FOREIGN TRADE UNIVERSITY

CAMPUS II IN HO CHI MINH CITY

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MID-TERM PRESENTATION
LOGISTICS OPERATION

TOPIC: LAST-MILE DELIVERY IN THE WORLD

AND IN VIETNAM

Group: 7
Class code: ML03
Class: K59CLC7
Lecturer: Lê Thị Thanh Ngân
Member list:
Đào Trúc Quỳnh - 2015535505 Nguyễn Xuân Thi - 2015535564
Văn Trúc Quỳnh - 2015535516 Vũ Nguyễn Hoàng Thịnh - 2015535574
Vũ Thanh Trúc Quỳnh - 2015535518 Nguyễn Phương Thuý - 2015535594
Nguyễn Đàm Thanh Thanh - 2015535537 Nguyễn Hoàng Thủy Tiên - 2015535602

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 I. INTRODUCTION
- While Covid-19 pandemic has caused huge damages to the economy
worldwide, it also has triggered the substantial growth of e-commerce. Last
year, retail eCommerce had sales up to 4.28 trillion US dollars worldwide.
- With many people purchasing goods online, customer behavior and
expectations changed a lot,… They all expect to have not only high-quality
products at affordable prices, but also a so-called freeship, one-day delivery,
2-hour delivery, etc.
- And the development of last-mile delivery has turned this into a reality.
II. AGENDA
A. Overview of last-mile delivery
1. The definition
2. The importance
B. Last-mile delivery in the world and in Vietnam
1. How is last-mile delivery carried out in the world?
2. How is last-mile delivery carried out in Vietnam?
⇒ What has VN failed to do that the world has already done?
3. Solutions to improve last-mile delivery in Vietnam
III. MAIN CONTENT
A. Overview of last-mile delivery
1. Definition
- Last-mile delivery is the last part of a delivery process. It involves a series of
activities that are necessary for the delivery process from the last transit point
to the final customers.
- Most supply chains have the following standard process:
● Raw materials are supplied to the manufacturing industry.
● Then the finished products are shipped to the warehouse or the distribution
center.
● From this point, there are two main ways of distribution to supermarkets and
retail stores; or a direct delivery system for customers. And last-mile delivery refers
to the delivery to final customers.
- For example, you purchase books online through the Tiki website with the
TikiNow service. The last-mile delivery process will be illustrated as follows:
● Step 1: Your order information is sent to the seller via Tiki system

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● Step 2: The seller prepares and packages the order
● Step 3: Tiki’s selected carrier picks up the package from seller’s workplace or
warehouse
● Step 4: The carrier then delivers the package to your given address.

(Source: Last-mile logistics in the basic supply chain, 2020)

- In short, last-mile delivery is the last stretch of a business-to-customer (B2C)
parcel. It takes place from the order penetration point to the final consignee's
preferred destination point.
2. The importance of last-mile delivery
Last-mile delivery is especially important for e-commerce and omni-channel model,
because of 2 main reasons:
● Directly influence customer satisfaction level & customer retention rate
- This is because since the outbreak of Covid-19, customers are leaning towards
e-commerce shopping rather than shopping at stores.
- Beside the change in customer behavior, there are also changes in customer
expectation for last-mile delivery. Customers now expect faster, cheaper
door-door delivery. They will be ready to switch to brands that can satisfy
their demand and stay loyal to that seller.
For example, Tiki has offered a special delivery service called TikiNow - where
customers can choose how much time they want to wait for their order. The
waiting time can be as short as 2 hours, which makes customers really
satisfied.
⇒ The quality of last-mile delivery determines the competitive advantage of the
business and level of customer satisfaction.
● Affect the company expenses

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 - Last mile delivery is the most expensive and time-consuming aspect of the
shipping process. It accounts for 53% of the total shipping costs. These include
costs for labor, fuel, packaging or delivery equipment, delivery
management software and others.
- However, consumers usually expect “free shipping”. This graph demonstrates
the differences between the real last mile delivery costs and the cost consumers
actually pay, or willing to pay.

Why is last-mile delivery so costly?

