MASTER OF GLOBAL BUSINESS (MGB)

ALTERNATE DELIVERY METHODS FOR LAST MILE LOGISTICS

Submitted By: - Mentor: -

Akshay Jadhav MM19GL054 Ahammed Shamir

Sri Ram Kashyap Mulukutla MM19GL046

Venkata Sundara Kalyan Chinta MM19GL054

S P JAIN SCHOOL OF GLOBAL MANAGEMENT

DUBAI
 ALTERNATE DELIVERY METHODS FOR LAST MILE LOGISTICS

Submitted in partial fulfilment of the requirement of

Master of Global Business (MGB)

GLOBAL LOGISTICS AND SUPPLY CHAIN MANAGEMENT

Submitted By: - Under the guidance of: -

Akshay Jadhav – MM19GL054 Ahammed Shamir

Sri Ram Kashyap Mulukutla – MM19GL046

Venkata Sundara Kalyan Chinta – MM19GL040

S P JAIN SCHOOL OF GLOBAL MANAGEMENT

DUBAI
 ACKNOWLEDGEMENT

We would like to begin by thanking S P Jain School of Global Management for providing us with the
opportunity to undertake a project which helped us in understanding the logistics and supply chain
industry alongside the business environment present in UAE.

We are very grateful to our mentor, Mr. Ahammed Shamir for giving us his time and enriching our
project with the insights and suggestions he provided us. His guidance was paramount for the
project to achieve its goal.

We want to thank Ms. Krishnapriya Nandakumar for always being available for any queries we had
regarding the project.

We would like to thank Ms. Sakshi Sachdeva for helping us hone our presentation skills all through
the trimester.

We want to thank Mr. Prashant Verma (Aramex) for giving us his valuable time and inputs. Our
discussion with him gave us a deeper understanding of the logistics industry and the companies
operating within it.

Finally, we would like to thank the entire MGB Cohort for their support and suggestions.

Sincerely: -

Akshay Jadhav- MM19GL054

Sri Ram Kashyap Mulukutla – MM19GL046

Venkata Sundara Kalyan Chinta – MM19GL040

S P JAIN SCHOOL OF GLOBAL MANAGEMENT

DUBAI
 DECLARATION

We hereby declare that the matter included in this report entitled “Alternate Delivery Methods for
Last Mile Logistics”, is the result of study and interviews carried out by us. We further declare that
this is our original work and has not been published anywhere before.

This Project Work has been carried out for the sole purpose of submission in partial fulfilment of
Master of Global in Business (MGB) at S P Jain School of Global Management, Dubai.

The above is true to the best of our knowledge and understanding.

We have read, understood and signed the code of Ethics.

COPYRIGHT ASSIGNMENT

FOR THE GOOD AND VALUABLE CONSIDERATION, receipt of which is hereby acknowledged, the
Project team (“Assignor”), hereby irrevocably transfers and assigns to S P Jain School of Global
Management (“Assignee”), located at Dubai, Singapore, Sydney, its successors and assigns, in
perpetuity, all right (whether now known or hereinafter invented), title, and interest, throughout the
world, including any copyrights and renewals or extensions thereto, in (project title).

IN WITNESS THEREOF, Assignor has duly executed this agreement.

Date: 27th August 2019

Project Team:
Akshay Jadhav MM19GL054
Sri Ram Kashyap Mulukutla MM19GL046
Venkata Sundara Kalyan Chinta MM19GL040

Project Mentor
Name: Ahammed Shamir
Signature:
S P JAIN SCHOOL OF GLOBAL MANAGEMENT
DUBAI
 Table of Contents
S.no Topic Page number
1.0 Introduction 3
1.1 E-commerce in UAE 4
1.2 E-Commerce Companies in UAE 5
1.3 Current Delivery Practices in UAE 5
2.0 Literature Review 5
2.1 Alternative Delivery Methods 6
2.1.1 Delivery Box 6
2.1.2 Reception Box 6
2.1.3 Collection Points 7
2.1.4 Controlled Access System 7
2.1.5 Parcel Lockers 7
2.1.6 Automated Guided Vehicles 9
2.1.7 Drones 10
2.1.8 Crowdsourced Logistics 11
3.0 Research Methodology 14
3.1 Research Objectives 14
3.2 Primary Data 14
3.2.1 Qualitative Research 14
3.2.2 Quantitative Research 14
3.3 Secondary Data 15
3.4 Research Gaps 15
4.0 Analysis & Findings 16
4.1 Demographics 16
4.2 Findings from the Main Questionnaire 17
4.3 Expert Interview 27
4.3.1 Key Learnings from Expert Interview 27
5.0 Limitations 27
6.0 Recommendations 23
7.0 Conclusion 24
 GIP MID-REVIEW

Alternate delivery methods for Last Mile Logistics

1.0 INTRODUCTION

With the growth of the ecommerce industry and the rising connectivity in the world, the importance
of having an efficient supply chain and logistics department is of the utmost importance. The
internet has revolutionised the way the retail industry works and has made it possible for the
consumer to have access to almost any company or brand within the confines of their homes from
their bed. The only interaction the consumer has with the company is when the product is delivered
to him. Thus, it is very important for the ecommerce retailer and the retail brand to provide the
consumer with a seamless experience so as to not create a negative perception in the consumers
mind. There is a lot of cost incurred to provide the customer with this seamless experience which
affects the bottom-line of the company. The ecommerce industry is trying to find solutions which will
help them cater to the consumer needs and reduce their operating costs. This adds to the
importance of logistics department of a company.

Logistics is a part of the supply chain of a company which deals with the flow of goods and resources
from the point of origin to the point of consumption.

