E-commerce businesses across Europe are facing significant increases in last-mile delivery costs, according to a report by DS Smith.
The research is based on survey responses from 550 decision-makers in the United Kingdom and the rest of Europe.
The findings indicate that last-mile delivery expenses have risen by up to 90%, with 84% of businesses experiencing cost increases over the past year and an equal percentage expecting further rises over the next 12 months.
Half of the respondents anticipate that these cost increases could double again in the coming period.
Olivier Cottard, global e-commerce and industries director at DS Smith, stated, “The message from our survey is clear: innovative companies that are more open to new ideas, and which regularly review their set-up around last-mile delivery and explore new ideas with packaging suppliers, are better able to cope with the significant challenges that the e-commerce sector faces and in a better position to meet the demands of tomorrow.”
European E-Commerce
The report further reveals that 39% of European e-commerce businesses have encountered double-digit increases in supply chain expenses related to couriers, returned items, and damaged products during transit.
Nearly 39% of respondents also reported a decline in profits due to these operational challenges.
In response, 35% have increased the delivery fees charged to consumers, while an additional 35% have raised the prices of their products.
Traditionalists, Pragmatists, Innovators
The study categorises respondents into traditionalists, pragmatists and innovators, to differentiate between those relying on long-term value chain partnerships and those actively seeking new solutions.
Innovation plays a crucial role, with 65% of innovative businesses conducting regular supplier reviews for cost savings and 59% utilising third-party coordination to reduce overhead costs across packaging, production, warehousing and transportation.
The report also explores the impact of rising costs on sustainability initiatives.
Approximately 27% of e-commerce companies are reducing spending on sustainability, while 59% are revising their returns policies and 57% are managing future-forecasting by setting minimum-order values for deliveries.
Customers Expect Sustainable Packaging
Consumer expectations further complicate the situation, according to the report.
Seventy-five per cent (75%) of respondents indicated that their customers expect sustainable packaging, 71% demand options for tracking deliveries and related communications, and 69% expect flexible delivery times.
Furthermore, fewer than 39% of businesses believe that they have met customer expectations for sustainable delivery options.
The survey also found that 36% were concerned over delivery cost expectations, while 30% said that they feel that they have succeeded in providing flexible delivery times.
