Publication Date
Authored by
Andrew Jessie Fu, Mina Saito
Topic(s) Covered:
  • Strategy
  • Environment
  • Urban Logistics

The growing trend of e-commerce has led to new ways of selling and delivering products, resulting in increasing scale and complexity of last mile home delivery. The drive to provide convenience to consumers has led companies to offer faster delivery times. As a result, companies have focused on facility location, network design, and asset utilization (trucks, drivers), in order to improve service and speed. Few, however, have questioned whether consumers truly want convenient and fast delivery. Ratherthan focusing on a company’s operations, we approach the last mile home delivery from the perspective of the consumer. Our research considers whether consumer preferences for home delivery options can be influenced by environmental incentives, which include CO2 equivalent, electricity, trash, and trees. A case study with a corporate partner, Coppel S.A. de C.V. (“Company”), one of Mexico’s largest retail companies, reveals ways to incentivize consumers to wait longer. The case study involves a field study of approximately 1,000 home deliveries to predominantly low socioeconomic households across ten regions of Mexico. The results suggest that consumers are willing to wait longer for their home deliveries when given the environmental impact reduction. Moreover, information on trees saved is the most effective at incentivizing consumers to wait longer, regardless of education, occupation or socioeconomic status. Finally, using this extended delivery lead time, we provide an alternative methodology for improving vehicle utilization in last mile deliveries of a one-warehouse-N-customer system. The improved utilization results in lower fuel consumption and reduced carbon emissions.