Last Mile Logistics is the final step in logistics which involves getting the goods from the warehouse
to the doorstep of the consumer. Currently, some estimates suggest that the last mile of the delivery
process accounts for an average of 28% of the costs incurred for delivery (Deutsch & Golany, 2018).
The problem of trying to increase the efficiency of the last mile process is commonly known as the
‘Last Mile Dilemma’. (Grando & Gosso, 2005)

Currently Amazon’s shipment costs raised from collective share of logistics costs from 16.6% to
26.4%, which is almost $25.2 billion in last mile logistics expenses In 2017, It is almost the same case
with almost all the key ecommerce players and also they hold an solid focus on successful last mile
delivery operations. Also, they are working on the best combinations to face the last mile hassles
and update them to a major customer retention tool. (Loginext, 2017)

With the increase in the importance of the last mile, it is imperative for the ecommerce industry to
come up with alternative methods for delivery in order to improve the consumer experience. The
last mile is the only touch point for the consumer in the whole process which begins with buying
decision and ends with the reception of the product. This interaction plays a vital role for the
ecommerce retailer as it will define the company and its perception for the consumer. A smooth and
seamless experience will increase the possibility of the consumer returning to the ecommerce
platform for further buys.

For us to understand how alternative delivery methods will impact the ecommerce industry, it is
important for us to take into consideration the ecommerce industry in the UAE and the current
practices it follows in the region.
1.1 E-commerce in the UAE

United Arab Emirates is a country located in the middle east and has a population of 9.6 million. Of
these, 92% or 8.8 million people have access to internet. 63% of internet users in the UAE were part
of the ecommerce industry, i.e. they were active participants in online shopping in the year 2017.
(Sarkis, Dhall, Ghorra, Fabre, & Malauzat, 2017)

The online shopper in the UAE on average made 4 purchases within a year and spent $150 USD on
average per basket (Sarkis, Dhall, Ghorra, Fabre, & Malauzat, 2017). The number of online purchases
made by the consumer in UAE is very low as compared to other nations like the USA and the UK, but
the average spend per basket is higher or equal to most of the other nations.

Even with high internet penetration and use the E-commerce penetration in the UAE is a meagre 4-
5%, (Sarkis, Dhall, Ghorra, Fabre, & Malauzat, 2017) which means that almost 95% of the purchases
made in the UAE were in brick and mortar stores.

As for the growth of the ecommerce industry, it has doubled from 1.1% in 2014 to 2.3% in 2017. The
compounded annual growth rate (CAGR) for UAE is estimated at 25%. (Sarkis, Dhall, Ghorra, Fabre, &
Malauzat, 2017) The ecommerce industry contributes 1.6% of the GDP in the UAE and accounts for
$7.48 billion USD. (Deloitte, 2018) This number is estimated to grow to 16.48 billion by the year
2021. (Deloitte, 2018)

Figure 1 Ecommerce in UAE and ROW, Source: Bain&Co

1.2 Ecommerce Companies in the UAE

The growing trajectory of the ecommerce industry has attracted a lot of new companies to enter the
region. Amazon entered the UAE market by acquiring Souq.com which was a Dubai based
ecommerce site with over 50 million customers. The Emaar group acquired the local company
JadoPado.com and eventually launched Noon.com in 2017 as a competitor of Amazon. Other
ecommerce companies which operate in the region are Namshi, Ali Express, Nahel and Awok.
(Deloitte, 2018)

1.3 Current Delivery Practices in the UAE

At this moment in time, there is only one delivery technique that is being implemented in the UAE is
the direct delivery or home delivery technique. Here, the company assembles all parcels at a local
warehouse from where various parcels are assigned to delivery agents based on the proximity of the
delivery locations. The delivery agent must locate and deliver the parcel to the given address and
then move on towards the next location. (Moroz & Polkowski, 2016)

Though this delivery technique allows for greater consumer satisfaction, this also gives rise to some
complications that lead to an increase in the overall cost of the last mile and adversely affects the
consumer experience. One of the major problems associated with this is the Vehicle Routing
Problem or VRP. Scientists and researchers have been working on this since 1960’s and it relates to
the optimum route a vehicle can take in order increase the efficiency and decrease the costs
incurred for delivery (Punakivi, YrjoÈlaÈ, & HolmstroÈm). ‘Not at home’ problem is when the
consumer is not present at the delivery location to receive his parcel. As this technique requires
attended delivery, the first-time delivery rate is very poor and require repeated attempts for
delivery. Research indicates that the optimal technique for reduction in costs and high first-time
delivery rate is unattended delivery, where the presence of the consumer is not necessary. (Punakivi,
YrjoÈlaÈ, & HolmstroÈm)

It is very important to constantly find solutions to better the consumer experience because,
(Schröder, et al., 2018)

 Consumer expectations are getting higher

 Room for Automation
 Fierce Competition

The ecommerce industry must find these solutions not only to increase the satisfaction of their
consumer but also to reduce the costs that are being incurred currently for delivering products to
the consumer. These solutions will also help the industry to keep a check on their carbon footprint
and be more environmentally conscious
2.0 LITERATURE REVIEW

Some of the factors that contribute towards the complexity of the dilemma are (Deutsch & Golany,
2018)

 Lack of economies of scale (number of orders per customer is low)

 Difficulty of finding addresses
 ‘Not at home’ Problem
 Average time required for delivery agent at each stop
 Customer Nuances

2.1 Alternate Delivery Methods

The growing ecommerce industry and the problems related to the current delivery practices in the
region, which include the high costs, low first-time delivery rate, low economies of scale etc. it is
very important for the industry to not only apply alternate solutions for last mile delivery, but also to
understand the feasibility and acceptability of alternate delivery techniques. (Deutsch & Golany,
2018)

Various delivery methods other than direct home delivery have been implemented all over the
world. Parcel lockers, collection points and controlled access systems have been used for deliveries
in many European countries like Poland, France, Germany. (Iwan, Kijewska, & Lemke, 2015)
(Morganti, Seidel, Blanquart, Dablanc, & Lenz, 2014) Experiments with drones have been carried out
in the USA by big ecommerce companies like Amazon.

There are various methods of delivery which have been employed by the ecommerce industry. We
will be discussing the most widely used methods below.