Reason 1: Labor costs
- Labor is a major expenditure for fleet operators, accounting for 50 to 60% of
last-mile delivery costs.
Reason 2: Fuel expenses
- Fuel costs account for roughly 10-25% of the overall last mile delivery
expenses.
- Fuel prices are volatile, especially when there is political instability such as the
war between Russia-Ukraine.
Reason 3: Reverse logistics and failed deliveries
- Product returns are expensive for e-commerce businesses that offer free returns.
The average return rate for ecommerce products is 20%, making ecommerce
fulfillment particularly difficult.
Reason 4: Delivery-related issues
- Lack of investment in dispatch automation software and other technological
solutions can also increase the cost of the final mile.

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 - Missed, late, incorrect, and failed deliveries incur additional costs for the
company in the form of product returns, re-delivery, and concession offers.
⇒ To sum-up the 1st part, last-mile is playing a critical role in that it determines
customer satisfaction rate & influences the cost of business. But the biggest challenge
is it is costly, so how do companies in the world and in Vietnam handle last-mile
delivery?
B. Last-mile delivery in the world and in Vietnam
1. Comparison between last-mile delivery in the world and in Vietnam

In the world In Vietnam

Transportation 1. Pickup trucks, bikes, 1. Motorbikes

methods of motorbikes, etc. Last-mile delivery in Vietnam is
Last-mile Last-mile delivery in the world conducted using mostly motorbikes.
delivery is done by diverse modes of However, motorbikes are not
transportation to be best designed for delivery, so companies
suitable for the route, the terrain have equipped it with an extra box
and product requirements. with low carrying capacity.
For example, Amazon in India
used bikes in the last leg of the 2. Lockers
delivery process to be able to
get into narrow roads and heavy The adoption of smart lockers in
traffic. Vietnam is still very limited, with
only several businesses such as
Lazada, Viettel Post,…
2. Self-driving cars, For example, in 2020, Lazada
drones, robots introduced a smart locker system
The highest cost in delivery is called iLogic. Over 22 lockers have
labor, which accounts for been established in big cities HN,
(50-60%). So replacing human Hưng Yên, Tp.HCM,...
labor with these futuristic
delivery options will cut costs
substantially and avoid risks
of unavailability, health issues,
etc.
For example, the Fedex team
has applied an autonomous

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robot called R2 to deliver pizza,
food,... on public roads.

3. Smart lockers
Smart lockers have proven to be
an efficient and green option for
door-to-door delivery systems in
many countries. It works as
follows:
● Step 1: Choose Locker as
the method of delivery
● Step 2: Choose the
available address to pick
order from the Locker
● Step 3: The seller sends
email of confirmation to
the buyers and delivers
the order to a warehouse
● Step 4: The order is
transported to the Locker
● Step 5: A message is sent
to the buyer to inform
them about the password
code. The buyer then
comes to pick the order.
Examples of companies using it:
DHL, Amazon,...

⇒ Conclusion:
- The means of transportation in Vietnam, motorbikes to be specific, is
not as diversified as in the world. Such delivery options as robots,
drones, etc. are quite hard to apply in Vietnam since these vehicles can
only operate on structured roads with few traffic.
- Locker is a green and effective solution, but it has not been widely
applied.

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Faster 24h delivery, 2-3 hours delivery, Similarly, in Vietnam there is Tiki
fulfillment one-day delivery. Now, Shopee Express, Grab quick
Due to increasing demand, this delivery mode,... to adapt to the
has become a new trend in trend and raise their
last-mile delivery. For example, competitiveness.
Amazon Prime is a service that
offers quick last-mile delivery at
affordable prices.

Crowd- Crowdsourced delivery is a In recent years, in Vietnam, crowd

sourced method of fulfillment that
delivery takes advantage of community
idleness to pick local,
non-professional carriers to
deliver packages to customers.
These companies sell digital
platforms and share emptiness
to optimize resources (time,
labor).
The companies post delivery
jobs on their apps to find drivers
for available gigs.
Companies like UberRUSH for
parcels, Postmates, Deliv and
even Amazon Flex provide
spot-market deliveries by
independent drivers.
logistics platforms of Vietnamese
companies as well as multinational
companies have appeared, bringing
great benefits to customers along
with threats to companies with
traditional transport (those who
have not taken advantage of crowd
resources), currently occupy a large
market share in last-mile delivery,
such as: VNPost, ViettelPost, GHN,
GHTK, ….

