According to recently released statistics from Statistics Canada, retail sales in Canada reached $70.2 billion in June, increasing by 1.5% from May. The report further states that the figures can be attributed to a price increase, changes in consumer demand for some products, and supply chain delays that are problematic for retailers and businesses. It is supply chain delays that represent an increased cost and amount of complexity associated with the last mile delivery of products. Last mile delivery ultimately has an impact on the bottom line for businesses but also customer satisfaction for consumers. However, the issue is not simple because supply chain delays drive a unique combination of issues related to delivery such as geographic limitations, high operating costs, logistics, weather challenges, and urban congestion, among others.
Geographical and Demographic Constraints
The country is the second largest in the world by land area, but its population is highly concentrated in a handful of major urban areas close to the US border. Therefore, if a store had to deliver supplies from a major distribution point of Toronto or Vancouver to a remote or rural community, the only option its last mile delivery would have in some cases, will require thousands of kilometers of travel. This contributes to high fuel and labor costs. In addition, in non-urban locations, delivery routes have fewer stops per km reducing efficiency and increasing the cost per unit. In Canada’s North where roads are not present, goods must be flown in or moved by seasonal ice roads making deliveries incredibly expensive, time-consuming, and often impossible during certain times of the year.
The ”last-mile” of the delivery, that is, the final stretch of the product from the distribution hub to the consumer is the most expensive part of the supply chain accounting for over 50% of the total shipping cost. It is also aggravated by large distances between urban and rural areas in Canada. For example, B2B orders can be kept in a vast network of warehouse facilities ensuring that retail fulfillment runs smoothly. This system is appropriate for large orders that emphasize accuracy and efficiency in bulk handling. Reliability and accurate delivery are crucial to maintaining these partnerships. On the other hand, B2C arrangements feature individual customers who require swift, some cases same-day or next-day delivery. It contains high return volumes with focus on easy reverse logistics.
Evolving Consumer Expectations
To this purpose, Canadian consumers have high expectations for both retail and e-commerce driving significant changes in supply chain strategy. For instance, the requirement for speed has led to the development of regional distribution networks. Nonetheless, despite the demand for speed and convenience, consumers are highly price-sensitive especially when it comes to food and daily necessities. This puts pressure on retailers to come up with more efficient supply chains in a way that they can reduce the expenses and offer competitive prices.
Besides, customers expect a smooth shopping experience whether they are browsing online, making purchases in physical stores, or picking up an order at a designated location. Accordingly, retailers must possess one, unified view of their inventory and must be able to fulfill orders from multiple locations such as a store, shelf, warehouse, or a partner facility.
Navigating Complexities and Issues
Many Canadian businesses have addressed these issues using different solutions. By using a mix of national carriers like Canada Post, Purolator, and FedEx and specialized last-mile delivery providers, businesses can deliver orders reliably and in a timely fashion. Technology also plays a crucial role in live tracking, route optimization, and providing transparent updates to customers. Third -Party Logistics (3PL) providers that specialize in warehousing, inventory management, and fulfillment can help manage the challenges of a complex supply chain without an upfront capital investment in their own warehouses.
A further key issue is sustainability and the “green supply” chain which is of high importance to Canadian consumers and enterprises. More and more consumers are deciding whether or not to buy from a company based on its environmentally responsible conduct from raw material sourcing through packaging used and emissions generated through transport. The positive note is consumer-driven, “green supply” chain activities have a positive effect on efficiency improvement like optimizing delivery routes to reduce fuel consumption and costs. Delivery and logistics companies are also spending on electric vehicles (EVs) for last-mile delivery to reduce their carbon emission.
Undoubtedly, Canada is dealing with a rather complicated mix of issues in its retail and e-commerce supply chains. Businesses that manage to tackle these challenges through varied carrier mix, strategic partnerships, and application of technology will prosper in the Canadian marketplace.