2.1.1 Delivery Box

It is a box which is owned by the ecommerce retailer, it is attached to the consumers home using a
temporary locking mechanism. The delivery box is filled with product that the consumer has ordered
at the nearest distribution centre (DC) and is sent to the consumers location. Here, the delivery
agent brings the box to his house and fixes it to the consumers house at a secure location. The
delivery box is locked using an electronic code which is provided to the consumer through mobile or
email. (Deutsch & Golany, 2018)

The delivery box can also be used by the consumer for returns. The empty delivery box or one with
returned items is collected by a delivery agent on a separate pick up run or it is collected at the time
of the next delivery. (Punakivi, YrjoÈlaÈ, & HolmstroÈm)

Here, the ownership of the box is transferred to the consumer once the delivery agent delivers the
box to the consumers home.

This is an unattended form of delivery, where the presence of the consumer is not needed for the
delivery to take place. (Deutsch & Golany, 2018)

2.1.2 Reception Box

This box is owned by the consumer. It is permanently fixed to the consumers home and has some
sort of locking system, the access to which needs to be shared with the delivery agent. The delivery
agent on reaching the consumers home, uses the access given to him and opens the box and places
the parcel in it, the consumer is alerted to the fact that the delivery has occurred by mobile or email.
(Iwan, Kijewska, & Lemke, 2015)

The consumer can pick up his parcel whenever he reaches the designated location. This is an
unattended delivery method. This method has a 100% first time delivery rate. (Deutsch & Golany,
2018)

2.13 Collection Points

The concept behind collection point involves the delivery of goods to locations other than the
consumers home. These locations are selected so that the client must suffer from very little
deviation from his usual routine. The post office, gas station, supermarket etc are some examples of
the locations where collection points are set up. (Iwan, Kijewska, & Lemke, 2015)

In this delivery technique, the delivery agent delivers the parcel to the designated collection point,
upon which the consumer is informed that his parcel has been placed at the collection point and is
ready for collection. The consumer can then arrange for pick up from the collection point or arrange
for delivery from the collection point to his desired location. (Iwan, Kijewska, & Lemke, 2015)

Here, the ownership of the parcel is temporarily transferred to the collection point from the
ecommerce retailer and the parcel is in the care of the collection point. The ownership is finally
transferred to the consumer when he collects it from the collection point. The ecommerce retailer is
devoid of any liabilities once he makes the delivery. (Iwan, Kijewska, & Lemke, 2015)

This is an unattended delivery method as well. The consumer can collect the parcel from the
collection point only during their respective hours of operation. This method has an almost 100%
first time delivery rate and improves the drop density as well. (Iwan, Kijewska, & Lemke, 2015)

2.1.4 Controlled Access System

The controlled access system involves the consumer providing the delivery agent with access to a
secure part of his domicile which can be accessed via an electronic code or a key which can be
placed at a designated safe spot. The delivery agent uses this key or code to access the consumers
home and places the parcel in the secure area. The consumer has to specify the location where he
wants the parcel to be placed, this is known as a nominated location. (Deutsch & Golany, 2018)

This is an unattended delivery technique, which improves the first-time delivery rate for the
company and the consumer.

2.1.5 Parcel Lockers

They are similar to the collection point but are normally owned by the ecommerce company itself or
by a third party which has been contracted by the ecommerce retailer. They are placed in apartment
buildings, subway stations, carparks, workplaces etc. They are locker banks that are locked using an
electronic code. The electronic code is sent to the consumer once his item has been placed in the
 locker. He is made aware of the locker number which he can access any time of the day for a brief
period of time. If the consumer doesn’t collect his parcel before a specified number of days, the
parcel is considered as returned. (Deutsch & Golany, 2018) (Iwan, Kijewska, & Lemke, 2015)

The locker is then subsequently emptied and used for other consumers to collect their parcels. The
lockers can also be used by the company for returns which will in turn reduce its cost in return
logistics as well. (Iwan, Kijewska, & Lemke, 2015)

In case of third-party operators of lockers, they can be contracted by one or more ecommerce
retailers at the same time for their locker banks. (Iwan, Kijewska, & Lemke, 2015)

The ownership of the parcel is held by the ecommerce retailer till the parcel is collected by the
consumer if the locker bank is owned by the company. In case of third-party contractors, they
assume the ownership till the parcel is collected by the consumer.

This is an unattended delivery method. This technique improves the drop density and the first-time
delivery rate of the company and thus helps in reducing the cost. (Deutsch & Golany, 2018)

SWOT Analysis of the Parcel Locker system

Strengths Weakness
 24/7 access for consumers  Public authorities are unaware
 Informed as soon as parcel placed in  Lockers are normally located in public
locker places and thus require authorization
 Reduction in the number of trips for  Consumers need to travel to the lockers
delivery
 Eco-friendly
 Low Delivery costs

Opportunities Threats

 More efficiency in the last mile  Higher number of lockers required with
 Lockers can be moved to different growing ecommerce industry
locations  Locations need to be in an area with
surveillance for security of the
consumer

2.2 COMPARISON OF DELIVERY TECHNIQUES

Table 1 Comparison of various delivery techniques

Attended Reception/ Controlled Parcel lockers Collection Points

Delivery Delivery access system
Box
Who Delivery Delivery Delivery Customer Customer
covers company company company
the last
mile
Customer Yes No No No No
presence
Types of Any Packages/ Packages/ Packages/ Packages/
products Groceries Groceries Groceries Groceries
Failed High Low Virtually None Virtually None Virtually None
Deliveries
Delivery Fixed Delivery Delivery Delivery CP opening
Window delivery Company company company times
hours Operating hours operating hours operating hours
Time Not 24 hours 24 hours 24 hours CP opening
Appropria times
te
Consume None Very short Very short Short-Long Short-Long
r retrieval
time
Drop off Long Short Short Very short Very Short
time

Initial Low High/Medium Medium Medium Low/Medium

Investme
nt
Delivery High Low Low Lowest Lowest
Costs

Potential - Some reduction Some reduction Greatest Greatest

reduction reduction reduction
in Vehicle
use

Table: (Iwan, Kijewska, & Lemke, 2015)

2.1.6 Automated Guided Vehicles

Automated Guided Vehicles or AGV’s are unmanned vehicles which are equipped with parcel
lockers. They reach the consumers location using Global Positioning System or GPS. They move at a
speed of 5-10 kmph on the sidewalk or footpath and stop at the required location for a given
amount of time. (Schröder, et al., 2018)

The consumers are intimated about their locker and its electronic access code beforehand and they
can collect their parcel when the AGV reaches their destination.

