Solving the last mile issue: reception box or delivery box?

Abstract

One of the biggest challenges in B2C e‐commerce is the so‐called “last mile”, the home delivery service for the customer. Particularly in electronic grocery shopping it is difficult to combine profitability and high service level. The authors’ simulations suggest that the unattended reception of goods reduce home delivery costs considerably, by up to 60 percent. Unattended delivery has not been widely used because it requires investments and commitment from the customer. The two main approaches to unattended delivery are the reception box concept and the delivery box concept. The reception box is a refrigerated, customer‐specific reception box installed at the customer’s garage or home yard. The delivery box is an insulated secured box equipped with a docking mechanism. The reception box concept results in more effective home delivery transportation and the delivery box concept in smaller investment to achieve unattended receipt. This article assesses these two different concepts. The cost savings in transportation are analysed using simulation. The operational cost savings are compared to the respective investments required to calculate the payback period. Both concepts proved to be feasible but which one works better is not only a question of financial justification. The possible additional value to customers and overall suitability to the market must also be considered.