption of IoT and IT solutions, the last mile delivery software market is facing an increase in new threat vectors and an unprecedented level of cyber risk. IoT end points that are physically deployed at the global scale and are also connected to the internet through many different protocols, make data privacy, confidentiality, and assurance of key protection aspects and transactions vulnerable. These increasing number of cyberattacks pose a challenge and may hinder the growth of the last mile delivery software market.
Artificial Intelligence (AI) has become a huge part of daily operations for many businesses with the latest technology advancements. Machine learning and robotics technologies have produced a global impact by transforming the way a task is assigned quicker to increase productivity. In the area of last-mile delivery software, AI is already beginning to prove its impact by simplifying the supply chain logistics process and providing markets with immense growth opportunities over the forecast period.
Implementing artificial intelligence for the planning and operation of last-mile delivery with automated shipping software can deliver positive results. One of the biggest reasons for the high costs in shipping and logistics is that many organizations haven’t implemented technology that allows them to automate the freight rating process and find the best shipping option fast. The logistics and the route planning algorithms from AI can reduce the challenges faced by last mile delivery and can simplify the processes, and performance.
The study categorizes the last mile delivery software market based on type, and application area at the regional and global levels.
Based on the type, the market is divided into cloud-based and on-premises. The cloud-based segment is expected to dominate in 2022, gaining a revenue share of around 70.2%. It is expected to grow at a CAGR of 10.8% throughout the forecast period in 2022 in the global last mile delivery software market. The cloud-based segment currently dominates the market share in the last mile delivery software market. Cloud-based software provides end-to-end encryption to provide quick scalability, increased processing power, and high levels of storage capacity, as well as highly productive service and administration capabilities without the need for costly IT infrastructure setup and maintenance. Cloud-based software is growing increasingly popular since it provides end-to-end encryption. Furthermore, it enables high levels of capacity deficit, quicker scaling, more powerful processing, and very effective service and administration. Various enterprises and organizations in the IT and telecom industries use cloud-based platforms or software that provides them with complete security authority and enables a seamless workflow.
Based on the regions, the global last mile delivery software market has been segmented across Europe, North America, the Middle East & Africa, Asia-Pacific, and South America. North America is projected to account for the highest market share of 37.5% in 2022. One of the primary elements driving development in this region is the desire for same-day and next-day delivery. As the region concentrates on the implementation of cutting-edge software technologies such as big data, artificial intelligence, machine learning, and others.
The last mile delivery software market is a significant competitor, and extremely cutthroat in the sector are using strategies including product launches, partnerships, acquisitions, agreements, and growth to enhance their market positions. Most sector businesses focus on increasing their operations worldwide and cultivating long-lasting partnerships.
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