This is an attended delivery method. AGV’s are set to replace the regular delivery method as there is
a 40% reduction in cost when using AGV’s as compared to the regular delivery methods. This 40%
reduction translates to 15-20% increase in profit for the company. (Schröder, et al., 2018)
The picture depicts an AGV and how it will be used. Amazon has already started controlled
experiments with AGV’s in certain locations. (Schröder, et al., 2018)

The AGV’s can be used to return the parcels as well.

They are most suitable in urban and suburban areas.

2.1.7 Drones

Drones are unmanned aerial vehicles. They are being used to complete deliveries of single orders at
remote locations. The ecommerce retailer incurs a very high cost when delivering single day delivery
or specified time window delivery items to remote or rural areas using a driven vehicle. Drones are
the best replacement for this scenario. With drones, it is estimated that in the USA, 13% of the
deliveries will be fulfilled using drones for same day deliveries. (Schröder, et al., 2018)

Drones also have some disadvantages. They can operate only in the rural areas and not in cities with
tall skyscrapers and buildings. Currently they have a load capacity of 5 kg and the number of drones
required for long distance parcel delivery is quite high. It is projected that 250,000 drones will be
required in the USA by 2021. (Schröder, et al., 2018)

Drones, even with their disadvantages, are still the best form of delivery method for remote areas.

They are unattended form of delivery.

SWOT for Drone delivery

Strength Weakness
 Cost Effective  Regulations
 Low carbon footprint  R&D Costs
 Remote areas made accessible
 Market driven by technology

Opportunities Threat
 New emerging market  Aviation Regulation
 Services related to drones  Low level of testing as it is a new
technology

2.1.8 Crowdsourced Logistics

Crowdsourced logistics is the phenomenon where ecommerce retailers make use of the rideshare
service model to perform deliveries. In crowdsourced logistics, the company responsible for shipping
acquires transportation by making use of the mobile application or online site directly from the
members of the crowd who work as independent contractors. (Castillo, Bell, Rose, & Rodrigues,
2018)

CSL is also being used for return logistics, i.e. for items being returned by the consumer. With
efficient returns management the ecommerce retailer can improve its performance and enhance the
consumer experience which will lead to increased consumer referrals and thus, increase in sales.
(Castillo, Bell, Rose, & Rodrigues, 2018)

In CSL, the resource sharing enables for the distribution of cost and benefits for various users. The
involvement of the crowd in the process brings about a level of uncertainty as the crowd is
responsible for managing its own schedule. Also, the crowd can provide or decline its services, also
known as a strategic resource, to the ecommerce retailer. This makes the crowd a combination of
strategic resource and an uncontrolled environment. (Castillo, Bell, Rose, & Rodrigues, 2018)

CSL plays an important role for businesses that want to scale up quickly without major investment.
CSL is also a very important resource for ecommerce retailers during peak periods. (Schröder, et al.,
2018)

SWOT for Crowdsourced Logistics

Strength Weakness
 Low cost  Difficult to ensure capacity as drivers
 Helps cope with fluctuating demand sign with various CSL companies
 Quick scaling without investment  Crowd is an uncertain and uncontrolled
 Important resource in peak season environment
 Big companies like Amazon and DHL  Deemed illegal in some countries
experimenting with it

Opportunities Threat
 Big resource for small ecommerce  Legal requirements
retailers  Quality
 Can help in improving the consumer  Reliability
experience

CSL is the only alternate delivery technique discussed above which does not have any effect on the
consumer for receiving the delivery. It requires a change in the mechanisms used for delivery from
the ecommerce retailer.
The different up and coming methods of delivery and the best type of deliveries suited for them
have been shown in the figure below.

Figure 2 Delivery methods and their areas of application Source: Mckinsey&Company

For the purposes of this research we are considering three of the above delivery methods to be
applied in the UAE and understand the ramifications their application will have on the consumer side
as well as the ecommerce industry side. The alternate delivery methods we will be considering are,

 Parcel Lockers
 Drone Delivery
 Collection points
Parcel lockers:

One of the major challenges in UAE for Last Mile Logistics are customer nuances, due to this the
first-time delivery rate is getting low, which increases the delivery costs. So, parcel lockers are one of
the best alternatives available to face this issue and get the delivery costs down.

In parcel lockers even the parcel ownership will be with the shipping company until customer picks it
up from the lockers

Drone Delivery:

In UAE in many areas there are individual houses where we can use drone delivery system as an
alternative. Especially in rural areas where there are more individual houses and high uncertainty in
deliveries, they receive every day these drone delivery systems will reduce the delivery costs.

Collection Points:

Collection points are also one of the best alternatives to face the challenge of customer nuances, in
collection points the ownership of the parcel will be shifted from delivery company to the collection
points and also these collection points will be open for 24 hours which enables customers to collect
their parcels according to their convenience.

3.0 RESEARCH METHODOLOGY

In our research we understood what the current practices for last mile delivery are prevalent in the
UAE currently and gauge the feasibility of the implementation of alternate delivery methods for the
ecommerce industry and the acceptance of these delivery methods by the consumers in the UAE.

We have set ourselves four research objectives which helped us with understanding the ecommerce
industry and its trends in the UAE and the overall impact of alternate delivery methods in the region.

3.1 Research Objectives

 To understand the growth of the E-commerce industry in the UAE

 To ascertain the current practices in place for last mile delivery in the UAE
 To study the alternate delivery methods available for last mile delivery
 To realise the feasibility and acceptability of alternate delivery methods in the UAE

Research methodology is defined as a research method with a systematic plan for conducting
research, we primarily have two types of data used for conducting this research one of them is
Primary data while the other is Secondary data.

3.2 Primary data

Primary data can be defined as the data that was collected by the researcher directly using various
methods like Surveys, interviews, or experiments. This data will be more relevant as the data will be
collected in our own perspective.

