Why last-mile logistics can make or break SMEs in a crowded marketplace

In a journey of a thousand miles, the final step is often the most critical. At least, that appears to be the case for logistics companies that specialise in last-mile delivery.

A lot can happen to a parcel as it makes its way from a distribution centre to a recipient's address, including being misplaced and damaged. These mistakes can be costly to sellers, given that competitors are just a click away.

Beyond the monetary value of the item, there is the potential loss of future revenue from a miffed customer or a damaged reputation from a negative online review.

Therefore, logistic providers such as Lalamove have become a crucial cog in fulfilling orders with speed and accuracy. "When consumers buy online, convenience is key," says Mr Alex Lin, managing director of Lalamove Singapore. "They want it fast, and they want it cheap."

Accelerated by the pandemic, Lalamove saw blistering growth last year, as the company experienced a 200 per cent increase in revenue on a year-on-year basis.

Mr Lin attributed the growth to two key factors. The first being the pivot by food and beverage businesses to online deliveries when the circuit breaker shuttered dining establishments. The second stemmed from the huge adoption of e-commerce. Users turned to the Internet to purchase everything from instant mala noodles to Secretlab gaming chairs.

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Even if one discounts the pandemic boost, Lalamove has come a long way since its founding more than seven years ago. It began as a prototype app created out of a rental flat in Sai Wan district on Hong Kong Island. Today, its vibrant orange hummingbird logo can be seen on vehicles darting through more than 20 markets across Asia, Latin America and the United States.

The company has a 50,000-strong driver team in Singapore alone. Its vehicle fleet - comprising motorcycles, cars, vans and lorries - is equally suited for delivering envelopes as it is the contents of your living room. The service is available on-demand through its mobile app.

Fuelling the SME economy

"Small- and medium-sized enterprises (SMEs) have been among the hardest hit businesses during the pandemic," says Mr Lin. "SMEs also make up 80 per cent of Lalamove's user base."

The logistics company played a role in assisting with the digital transition of these SMEs - many were using online sales channels for the first time. "A lot goes on behind the scenes to make scheduling a delivery just as simple and easy as any ride service," he adds.

By engaging Lalamove, SMEs could avoid the high upfront costs of setting up their own fleet. This freed up cash flow as they needed to pay only for what they used, eliminating the operational costs involved in maintaining an in-house fleet and labour.

This offers businesses greater flexibility to ramp up the number of vehicles as needed, something that is imperative in an environment where demand is subject to the vagaries of public sentiment. A viral Instagram post or a rave review online can send orders skyrocketing. When that happens, businesses need to be able to scale their delivery vans as easily as software.

More important, Mr Lin says an on-demand delivery service like Lalamove helps SMEs - some comprising one- or two-person teams - focus on the things that matter. "They have more time and resources to focus on growing their core business while leveraging Lalamove's expertise, experience and extensive fleet," he adds.

Swimming in a red ocean

Mr Lin admits that differentiation in the logistics business is tough as the arena is crowded and intensely competitive.

To stand out, Lalamove has had to constantly anticipate trends to stay ahead of the curve. This requires a relentless approach to discovering new ways to make deliveries better and cheaper.

For instance, it developed an API (application programming interface) integration tool that allows businesses to easily plug in Lalamove's delivery services to their existing workflow. This has the benefit of allowing customers to track their deliveries in real time. While it might seem like a small feature, it can make an outsized difference in the customer experience.

"The last mile is the last impression," explains Mr Lin. "If you can consistently provide a positive experience, you've got the key to creating loyal customers."

Moreover, the company has branched out into reverse logistics. This is a service that is used extensively by online clothing retailers, who dangle free returns to entice customers to check out. Lalamove ensures that these returns are handled as smoothly as the deliveries.

"We offer a return-trip feature that allows returned items to be delivered to a company's warehouse," says Mr Lin. "Demand for such services will only grow as people expect more when they purchase online. We want to ensure merchants can deliver an exceptional end-to-end consumer experience."

As e-commerce expands in volume and variety, Mr Lin is keeping a keen eye on evolving its suite of services to accommodate the varying needs of consumers.

"In this space, you can't take your eyes off the road," says Mr Lin. "We will keep working on product enhancement and coming up with new features to ensure convenience for all our users."