The last mile is seeing disruption from new business models that address customer demand for ever-faster delivery, as well as new technologies such as drones and autonomous ground vehicles.

Last-mile delivery, especially of parcels, has recently received lots of attention in the media and from investors. The cost of global parcel delivery, excluding pickup, line-haul, and sorting, amounts to about €70 billion, with China, Germany, and the United States accounting for more than 40 percent of the market. And not only is the market large, but it’s also highly dynamic, with growth rates in 2015 of between 7 and 10 percent in mature markets (such as Germany and the United States) and more than 100 percent in developing markets. The biggest driver of this growth, not surprisingly, is e-commerce, which has shifted market share from the B2B to the B2C segment.

With the rise of e-commerce, consumer preferences have grown increasingly important in the formerly business-oriented parcel-delivery market. Large e-commerce players, as well as various start-ups, have identified last-mile services as a key differentiator. In fact, the variety of delivery options and the perceived quality of the delivery service are major decision-making criteria for online customers and hence directly affect e-commerce players’ success in the marketplace…

Source: How customer demands are reshaping last-mile delivery | McKinsey & Company