Primary data can be collected using two methods namely Qualitative research and Quantitative
research
3.2.1 Qualitative research

Qualitative research can also be known as exploratory research, which is used to gain some
understanding of the underlying reasons, opinions. It provides insights into problems and helps us to
develop ideas or hypothesis for deciding. Qualitative research can be descriptive or diagnostic.

3.2.2 Quantitative research

Quantitative research is used to get some unbiased measurements and statistical, numerical and
mathematical analysis of the data gathered conducting various polls, surveys etc., Quantitative
research can also descriptive or diagnostic.

3.3 Secondary data

Secondary data can be referred as data which is readily available and was already collected by
someone and common source of this data can be the data collected by government departments,
organizational records etc., Secondary data can also be obtained internally or externally from
organization. The main challenge with the secondary data is it should meet our requirements
according to the research.

Our research will make use of both, primary and secondary data.

For primary data for the project we obtained our Quantitative data by forming a questionnaire and
conducting few face-to-face interviews by selecting individuals using ecommerce websites through
quota sampling methods. This questionnaire mainly dealt with analysing how would be the people
acceptance on using alternative delivery methods in Last mile logistics. This questionnaire contained
various sections like Screening questions, profiling questions, usage habits, awareness of alternative
delivery methods, satisfaction for available brands and delivery methods.

For qualitative data, we contacted few industry experts on feasibility of using this alternative
delivery methods in last mile logistics by conducting interviews and made an analysis on how
feasible these methods are in UAE.

We looked into few companies like Aramex, DHL as they have already experimented with few of the
alternative methods in various regions and try to get some insights about the change in customer
behaviour, acceptance of customer and also how much did the company got benefited using these
alternative methods

We also focused on local companies like Fetchr, Wing, QXpress for assessing the feasibility of
various delivery techniques as these companies are completely into the domestic market of UAE and
assessing the feasibility of various delivery techniques as these people know the local markets and
consumer behaviour much better than anyone else

3.4 Research Gaps

All research done in the field of Last mile logistics can be broadly classified into four categories,

 Vehicle Routing Problem (VRP)

 New or Alternate delivery methods
 Environmental issues in the last mile
 Connected distribution strategy for logistics (Deutsch & Golany, 2018)
Even though there has been significant research in the field of alternate delivery methods, it has
been focussed mostly in Europe and USA. We have not come across any research which involves the
application of these delivery techniques and understanding the implications these might impose on
the ecommerce industry and the local customers of the UAE.

In this research we mostly focused to bridge this gap and carry out the above-mentioned objectives
to form a clear picture of the last mile delivery and the delivery techniques implemented for it.

4. ANALYSIS AND FINDINGS

The sample size used for gathering the data is 46 respondents.

4.1 Demographics:

Gender
Male Female

Female
22%

Male
78%
78% of the respondents were male and remaining 22% female. Out of the 46 respondents, 34 were
Indian while the remaining were made up of Pakistanis, UAE nationals, Expat Asians and Expat Arabs.

4.2 Findings from the Main Questionnaire:

Does the availability of free shipping infl uence

your buying decision?
Yes No

7%

94%

We discovered that 93% of the respondents state the availability of free shipping as an influence on
their buying decision.
 Do you add more items in your basket to avail
the free shipping opti on?
Yes No

13%

87%

We also recorded that 87% of the respondents add more items in their cart to avail the free shipping
option available on various ecommerce websites and applications.

How do you prefer the items in your basket to be de-

livered?
All items delivered together Items delivered seperately No preference

7%

28%

65%

Out of the 46 respondents surveyed, 30 responded that they like all the items in their basket to be
delivered together, 13 of the respondents preferred the items delivered separately, as quickly as
possible.
 What type of shipping do you normally choose
for your online purchases?
Same day delivery Next day delivery 2-3 days delivery
4-5 days delivery Delivery time does not matter

9% 13%
7%

33%

39%

Delivery within 2-3 days was found to be the most popular choice amongst the respondents with
39% opting for it, closely followed by next day delivery with 33% of the respondents choosing this
type of shipping.

Are you willing to pay extra for fast shipping of

your orders?
Yes No

48%
52%

We observed that more than 52% of the respondents are willing to pay extra for faster shipping of
their orders.
 What method of payment do you use while
shopping online?
Cash-on Delivery Internet banking Credit/Dbit Card

37%

59%

4%

We also recorded that 63% of the respondents use online payment while shopping online. This
finding differs from the data we gathered in our secondary research which showcased that over 70%
of the transactions for online orders were Cash-On-Delivery.

When we asked the respondents to select the delivery techniques, they were aware of, we found
that 78% or 36 out of 46 respondents were aware of collection points, followed by
reception/delivery boxes with 67%. Drones came in third with 56% of respondents aware and parcel
lockers and AGV’s coming in 4th and 5th with 37% and 15% awareness.
When asked if the respondents were willing to use parcel locker systems, over 63% said they willing
to use this system if it lowered their delivery charge. 22% of the respondents were undecided on
whether they would like to use this delivery method or not. 15% of the respondents said they were
not willing to try this delivery technique.

A further open-ended question revealed that the reasons for the respondents stated for using the
parcel locker system were, saving time, convenience, faster delivery and lower shipping rates. Some
of the reasons for respondents not using parcel locker systems were lack of trust and not being
aware of what parcel lockers were.

For what occasion will you use this delivery

technique?
Immediate Shipping (<2 days) Regular Shipping (>2 days)

26%

74%
We observed that over 74% of the respondents would use parcel locker system for immediate
shipping (within two days) while the rest would prefer to use parcel lockers for regular shipping.

What are some of the locati ons near your residence you
would like the parcel lockers to be situated at?
Super Markets Petrol Pumps Post Offices Mall
Others (specify) No where On top of my house

2%
2% 2%

20%

43%

4%

26%

Supermarkets emerged as the most popular location where the respondents would like the locker
bank to be situated with 44% followed by petrol pumps with 26% of the respondents choosing this
as their preferred location.
 Are you willing to use online payment to
receivve your orders through drone de -
livery?
Yes, No added charges May be No

9%

28%

63%

Over 63% of the respondents were willing to try drone delivery while 23% were on the fence when it
came to drone delivery. 9% of the respondents were not willing to try drone delivery. A further
open-ended question revealed that some of the reasons why the respondents were opposed to
drone delivery were safety of parcel, new technology, legal aspects and lack of trust in the system.
 For what occasion will you use parcel locker and
drone delivery techniques?
Immediate Shipping (<2 days) Regular Shipping (>2 days)

20%

80%

Like parcel lockers, majority of the respondents (80%) said they would use drone delivery for
guaranteed immediate shipping rather than for regular shipping.

