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Last mile delivery: How to get it right in 2021

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Every phase of ecommerce fulfillment is important, but there’s one stage that receives more attention than any other – the last mile.

Even as fulfillment grows more efficient and technologically advanced, the last mile continues to throw up barriers to customers experiencing a satisfying delivery process. Slow and expensive delivery remains a consistent problem in ecommerce – even as consumer expectations for fast and effective service increase. 

With 83% of customers now expecting a guaranteed delivery date and 80% a specified delivery time slot, this leaves very little room for error in your last mile logistics. 

In this post, we’re going to explore the infamous ‘last mile problem’, and what your business can do to improve the last mile delivery experience for your customers.

What is last mile delivery?

Last mile delivery refers to the final stage in the fulfillment process. This is where a business or 3PL transports online orders from a distribution facility to the delivery location set by the customer. 

The goal of the last mile is to get orders out to customers as quickly as possible. Delivery is one of the most important touchpoints in the ecommerce customer journey, meaning that the last mile is key to ensuring customer satisfaction. 

However, this is also the most challenging stage to coordinate – hence the so-called ‘last mile problem.’

What is the ‘last mile problem’?

The ‘last mile problem’ is a common phrase within the world of logistics management. It reflects the immense difficulty that many merchants encounter during this phase of ecommerce fulfillment.

Other fulfillment stages, such as order processing, picking/packing, and even shipping, can reduce costs by handling orders in bulk and creating standardized procedures. Innovations such as automation and robotics can also help to make these activities more efficient.

In contrast, last mile logistics cannot rely on these economies of scale. Why? Because it requires delivering orders in very diverse circumstances. This results in the last mile being the slowest – and the most expensive – stage of fulfillment.

What makes the last mile so challenging?

Thousands of unique delivery locations

As mentioned above, the last mile is the point where large-scale fulfillment activities come to an end. Unlike retail distribution, where goods are going to a finite number of locations, each package requires a tailored approach to reach its final destination. This makes it very difficult for businesses to streamline delivery logistics.

Transportation costs

The last mile has long been the most expensive part of the fulfillment process. It costs as much as 50% of a business’s total supply chain spend! This is because multiple deliveries means indirect routes and diverse delivery locations e.g. rural deliveries, apartments, P.O. boxes, which further slows down parcel drop-offs.

Delivery trucks also need to use local roads with low speed limits to reach residential addresses. This means traffic delays, frequent stopping, and idling, which reduces fuel efficiency.

Consumer expectations

Expectations for fast and cheap shipping have never been higher. The likes of Amazon Prime making rapid delivery the norm in the eyes of many consumers. A 2018 study found that 83% of US consumers saw free delivery as their most important consideration when choosing a vendor, followed by delivery speed at 53%. This makes the last mile even more difficult and costly for businesses to coordinate successfully.

The impact of ineffective last mile delivery

Higher operating costs

If you aren’t managing last mile delivery effectively, your costs will escalate rapidly. The impact of unoptimized delivery routes, fuel costs, and failed deliveries all make for a major hit to your profit margins.

Moreover, offering faster shipping often results in retailers shouldering more in last mile delivery costs, which further reduces their revenue.

Poor customer experiences

The hard truth in 2021 is that accurate, on-time delivery is not a selling point for brands. It’s simply the bare minimum that customers expect. 

Ecommerce is a highly results-driven channel. Marketing revolves around ‘fast shipping’ and ‘easy returns’ as much as product offerings. So, if delivery is delayed and communication is lacking, customers are going to feel neglected and devalued. Naturally, this isn’t a great recipe for customer retention.

If last-mile delivery is not up to par, customers are unlikely to shop with you again. This means fewer growth opportunities for your business.

Lost sales opportunities

If your delivery times are slow, you’re going to have a hard time actually attracting customers in the first place. As consumers grow accustomed to fast delivery timetables, they become more sensitive to ‘long’ waits for items.

In short, instant (or close to) gratification is now the norm in ecommerce. If last-mile logistics are slowing you down, your customer acquisition is likely to take a hit.

3 ways to improve last mile logistics

For all the reasons above, it’s vital that businesses work to optimize their last mile logistics. Here are a few areas that merchants can focus on to enhance their last mile delivery capabilities:

1. Using multiple facilities

Centralized fulfillment strategies can cause real problems for last mile logistics. The reason is simple; if orders are distributed from one facility, you’re close to some end customers – but a long way from others.

This means:

  • More expensive shipping
  • Slower delivery times
  • Difficulty coordinating transportation routes

This is a common problem for growing businesses who’ve chosen to fulfill orders close to their initial customer hub. But as order volumes increase, delivery destinations are set to diversify.

By using a multi-node fulfillment strategy of ‘micro facilities’ in strategic locations, you can allocate customer orders to whichever facility is closest to the end customer. This massively reduces shipping time and costs for faster delivery.

2. Real-time tracking

The success of companies such as UberEats isn’t due to convenience alone. After all, home delivery has been around for many years. The innovation that changed the game was users being able to track the progress of their food as it’s made, picked up, and delivered to their front door.

Real-time tracking gives your customer greater insight into the last-mile of the delivery process. It helps to alleviate the anxiety of ‘where is my order?’ (A major help to your customer care team!)

If an order has gone astray or redirected to the wrong address, real-time tracking also helps to identify this quickly – before it impacts the customer experience.

3. Optimized route planning

Indirect routes are responsible for huge slowdowns during the last mile, as well as increased fuel costs and idling. By optimizing delivery routes for your fleet, this eliminates travel time and helps customers receive their parcels faster.

Instead of finding whatever is the shortest route between points A and B, optimized route planning uses many criteria. This includes driver schedules, the number of deliveries, and total time available to generate the most efficient delivery schedule. Optimized routes allow you to estimate delivery times with much greater accuracy – meaning better customer service and more positive delivery experiences.

Need help with last mile delivery?

With their superior fulfillment infrastructure and large delivery fleets, partnering with a well-resourced provider is a cost-effective way to streamline your last mile logistics. You also gain access to industry experts who can help identify flaws in your fufillment process that are adding time onto delivery, which helps to improve customer satisfaction and brand loyalty.

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