Circular economy services for last-mile deliveries

How do we make the last mile profitable?

Even though the huge growth caused by the coronavirus is behind us, online shopping is not about to decline in the long perspective. With the growth of online shopping, the operation of the last mile of online shopping is also growing and diversifying. One interesting player in last-mile services is Fetch, led by Finn Tuomo Pirhonen, which is part of the same group of companies as Colligx offering logistics services.

Fetch is a company that combines circular economy with last-mile transport. This means that the customer can also send goods back, for example, when receiving a food order from an online store. The customer can choose from a wide range of services that Fetch offers. For example, the consumer can recycle used clothes and household items, send clothes to the laundry, return bottles, and even send a bicycle for maintenance.

What makes Fetch different?

“We have studied a lot of different markets, and we have not found a similar operator in Europe that would combine the last mile and the circular economy. We offer the customer the opportunity to choose from various services. We bring more services to the market all the time and strive to develop our store with the help of customer feedback,” says Pirhonen

In the direction of online shopping, Fetch is able to serve a wide variety of operators. The customer journey can be customized, in which case the orders from different stores traveling in the same car can be displayed in accordance with the online store’s own brand image. This means that, for example, online store logos and prices appear different to the customer, even if there are products from several online stores in the vehicle. In practice, for example, orders from the S-group and Kesko’s online food store can be delivered in the same car, in which case the pricing is also competitive due to the efficiency brought by the volume, and the customer sees the brand look of Kesko or the S-group, depending on where they ordered from.

“I hope that in the future we will be a big operator as a provider of home logistics services also internationally,” says Pirhonen. “I have thought that Fetch should be a kind of circular economy, Wolt.” Fetch is currently flexibly testing the provision of different services to its customers. “We want to create opportunities for small businesses to expand their field of activity by offering the opportunity to join Fetch’s range of services. The customer then decides which services should be kept,” says Pirhonen. One big opportunity is the various consumer-to-consumer trade operators. In them, consumers agree to shop with each other using a platform, and the logistics are often left to the consumers as well.

Volumes and new services to bring profitability

In order to improve the profitability of the last mile, it is important to improve both the volumes and the occupancy rate. In Fetch’s model, where products move in both directions, the vehicle occupancy rate is higher. In increasing the volume, the grocery store plays a key role due to its high frequency of transactions. It is also easier to build other services around the large volume of the grocery store. In this way, the grocery store’s transportation becomes more profitable when the occupancy rates of the vehicles increase.

The integration of various package services as part of home delivery would have its own benefit in improving profitability. Picnic, an online food store operating in Central Europe, has piloted the delivery of DHL packages in connection with online food store deliveries. This would be a logical next step in Finland as well. “We are actively researching different models that we could offer, and bringing package services to the doorstep is one of them,” says Pirhonen.

When it comes to recycling, one of the bottlenecks in online food shopping is the empty bottles that pile up at home. Oda in Norway and Mathem in Sweden have been offering an additional service already for some time, where they take back not only customers’ old order boxes but also empty bottles. The bottles must be packed in the bags sold by Oda or Mathem. Fetch will expand this recycling by offering other recycling services in addition to bottle return.

Consolidators of goods flows like Colligx enable the emergence of new types of operators.

Another area of the circular economy that is growing in terms of last-mile services is consumer-to-consumer transport. Similar to Fetch, consumer-to-consumer transportation concepts have been developed in Norway. The media company Schibsted has created the Helthjem delivery service around newspaper distribution. In it, the customer can order transport for the product sold in the consumer-to-consumer transaction. Schibsted is the owner of Tori and its sister companies operating in other Nordic countries. The package is left in front of the front door before 23:00 in the evening, and during the night, when the newspapers are distributed, the package is also picked up.

In Finland, Colligx offers operators in the transaction value chain the opportunity to connect goods flows. This may mean combining the transport of food online shopping and consumer goods online shopping or enabling turnkey logistics for the direct sales channel of various brands. The third area where online shopping can bring changes to the market is the emergence of new types of players, such as Ruokaboksi or Fiksuruoka.

In Norway, a large number of online retailers have joined Helthjem’s service. One interesting newcomer to the Norwegian online commerce scene with Helthjem is an online store called Morgenlevering. The original idea of Morgenlevering was to offer breakfast delivered overnight. The customer placed an order in the evening, and in the morning, ready breakfast ingredients, such as fresh bread, juice, or croissants, were waiting at the door. Morgenlevering’s current selection has since expanded significantly.

Both Helthjem and Fetch connect product flows and use them to enable new types of services for customers. New types of players are always a welcome addition to diversify the field of domestic trade.