Which online retailer do you prefer the most?

Amazon Noon.com Namshi.com Aido.com Aliexpress

2%
9%

89%
Almost 90% of the respondents stated Amazon as their preferred ecommerce retailer. Only 5 of the
respondents chose Noon and 1 chose AliExpress as their preferred ecommerce retailer. None of the
respondents chose Namshi or Aido.

4.3 Expert Interview

For our expert interview, we had a discussion with Mr. Prashant Verma who is currently working for
Aramex in UAE. We chose to interview an expert working in Aramex because they have already
introduced parcel lockers in UAE. Hence, any information and data we received from them would
help us in understanding the feasibility of this delivery technique in UAE.

4.3.1 Key Learnings from the Interview

Aramex has introduced the parcel locker system to increase customer convenience and allow the
customer to decide the pickup time for their deliveries.

The introduction of parcel lockers has helped the company reduce it operational costs. The
transportation costs were reduced by replacing individual (per customer) deliveries with
consolidated deliveries.

With the reduction in use of vehicles, it has also helped Aramex reduce its carbon footprint.

The costs have also reduced due to reduction in costs of attempted deliveries, reduction in last mile
tracking system costs, reduction in cost due to the elimination of customer care personnel for follow
up and because of the reduction in holding costs.

Currently, Aramex has introduced parcel lockers for ‘shipandshop.com’ customers. There has been
good amount of interest from customers, but the system is not completely utilized as Aramex is
serving only one ecommerce retailer.

Emirates Post tried to introduce parcel lockers in the UAE through partnerships with DHL, FedEx but
the project has not come to fruition yet. One of the main reasons for this is the high capital
investment at the beginning of the project and the fact that traditional delivery methods are more
suited for the lifestyle of UAE residents.

Drones are still just a trend, though their application might be feasible in certain areas of UAE. The
number of drones to add to your fleet and future problems like air traffic congestion will be
something that the companies will have to consider before introducing drones.

Both, customer satisfaction and reduction of operational costs, is equally important for logistics
companies. Mr. Verma explained that the solution for customer satisfaction and reduction in costs
can be achieved simultaneously. He used the example of Tableau, where the dashboards generated
would help the company to fulfil their requirements to the customers while tracking the operations
taking place along the way.

He also mentioned that Aramex is not using Crowd Sourced Logistics currently. He also said that CSL
was not being employed by any of the big UAE logistics providers or ecommerce retailers.
5.0 LIMITATIONS

 While conducting the research, we have not considered the location of residence of the
respondent.
 Drone delivery is only possible in locations with individual residences and in localities with
no tall buildings and skyscrapers.
 The responses recorded from the respondents for drone delivery thus provide us with a
picture that might not represent the opinions of the people who are eligible for drone
delivery.
 The data from this report, only considering the drone delivery aspect, needs to check and
reconfirmed by conducting further research with a more specific sample in terms of their
residence and location.

6.0 RECOMMENDATIONS:

 A huge majority of the respondents, 93%, stated that their buying decision was influenced
on the availability of free shipping. We recommend that the ecommerce companies and
logistics providers in UAE find cost effective ways of delivering parcels to the consumer.
There are several alternate delivery methods available for this.

 Even though the results of this survey showed that the awareness for parcel lockers is lower
than that for drones, its acceptability was higher. This was also backed up by the information
we gathered from our expert interview. Thus, we recommend that companies introduce the
parcel locker system to the market before adding drones to their fleet. This will also help
them in reducing their costs as the initial investment for drones is much higher than that of
drones.

 As was evident by the research, not a single of the alternate delivery technique was known
by all the respondents. Thus, we recommend that any that is trying to introduce the parcel
locker system or any other alternate delivery technique to the market, they need to
generate and create awareness of the entire workings of the delivery method in order to get
more customers to use them.
7.0 CONCLUSION

 We have understood that the ecommerce market in UAE is a growing market with big
companies Amazon, AliExpress etc entering the market either directly or through
acquisitions of smaller local companies already present in the market.
 The prevalent delivery method in practice currently in UAE is home delivery, which involves
a delivery agent and is a form of attended delivery. The first-time delivery rate for this
method is very poor and there is huge cost involved in multiple attempts for delivery.
 With Last mile being one of the most important factors determining customer loyalty, it is
very important to optimize the delivery system at the same time also reducing the
operational costs.
 Alternative delivery methods can be used to achieve the same while still maintaining
customer satisfaction.
 We have found that all the respondents in the survey were aware of some form of alternate
delivery technique. There was enough awareness for collection points, parcel lockers and
drone deliveries for companies to try and introduce them in the market.
 We also recorded that customers were willing to try and use alternate delivery methods for
immediate delivery of their parcels (within 2 days) rather than regular delivery.
 We believe that the application of these delivery methods will help the industry to integrate
reduced operational costs with increased customer loyalty.
References
Boyer, K., & Prud’homme, A. M. (2009). THE LAST MILE CHALLENGE: EVALUATING THE EFFECTS OF
CUSTOMER DENSITY AND DELIVERY WINDOW PATTERNS. Journal of Business Logistics.

Castillo, V. E., Bell, J. E., Rose, W. J., & Rodrigues, A. M. (2018). Crowdsourcing Last Mile Delivery:
Strategic Implications and Future Research Directions. Journal of Business Logistics.

Deloitte. (2018). Going Digital. Deloitte.

Deutsch, Y., & Golany, B. (2018). A parcel locker network as a solution to the logistics last mile
problem. International Journal of Production Research.

DHL. (2018). Shortening The Last Mile. DHL.

