Collaboration in the last mile: evidence from grocery deliveries

ABSTRACT

The grocery sector has transitioned into an omnichannel operating mode, allowing consumers to buy online and have their order delivered to their chosen address. The last mile delivery service leads to avoidable inefficiencies such as low asset utilisation and repeated trips to nearby neighbourhoods, increasing vehicle emissions, traffic, and operational costs. Combining historical order and delivery data of an online grocery retailer with secondary data publicly available on other retailers, we employ Monte Carlo simulation to estimate grocery home delivery demand per 1-hour time windows. We use the simulation output as an input to daily vehicle routing problem instances under independent and collaborative last mile delivery operation to estimate the impact of collaboration. Our analyses show distance savings of around 17% and route reduction of around 22%. These results can support policies incentivising vehicle and infrastructure sharing settings and decoupling the last mile delivery from the core grocery retail services.

KEYWORDS:

• Collaboration
• last mile delivery
• UK grocery sector
• e-commerce
• vehicle routing
• Monte Carlo simulation

Acknowledgement

This paper is an outcome of a project which has received funding from the European Union's Horizon 2020 research and innovation programme.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Additional information

Funding

This work was supported by European Union Horizon 2020 [Grant Agreement No 635773].