What Is Last-Mile Delivery and How Can Your Business Get It Right?
Every eCommerce fulfillment stage is equally vital and should be treated as such if you want your packages to reach your customers. However, last-mile delivery often receives the most attention due to its importance, complex implementation, and hard-to-solve logistical issues.
What Is Last-Mile Delivery?
Last-mile delivery is the final stage in the fulfillment process and includes steps that bring a package from a local hub or warehouse to the customer’s door. Last-mile can encompass the whole journey (e.g., perishables) or serve as the end to a long shipping/fulfillment supply chain.
While the “last mile” doesn’t necessarily have a delivery radius, it typically refers to the last 30 miles of a journey. Companies will use cars, trucks, scooters, or bikes to fulfill last-mile delivery requests, and some are even experimenting with drones and self-driving vehicles.
Why is Last-Mile Delivery Important?
eCommerce websites can’t live without making it to the last mile, so investing in it is essential. When implemented successfully, improved last-mile delivery can keep you competitive. Here’s why.
Positive Delivery Experiences Are Essential
A poor delivery experience reflects negatively on your business, even if you used a 3rd party logistics (3PL) company to ship your orders. Your customers aren’t likely to forgive damaged, late, or lost shipments. If they leave a bad review, you’ll gain a reputation that’s hard to shake.
Slow last-mile delivery doesn’t just make you lose out on future profits; it can take earned money out of your pocket. Chargebacks will start pouring in, and they aren’t always fair. This handy article can help you understand chargeback representment and fight unlawful refunds.
Everyone Else Prioritizes Fast Delivery
Amazon set the bar for fast consumer delivery by implementing Prime’s 2-day shipping initiative. To accomplish this, they had to develop effective manufacturing logistics. This process utilizes material management, production planning, transportation, and various distribution channels.
To compete, business owners have had to implement fast last-mile delivery. A lack of fast delivery options or slow shipping is enough to compel customers to abandon their carts. If your industry competitor has perfected the last mile, you’ll frequently lose out on warm leads.
How Does Last-Mile Fulfillment Work?
While last-mile fulfillment is complicated, it can be broken down into 5 steps (or 6 if you’re using a 3PL fulfillment company). Here’s what an optimized last-mile fulfillment strategy looks like:
- Requests or orders are entered into a centralized system, like a warehouse manufacturing and warehouse inventory management solution. This system can keep track of your items.
- Goods from a supplier or manufacturing line are transported to a hub or warehouse. This step is also considered the first stage of the last-mile delivery (and fulfillment) process.
- Tasks are optimized (given priority) based on available delivery personnel and delivery date. This process is essential if you want to develop a cost-effective solution.
- Items are scanned before entering the delivery vehicle. This ensures nothing gets lost and lets you and your customers track their packages to their final destination.
- The delivery driver obtains proof of delivery (either with signature, picture, or scan). Drivers should always keep records that verify what deliveries have been made.
If a 3PL fulfillment company is taking charge of your orders, they’ll take care of the entire process (if your eCommerce software integrates with your fulfillment company). Since you don’t have control over the shipping process, you have to vet your delivery company carefully.
What Challenges Come with Last-Mile Delivery?
The current eCommerce boom has been beneficial for businesses, but that doesn’t make last-mile delivery any easier to pull off. These are the challenges affecting the last mile:
- Cost: Last-mile delivery is the most expensive part of the delivery process. In fact, it takes up 53% of the total cost of shipping. Any cost savings would be beneficial.
- Competition: It’s difficult for small businesses to compete with large enterprises. You can set yourself apart by improving your customer service and transparency.
- Location: Deliveries can happen anytime, which could cause inefficient route planning. It may also encourage overloading, leading to fuel waste and parking difficulties.
- More Deliveries: More orders are often a good thing, but driving errors often become more frequent if they’re rushing. Technology can help reduce delivery delays.
- Staffing Difficulties: Without well-trained staff members, you may receive more customer complaints. Always look for experienced drivers and be sure to train them.
If you’re currently using spreadsheets, tools like Google Maps to plan deliveries, or you're using too many drivers to account for route inefficiencies, customer complaints are sure to follow. You need a solution that tackles driving obstacles, customer expectations, and logistical challenges.
How Can You Reduce Last-Mile Delivery Challenges?
The ability to change and adjust is essential if you want to improve last-mile delivery logistics. The following actionable tips expand on the solutions discussed in the previous section.
1. Optimize Your Factory and Warehouse Management
Good factory and warehouse management requires space optimization, a lean (or organized) inventory, and an optimized workstation. You can prioritize safety and fast fulfillment by using automated warehouse inventory management software that integrates with other popular business solutions.
2. Use Route Planning and Package Tracking Software
To cut down on costs and improve the delivery experience, use route planning and package tracking software. Route planning software can account for weather, traffic, and unexpected deliveries, while package tracking software offers customers total package transparency.
3. Charge Shipping Fees or Offer Local Options
While it’s true that consumers don’t like to pay for general shipping, they’re willing to pay extra for same-day delivery. 40% of Gen Z and 32% of Millennials value convenience over costs. If you don’t have multiple statewide fulfillment centers, only offer same-day to local customers.
4. Manage Expectations Right from the Start
It’s better to underpromise than miss the final delivery date. If your business is experiencing shipping delays, loosen up your fulfillment schedule. Notify the customer before they finalize their purchases. That way, you set their expectations early and prevent possible disappointment.
5. Perfect the Rest of Your Fulfillment Process
If you can’t optimize the last mile or you’ve done as much as you’re able, place your focus on the rest of your fulfillment process. Come up with a way to pack up your items earlier or speak to a manufacturer about a bulk price deal. Any bit of time or money saved helps your business.