Grando, A., & Gosso, M. (2005). ELECTRONIC COMMERCE AND LOGISTICS: THE LAST MILE DILEMMA
REFERENCE FRAMEWORK AND SIMULATION. RAI.

Iwan, S., Kijewska, K., & Lemke, J. (2015). Analysis of parcel lockers’ efficiency as the last mile
delivery solution – the results of the research in Poland. Transport Research Procedia.

Joerss, M., Neuhaus, F., & Schröder, J. (2018). Parcel delivery: The future of last mile.
Mckinsey&Company.

Loginext. (2017). Top E-Commerce Companies Losing Money But Still Winning The Last Mile.

Morganti, E., Seidel, S., Blanquart, C., Dablanc, L., & Lenz, B. (2014). The impact of e-commerce on
final deliveries: alternative parcel delivery services in France and Germany. Transport
Research Procedia.

Moroz, M., & Polkowski, Z. (2016). The last mile issue and urban logistics: choosing parcel machines
in the context of the ecological attitudes of the Y generation consumers purchasing online.
Transport Research Procedia.

Punakivi, M., YrjoÈlaÈ, H., & HolmstroÈm, J. (n.d.). Solving the last mile issue: reception box or
delivery box? International Journal of Physical Research and Physical Management.

Sarkis, C., Dhall, T., Ghorra, J., Fabre, C., & Malauzat, A.-L. (2017). E-commerce in MENA.
Bain&Company.

Schröder, J., Heid, B., Neuhaus, F., Kässer, M., Klink, C., & Tatomir, S. (2018). Fast Forwarding the
Last Mile: Implications for the ecosystem. Mckinsey&Company.

Shah, V., Tegta, S., Viviez, L., & Belcald, A. (2016). Getting in on the GCC E-Commerce Game.
ATKearney.

Singh, A. (2018). jungleworks.com. Retrieved from jungleworks.com:

https://jungleworks.com/breaking-last-mile-delivery-challenges-solutions/
 8.2 Questionnaire

SCREENER:

INTRODUCTION:
Good Morning /afternoon/evening. I am--------------------------------------
(Full Name) from ------------, an MGB student who is doing research on
alternate delivery techniques for ecommerce in UAE and asks people’s
opinions on the satisfaction of service for the current delivery practices
and assessing the acceptability of alternate delivery methods.

Would you be willing to answer some questions for me?

QS 1. Are you a resident of UAE?

C 01
CONTINUE Yes 1
TERMINATE No 2
IF 2 IS CODED, THEN TERMINATE INTERVIEW, ELSE CONTINUE

QS 2. Have you used online shopping for any of your purchases?

C 02

CONTINUE Yes 1
TERMINATE No 2
IF 2 IS CODED, THEN TERMINATE INTERVIEW, ELSE CONTINUE
QS 3. How often have you shopped online in the past year?

C 03

CONTINUE More than 6 times 1

5-6 times 2
3-4 times 3
2 times 4
TERMINATE Less than 2 times 5
REFUSED (NOT MENTIONED ON CARD. 9
DO NOT READ)
IF 5 IS CODED, THEN TERMINATE INTERVIEW, ELSE CONTINUE
DEMOGRAPHICS:

D 1 GENDER
C 04

Male 1
Female 2
D2 What is your nationality? C 05

CONTINUE Nationality
Indian 01
Pakistani 02
Nepali 03
UAE 04
Sri Lankan 05
Egyptian 06
Other Expat Arabs 07
Other Expat Asians 08
Others 00
 Main Questionnaire

 Please check in your responses. If you do not wish to answer a question, you may skip it.

1. Does the availability of free shipping affect your buying decision?

 Yes (1)
 No (2)

2. Do you add more items in your basket to avail the free shipping option?
 Yes (1)
 No (2)

3. What type of shipping do you normally choose for your online purchases?
 Same day delivery (1)
 Next day delivery (2)
 2-3 days for delivery (3)
 4-5 days for delivery (4)
 Delivery time does not matter (5)

4. Are you willing to pay extra for fast shipping of your orders?
 Yes (1)
 No (2)

5. What method of payment do you use while shopping online?

 Cash-On Delivery (1)
 Internet Banking (2)
 Credit/Debit Card (3)
 Others (Specify) (4)

6. Please give reasons for your answer for Q.5

___________________________________________________________________
___________________________________________________________________

7. How do you prefer the items in your basket to be delivered?

 All items in the basket to be delivered together (1)
 Items delivered separately as per the quickest date (2)
 No preferences (3)
8. Please rate the current delivery practice (Home Delivery) in terms of satisfaction on the
following parameters? (Check mark under the desired option)

Extremely Dissatisfied Neutral Satisfied Extremely

Dissatisfied Satisfied
First time
delivery
Timings for
delivery
Customer service
Ease of Payment
Fulfilment of
shipping
deadlines

9. Awareness about alternate delivery methods.

Technique Unaided Aided

Reception/Delivery 1 1
Boxes

Collection Points 2 2

Parcel Lockers 3 3

Automated Ground 4 4
Vehicles

Drones 5 5

Others (specify)

10. Are you willing to go to a separate location to receive your order at a parcel locker bank
situated at a convenient location near your residence, which are accessible 24/7 at lower
delivery charges?(A parcel locker bank is a group of lockers owned by the ecommerce
retailer or third party logistics supplier which are used to place your order at a convenient
location near your residence. You need to make the trip to the lockers to retrieve your
parcel. This will reduce or eliminate the shipping charges for that order.)
 Yes, only if its free shipping (1)
  Yes, if it lowers the delivery charges (2)
 Maybe (3)
 No (4)

11. Give reasons for your answer in Q10

________________________________________________________________________
________________________________________________________________________
If answer for Q10 is YES, answer Q12 and Q13 or else move to Q14

12. For what occasion will you use this delivery technique?
 Immediate Shipping (Less than 2 days)
 Regular shipping (More than 2 days)
13. What are some of the locations near your residence you would like the parcel lockers to be
situated at? (Can choose multiple options)
 Supermarkets (1)
 Petrol Pumps (2)
 Post offices (3)
 Malls (4)
 Others (Specify) (5)

