Last Mile Delivery: What It Is and How to Succeed at It
Unlock the potential of last mile delivery to elevate customer satisfaction and drive business growth.
By Komal Puri | October 10, 2022
Consumer buying behaviors have evolved significantly, particularly in the realm of online shopping.
Modern consumers now demand cheap—or even better, free—and fast delivery.
Let's emphasize that: free, fast delivery.
To remain competitive, companies must improve efficiency and reduce costs within their shipping logistics.
A crucial focus area is optimizing the last mile delivery process. For a company to thrive in today's market, streamlining efficiency in this crucial stage is essential.
This article delves deeply into the intricacies of last mile delivery logistics, identifies key challenges of last mile deliveries expected in the future, and explores how leveraging technology can effectively mitigate these challenges, thereby providing your company with a competitive edge.
Here’s a table of contents:
- What is Last Mile Delivery?
- What is the “Last Mile Delivery Problem”?
- 6 Ways Technology Can Solve Your Biggest Challenges
- 8 Trends That Will Continue to Shape (and Change) Last Mile Delivery in 2024
What is Last Mile Delivery?
Last mile delivery refers to the last phase of the delivery process, where a parcel is transported from a distribution hub to its final destination—typically a private residence or retail store.
This step is crucial in the delivery process, and businesses strive to make it as fast and efficient as possible to meet the growing consumer demand for rapid shipping, particularly in sectors like e-commerce, food, and retail industries. It's also the most costly part of the journey for goods to reach their final destination.
5 Key Steps in the Last Mile Delivery Process
The last mile delivery process can be divided into five main steps:
Step #1:
Orders are entered into a centralized system
In this initial step, orders and requests are tracked both by the sender and the recipient, who likely monitors the status of their delivery through a tracking number.
Step #2:
Orders arrive at the transportation hub and await delivery
Here is where the last mile delivery phase officially begins. The goal is to move the order from the transportation hub to the customer as quickly as possible.
Step #3:
Orders are assigned to delivery personnel based on routes and addresses
Strategically sorting and assigning parcels for delivery is key to optimizing last mile logistics for a cost-effective and efficient solution.
Step #4:
Orders are scanned before being loaded onto delivery vehicles
Scanning updates the order status for both the sender and the recipient, minimizing the risk of packages being lost during transit.
Step #5
Orders successfully reach their final recipients, and proof of delivery is obtained.
At this point, the package has arrived at its intended destination. The delivery personnel then updates the tracking information to verify and confirm that the delivery has been completed.
What is the “Last Mile Problem”?
We’ve already established that having an efficient last mile delivery process is crucial for keeping customers satisfied.
However, here’s the paradox: while customers expect fast and free shipping, the last mile is actually the most expensive and time-consuming part of the entire shipping process.
With consumers easily finding alternative places to shop, companies cannot afford to let them down. This means companies often absorb these costs.
And that’s the essence of the last mile delivery problem.
Last mile shipping can account for up to 53% of the total cost of a shipment. While companies typically cover around 25% of these costs, this figure is rising due to increasing inefficiencies within the supply chain.
What’s the biggest challenge with last mile deliveries?
Graph showing last mile delivery challenges Source
Optimizing last mile delivery can lead to significant cost savings for ecommerce businesses and retailers, especially as shipment volumes continue to surge across industries.
In the next section, we’ll explore best practices for improving your last mile logistics.
5 Ways Technology Can Solve Your Biggest Last Mile Delivery Challenges
Perfecting last mile delivery to ensure fast, on-time deliveries is crucial for delivering a great customer experience. But how can you achieve that perfect last mile delivery?
A good place to start is by using an effective fleet management tool.
FarEye is a last mile delivery platform designed to help you master this critical last mile part of the delivery process. Trusted by companies like GAP, Total Wine & More, MedMen, Imperfect Foods, and United Supermarkets, FarEye provides a "complete toolkit for last mile delivery." It includes features such as end-to-end route planning, dispatching, real-time driver tracking, communication, and analytics.
In other words, the technology handles the heavy lifting, allowing you to focus on your customers.
Here are five ways a last mile delivery solution like FarEye can help streamline your delivery process:
1. Use route planning to reduce delivery times
Every driver follows a route for deliveries. Ideally, these routes are simple, with multiple drop-offs along the way.
In reality, routes can span many miles with just a few deliveries, especially in rural areas, which means wasted time and fuel for fewer deliveries.
In urban areas, heavy traffic can eat up just as much time and fuel, despite shorter distances between drop-offs.
FarEye optimizes delivery routes by considering factors like time, location, vehicle capacity, and traffic to recommend the most efficient routes. Any real-time traffic updates are sent to drivers via SMS, keeping them on the best route and informing customers in real-time.
2. Reduce service time and labor costs with auto dispatching
In addition to optimizing routes, using software to plan deliveries saves the time needed for manual planning. Since routes update in real-time, fewer drivers are needed to complete deliveries in a day.
Managers can create auto-assignment rules based on driver location, route distance, and task limits per driver.
This dispatch feature introduces a new level of automation, helping to save time, optimize resource allocation, and allowing managers to focus on improving other aspects of the delivery process. By streamlining last mile logistics, it also helps to reduce inefficiencies that often lead to higher delivery costs.