Focus on Tracking system allows Many Vietnamese carriers now

visibility customers to see where the offer order tracking tools like:
driver or package is. ViettelPost, NinjaVan, GHN or
VNPost. Customers only have to
enter the order number onto their
Customers who deliver website, and then track their orders.
temperature-sensitive items
want to track probe
temperature and possibly the Some temperature-controlled goods

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 humidity level at every step in
the delivery process. FedEx has
created a wide selection of
options to help maintain the
desired temperature for
sensitive shipments. They also
offer intervention capabilities
of re-icing, gel pack
replenishment and cold storage.
delivery service providers are: ABA
Cooltrans, Truong Phat logistics,
etc. With ABA Cooltrans, each
transport vehicle is equipped with a
data logger to ensure continuous
temperature recording and
monitoring. Positioning device
(GPS) is also equipped for real-time
tracking of each vehicle.

Fulfillment centers use weather .

data for planning, to add
additional packing materials to
account for temperature
variation. Carriers then use the
probe data to route the product
accordingly.

⇒ In Vietnam, the order tracking system is not sophisticated enough.

Some apps only let customers know if the carrier has picked up the
order. Customers don’t know when the carrier will arrive.

City There were at least 58 Amazon Sellers who sell via Tiki can store
warehouses: Prime Now hubs in the US in their products at Tiki - Fulfillment
Help reduce 2016, for customers demanding by Tiki (FBT) so the products can
speed of same-day instant delivery.
activate TikiNow’s fast delivery
deliveries or Thanks to Prime Now, Amazon service. With this model, customers
transit time. can now deliver in less than 2 can receive their orders in less than
hours. 2 hours and help reduce average
return rate by 3 times, compared to
The growing trend is for other operating models.
organizations to build or take
advantage of this urban
warehouse space and have easy
access to products for fast
customer deliveries.

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⇒ What has Vietnam failed to do compared to the world?
- Limited methods of transportation: use motorbikes only
- Lack of attention for the locker - an eco-friendly and effective solution
- Order tracking system is not sophisticated enough

2. Solutions to improve last-mile delivery in Vietnam

a. Combination between Blockchain and last mile delivery:
- In recent years, Blockchain technology has promoted its strength in the
protection of user information. Some practical applications of this technology
have been applied by businesses in the transportation sector.
- Maersk and IBM have jointly built a blockchain-based solution. This solution
helps to digitize trade processes and track orders from the beginning of
production until delivery to the customer. This system also allows the parties
involved to know the shipping progress as well as the location of the
container, the progress of customs procedures, bills of lading and other data
during the entire transportation process.
- However, Blockchain hasn’t been developed in Vietnam. This field needs
more research and investment from the Government as well as the logistics
specialists in the future.

b. Investment in Locker system:

- The application of Smart Locker in the delivery and receipt of goods brings
satisfied services to customers of the enterprise, saving labor costs and efficient
operation.
- Developing operating models with Smart Locker is gradually becoming a new
trend in Vietnam that many large corporations focus on investing in such as
Sun Group, Becamex, Mitsubishi, TNH Holdings, .. in order to gain
competitive advantages in the market. However, it hasn’t been a great success
due to lack of acceptance from customers and high operation cost.
- The company in Vietnam should invest an amount of money to offer discounts
to customers who are willing to choose the Locker method for last mile
delivery.
- Delivery companies should also be corporate and use one common destination
for lockers such as the supermarket so that they may save their investment and
operation costs.

c. Improvement in Logistics infrastructure:

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 - Vietnam is now mainly using Traditional last mile delivery method due to the
lack of logistics and transportation infrastructure.
- This creates low carrying capacity, low delivery efficiency and reduces
customer satisfaction in the long run.
- Government should pay more attention and make more investment in
transportation infrastructure including the routes and transports.
- The company itself needs training programs for the carriers so that they can be
ready for the changes in methods in the future.

IV. CONCLUSION
- Last-mile delivery in Vietnam has developed many solutions similar to that of the
world.
- But, the challenge still remains in the infrastructure, modes of transportation and the
presentation has given the solutions to address them.

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