14. Are you willing to use online payment services to receive your orders on the designated day
via drone delivery services if possible?
 Yes, only if there are no added delivery charges (1)
 Maybe (2)
 No (3)

15. Please give reasons for your answer for Q14

_____________________________________________________________________
_____________________________________________________________________

16. For what occasion will you use parcel locker delivery and drone delivery techniques?
 Guaranteed Immediate Shipping (Less than 2 days) (1)
 Regular shipping (More than 2 days) (2)

17. Which online retailer do you prefer the most for online purchases?
 Amazon (1)
 Noon.com (2)
 Namshi.com (3)
 Aido.com (4)
 AliExpress (5)
 Others (Specify) (6)

18. Any suggestions for improvement for quality of service regarding deliveries of your
online purchases?
________________________________________________________________
________________________________________________________________
8.3 Expert Interview Questions

1. Can you please shed some light on the parcel locker banks introduced by Aramex?
2. Has the introduction of this new delivery technique reduced operational costs in the last
mile?
3. How was the response from the customers in terms of accepting this new delivery?
4. Do you think that other logistics providers and e-commerce retailer with their own logistic
divisions will experiment with introducing new delivery techniques in the UAE?
5. How feasible is the drone delivery in UAE?
6. What are your views on Crowd Sourced Logistics (CSL)?
7. Is Aramex planning on introducing CSL or any other new delivery techniques?
8. What do you think is more important customer satisfaction or reducing the costs in last mile
logistics?
9. Is it possible to achieve both?
8.4 SPJSGM Code of Ethics

Application and Scope: Applies to all the students and research supervisors of SPJSGM on their
conduct during their association with the institute across the geographies where SPJSGM operates.
This is to be interpreted in conjunction with the laws of the land.

1. The Research Code of Ethics abides the individual to be

a. Socially Responsible, fair and tolerant

b. Law Abiding

c. Respecting Culture and ethnic diversity

d. Cooperating with authorities

e. Helpful to Fellow students

2. Performance Improvement: Students will consciously endeavour to achieve higher levels of

performance and will strive towards self and institutional development.

3. Professional Conduct: Students are expected to behave in an amicable manner and exhibit a
professional conduct. Any form of anti-social or anomalous behaviour is not acceptable.
Discrimination in any form will call for disciplinary action.

4. Students are to conduct themselves with Honesty and Integrity. Any form of corruption will result
in immediate suspension and dismissal.

5. Approvals: The students will obtain all the necessary approvals and will seek necessary
permissions for the research activity.

6. Infringement of copyrights and Intellectual Property in any form will call for a disciplinary action
and dismissal.

7. Confidentiality: Preserving the Confidentiality of all the privileged and propriety information.
Confidential information must be used only for the purpose of which it was made available.

8. Publication: No student researcher can publish any article, report or the product of research in
any form without the permission of concerned parties.

9. Conflicts: Any type of interpersonal or professional conflicts should be avoided. In case of any
perceived conflict, it is the duty of the student to bring it to the notice of the supervisor

10. Disclosures: Students are required to make necessary disclosures before a research engagement.
This may include situations such as: conflict of interest, existing relationships with the party etc.

11. Liabilities: Student researcher cannot hold unlimited liabilities for the research work with an
organization. They should be conscious to avoid joint liabilities involving SPJSGM as a party or
unlimited liability on themselves.
12. Student researchers have their primary responsibility towards the academic research and the
deployed teams are not allowed to pursue any commercial activity with the engaging companies.
Also, commercial exploitation of available information, research and its by-products are prohibited.

13. Misrepresentation of facts, identities and impersonation will result in disciplinary action.

14. Students are expected to be fair and prudent in their dealing with human subjects wherever it
occurs in the course of research. This includes, knowing personal preferences, orientations etc. Also
influencing or canvassing in any form is not allowed.

15. Giving or taking any form of gift, benefit or favour from the research activity is prohibited.
Exchange of cultural pleasantries must be informed to the project supervisor. This excludes sundry
and operational reimbursements from the client company.

16. Research Supervisors are expected to deploy the students/teams in a fair manner ensuring
against any form of discrimination, abuse or exploitation by concerned parties.

17. Supervisors cannot accept any monetary incentive for the research from companies and cannot
claim Intellectual Property rights emerging out of their access to client specific information during
research.

18. Sponsored researches or paid-internship deployments, if any, will have to be identified and
approved separately.

19. This code is enforced by a committee which will be empowered to recommend the remedial
actions and disciplinarily proceedings against the persons involved. The committee is constituted by
the SPJSGM management.

20. Student/teams are required to sign and submit a copy of this document to the program office
and corporate mentor. For all regulations, the decision of SPJSGM Management will be final.

Date 27th August 2019 MGB Cohort: May 2019

________________________________________________________________________________

Akshay Jadhav Sri Ram Kashyap Mulukutla Venkata Sundara Kalyan Chinta

--------------------------- --------------------------- ---------------------------

 Appendix A5 – Activity / Project progress dairy (mandatory)
Project Title: Alternative Delivery Methods in Last Mile Logistics
Student Name: Akshay Jadhav, Sriram Kashyap Mulukutla, Venkata Sundara Kalyan
Chinta
Roll Number: MM19GL054, MM19GL046, MM19GL040

Submission Time Work done in Any issues / Intended Approved by

dates the last two problems action plan Mentor
weeks for the next
(approximately two weeks
200 – 250
words)
23rd May Discussion Alternative
2019 about topic Delivery
Methods for
Last Mile
Logistics was
finalised
Submission SOP Submitted
nd
2 June on BB
2019
SOP Start
th
16 Jun Feedback working on
2019 Literature
review
23rd June Literature
2019 review
discussion
30th July Mid review Few updates need
2019 presentation to be made for
discussion presentation
1st July Mid review
2019 presentation
2nd July Mid review
2019 feedback
21st July Submission Mid review
2019 on BB Report
Submitted
17th August Final
2019 Presentation
th
26 August Final report Couldn’t get any
2019 discussion contacts Qualitative
research