In fact, an industry study revealed that 56% of consumers are demanding greater transparency in the delivery process.
But what other features are customers expecting from their last mile services?
One key expectation is proof of delivery. This involves verifying that an item has been successfully delivered, whether through a recipient’s signature or a photo of the package at the doorstep, complete with a time and date stamp.
FarEye makes proof of delivery simple. Drivers can capture signatures, take photos, scan barcodes, or add notes using a mobile app. This ensures both the sender and the recipient have confirmation that the delivery was successful.
4. Use reporting to increase accountability
Reporting helps identify bottlenecks before they escalate into bigger issues and highlights areas for improvement.
FarEye’s platform tracks key metrics such as success rates, on-time performance, service times, feedback scores, and distance traveled. This data can be filtered by team, driver, or time period, and you can export it to generate custom reports.
By tracking these KPIs, you gain insight into your last mile supply chain and can better understand how time and resources are being used.
5. Enhance the customer experience
Improving customer communication involves more than just providing a tracking number. Consumers now expect more from delivery services.
With FarEye, customers can do more than track their orders—they can communicate directly with the driver, receive SMS notifications about their delivery, and engage in a real-time feedback loop.
7 Trends That Will Continue to Shape (and Change) Last Mile Delivery in 2024
Companies are continuously testing and implementing new strategies to perfect the last mile delivery process and keep pace with evolving consumer expectations. Here are seven trends:
1. Rapid order fulfillment
More consumers now expect on-demand or same-day delivery, putting increasing pressure on logistics and fulfillment processes.
Businesses are required to turn orders around quickly—often faster than existing technology can handle.
“What would typically take less than an hour suddenly needs to be done within minutes, which creates planning challenges,” says Michael Armanious, vice president of sales and marketing at Datexcorp, a third-party logistics (3PL) company, in an article from Supply Chain Dive.
2. Improved traceability
Traditional last mile delivery carriers have made significant improvements in package traceability, incorporating features such as real-time tracking and proof of delivery.
These updates play a crucial role in ensuring packages don’t get lost, or locating them when they do. Advanced smartphone apps have transformed the way packages are tracked. For instance, solutions like FarEye offer GPS functionality that allows recipients to monitor their package on a map and track the driver’s exact location.
Proof of delivery options—such as signatures, time stamps, and details about where the package was left—help minimize disputes between carriers and customers, improving the overall last mile delivery experience for both parties.
3. In-house delivery services
More companies, including e-commerce giant Amazon, are using their own in-house delivery services.
In-house delivery gives businesses control over their own fleet of vehicles and employs salaried drivers to handle shipments directly from warehouses to customers. This control allows companies to manage costs, improve the customer experience, and extend delivery windows to include evenings and weekends.
4. Micro warehousing
Amazon continues to lead the way with its micro warehousing strategy, operating over 58 transportation hubs across the U.S. that support same-day delivery via Prime Now.
This trend has prompted other organizations to allocate or purchase additional warehouse space to enable faster deliveries.
While many retailers have successfully reduced delivery times to two days, Amazon still sets the standard, delivering parcels in as little as two hours. Competitors have considerable ground to cover.
5. Carrier upsells
E-commerce companies have long used data to suggest additional products to customers based on their browsing and purchase history. Now, this upsell strategy is being adopted by last mile delivery carriers, with some experimenting with product upsells at the point of delivery.
For instance, if a customer regularly orders oral hygiene products each month, the delivery driver could offer a tube of toothpaste along with the order. Similarly, if a customer has purchased gardening supplies, the driver might suggest grass seeds or fertilizer as an additional purchase.
6. Smart technology
The range of products ordered online is expanding rapidly, with consumers now purchasing perishable goods like fresh food, frozen items, and even live products like plants and pet fish. These items require special shipping conditions to preserve their quality.
Fulfillment centers are adopting smart technology to manage these shipments, using tools to control temperature, humidity, and air quality. Additionally, route planning now takes into account factors like weather conditions, and extra packing materials are often necessary to protect temperature-sensitive shipments.
7. Robots and drones
While not yet mainstream, robots and drones are set to revolutionize last mile delivery in the near future.
Andre Pharand, Accenture’s global management consulting lead for the postal and parcel industry, explains in a Supply Chain Dive article: “If parcels can be delivered by autonomous vehicles or drones, that will drastically alter the landscape. Labor costs represent 60% of delivery expenses. Automating delivery with robots and drones would eliminate those constraints and allow deliveries to be completed 24 hours a day.”
Final Thoughts
In conclusion, we’ve explored what last mile delivery entails, the associated challenges and costs, ways to optimize your last mile delivery process, and emerging trends to keep an eye on in the future.
If you’re ready to take your last mile delivery operations to the next level, reach out to our sales team or schedule a demo today.
Komal Puri is a seasoned professional in the logistics and supply chain industry. As the AVP of Marketing and a subject matter expert at FarEye, she has been instrumental in shaping the industry narrative for the past decade. Her expertise and insights have earned her numerous awards and recognition. Komal’s writings reflect her deep understanding of the industry, offering valuable insights and thought leadership.