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28.04.2021, Global Distributors Collective

How is the last mile distribution sector adapting and innovating following COVID-19?

From January to March 2021, the GDC team interviewed 23 last mile distribution companies, mainly working in the energy, agriculture, health, water, e-commerce and fast-moving consumer goods (FMCG) sectors. Through the interviews, four topics were identified as priority areas where peer learning could help companies identify and implement tangible changes in business practice.

Following desk research to dig deeper into the challenges that were identified, four peer learning workshops was held covering:

  1. Smart Use of Working Capital
  2. Digitising Customer Relations
  3. Remote Field Team Management
  4. Partnerships for Growth

This publication captures insights from the interviews, desk research, and peer learning events.

 

The Impact of COVID-19

The short term impact of COVID-19 on the interviewed businesses was varied. Health and e-commerce companies were positively affected, due to increased demand for their services. Companies selling to poorer, more remote, ‘offline’ customers, whose incomes had gone down, were most negatively affected.1 For most companies the impact was mixed, with an initial lockdown-driven drop in revenue compensated for in the second half of the year by a) increased demand and b) (for some) license to operate as ‘essential service providers’.

In the medium-term, companies have faced challenges around stock management and use of working capital; managing staff and field teams remotely; the need to reduce face to face customer interaction to operate safely; and the need to reappraise consumer credit risk. Other areas of concern or interest are around future risk management, access to finance and building effective partnerships for growth. The challenges faced were similar across countries and regions, although the timing, duration and predictability of measures such as lockdowns, social distancing or curfews varied.

Looking to the future, companies have concerns around the long term impact of the COVID-19 crisis and its potential to lead to lower or less predictable customer incomes, macroeconomic instability and increased investor risk aversion.

 

How Companies have Responded

In the short term, companies adapted by focusing on faster-moving, lower-cost and more ‘essential’ products and services that sell better to customers whose incomes have decreased. Nearly all reported accelerated adoption of digital solutions in areas such as sales, marketing, ordering, and field team Companies Interviewed for this Project: management. Companies have also responded by exploring partnerships to help achieve scale or to address complex challenges, collaborating with corporates, governments, and third-party service providers in areas such as software or logistics. These solutions are a ‘work in progress’, but have already reduced costs, improved efficiency, and enhanced the companies’ value proposition to customers. The changes made are expected to remain in place after the crisis abates.

 

Excerpt of: How is the last mile distribution sector adapting and innovating following COVID-19? (Global Distributors Collective, 2021)

 

Download the full report here.

 

 

 

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