The Last Mile Paradigm
Recently I met with a very interesting start-up, which has attempted to re-define the last mile connectivity in the financial services space. The interesting part about the model is that it uses certain elements of the e-commerce models present in India, in particular the cash on delivery (COD) model, the exception being, the product delivered is a financial product. You may ask what is so novel in this idea, the answer is that the model per se may not be so, but the context and the application makes this an unique attempt to solve 'the last mile' problem. The phenomenal success of the Cash on delivery (COD) model in the Indian e-commerce market, has meant it has become a subject of multiple case studies, but what most of them miss out in pointing, is the uniqueness of the 'last mile' context.
Picture this - for e-commerce in India today, the medium of customer engagement is the internet, but the mode of completing the transaction (payment) is mostly offline (cash on delivery, in this case). COD is fundamentally an Indian innovation which has re-defined the growth trajectory of the e-commerce industry. For example, India's largest e-commerce player transacts about 70% of its sales through COD, having set-up their own delivery and collection workforce. The dichotomy is the apparent mis-match between a customer having access to internet and the same customer not using the online medium (through credit/ debit card payments) to complete the transaction. Given the growing number of such consumers, one can safely assume that people are more than happy to shop online, but either don't have access to electronic payment mechanism or they are not comfortable with the usage of the same over the internet. Whichever angle one may choose to look at unique phenomenon, what is apparent is that the last mile connectivity for completing a transaction is fairly contextual on at least two fronts - access and preference of the customer to use cash for transaction.
While I might have just stated the obvious analysis, what is interesting is how this dichotomy has led to new delivery models coming up in different product/ service categories. The key here is that the context will lead to several innovations in bridging the 'last mile', be it for customer engagement or for enabling transactions. The challenges and opportunities for product and services companies would be to scale delivery to keep pace with the raising demand of today's consumer, especially for products/ services which need to be delivered off-line. The question therefore is, who will take a lead on this, will it be your fast growth ecommerce companies, your traditional retailer or the manufacturer who would like to access the consumer directly, redefining the traditional delivery channel as we know it.