Last-Mile Delivery: What it is and How it Works

Last-mile delivery is the final step in the shipping process, in which the product reaches the customer’s doorstep. It directly impacts the success of a business and plays a significant role in establishing a positive customer experience. Given that e-commerce sales are growing exponentially, it has become important for businesses to enhance their last-mile delivery strategies to ensure customer satisfaction and gain a competitive advantage in the marketplace. In this blog, we will cover various aspects of last-mile delivery, including its benefits for businesses, how it works, and practical tips for optimizing its execution.

What is Last-Mile Delivery?

Last-mile delivery is the final step in a product's journey from the manufacturer or seller to the customer. It’s the most important step in the delivery process, as it can greatly influence customer experience for better or worse. The process begins once a last-mile delivery station receives an item from a distribution center. At the station, items go through a series of steps until they are ready for the final dispatch. Last-mile delivery is usually the most time-consuming and expensive part of the shipping process. For this reason, businesses make it a priority to optimize last-mile delivery and increase its efficiency and reliability.

How Does Last-Mile Delivery Work?

Last-mile delivery involves the following substeps: 

• Order Tracking: Order tracking generally involves utilizing a centralized system that updates the order status and provides access to the order details. 
• Delivery Station Processing: After the item arrives at a delivery station, it is processed and then prepared for transport to its final destination. This process involves weighing, scanning, and checking the item for accuracy.
• Assignment to Delivery Driver: The item is assigned to a delivery driver based on the delivery location and estimated delivery time. The driver then ensures the order reaches the location safely without any delay.
• Route Optimization: Delivery partners use route optimization software to find the most suitable route to deliver the order. The software often uses GPS tracking to find the best route based on traffic density, distance, weather, and other relevant factors, reducing delivery delays and ensuring cost-effectiveness.
• Delivery to Doorstep: Once the delivery driver reaches the final destination, the item is delivered to the customer's doorstep. 
• Customer Confirmation: In some cases, the delivery driver collects the customer's signature or gets a digital confirmation to ensure the package is delivered to the right person. This step helps prevent potential delivery errors and fraud.
• Feedback and Evaluation: The delivery process ends with feedback and evaluation from the customer. The customer is asked to rate or review their delivery experience, which can help last-mile delivery providers assess and optimize their service.

Challenges in Last-Mile Delivery

Some of the common challenges in last-mile delivery include:

Urban Congestion

Delivery drivers working in urban areas can encounter challenges such as traffic congestion, navigational difficulties, and limited parking spaces. These factors can lead to delivery delays, increased fuel costs, and driver fatigue, hindering the overall efficiency of the process.

Delivery Time Windows

Customers usually want a fast delivery, and may provide limited delivery time slots. A tight delivery schedule can complicate logistics, making it difficult to fulfill delivery times and customer expectations.

Rural and Remote Locations

Delivering packages to rural and remote locations can be challenging due to poor roads and longer travel distances, which can increase delivery time and cost. 

Labor Shortages

With the increase in e-commerce sales, fulfilling rising customer demands, especially during the holiday season, may increase the workload on existing delivery drivers and potentially result in labor shortages.

Address Accuracy

Inaccurate delivery addresses can cause delays, compromising the customer experience and causing last-mile delivery providers to lose valuable time. Address errors also require packages to be re-delivered, resulting in an additional expense for delivery partners.

Why is Last-Mile Delivery So Expensive?

Last-mile delivery is often the most expensive part of the supply chain process for the following reasons:

• The cost of fuel required for delivery vehicles contributes significantly to the overall cost of delivery.
• Last-mile delivery requires the mobilization of a large number of delivery drivers, which represents an increase in labor expenses.
• Failed delivery attempts obligate drivers to spend more time on the road, which contributes to increased fuel costs.
• Returns and refunds increase the cost of last-mile delivery.

Benefits of an Effective Last-Mile Delivery Strategy

A well-thought-out last-mile delivery strategy can benefit businesses in the following ways: 

• Improved Customer Satisfaction: Last-mile delivery can provide quick and reliable delivery services and have a positive impact on customer experience. It can also provide businesses with flexible and customized delivery solutions that enhance customer satisfaction.
• Reduced Delivery Costs: When the right strategies are implemented, last-mile delivery can be very cost-effective. Some strategies that increase efficiency and affordability include route optimization, real-time tracking, and distributed inventory.
• Faster Delivery Time: Last-mile delivery can get packages to their destinations promptly without any delays. Quick delivery time improves customer experience and can give businesses a competitive edge.
• Flexible Delivery Time: Flexible last-mile delivery times allow customers to receive their packages at their convenience. This allows businesses to retain their customers and increase their consumer base. ‍
• Better Inventory Management: An efficient last-mile delivery approach contributes to better inventory management. It helps streamline the delivery process by implementing real-time tracking and visibility, which enables inventory optimization and smooth order processing.

Industries That Benefit From Last-Mile Delivery

Many industries leverage last-mile delivery to offer time-efficient and cost-effective delivery services to their customers. Some of the industries benefiting from this service include:

E-commerce

E-commerce stores largely depend on last-mile delivery to meet their customers’ demands. As this industry continues to grow, so does the need for prompt and reliable delivery, making last-mile delivery an effective solution for e-commerce stores.

Logistics and Supply Chain

The supply chain and logistics industry leverages last-mile delivery to streamline product distribution and ensure that all products reach consumers at the right time. Last-mile delivery utilizes various advanced resources that enable businesses to optimize operational efficiency and minimize costs.

D2C (Direct-to-Consumer)

The direct-to-consumer industry has benefited greatly from last-mile delivery. Since the D2C approach involves delivering products directly to consumers, last-mile delivery helps bridge the gap between businesses and their customers. It offers personalized services, helping businesses build a direct relationship with their customers.

Healthcare and Pharmaceuticals

The healthcare and pharmaceutical industries require compliant and time-sensitive delivery services. Last-mile delivery offers specialized services to meet complex delivery requirements and ensure that medical products are shipped to their destination securely without delay.

B2B (Business-to-Business)

In the B2B industry, last-mile delivery plays a crucial role in transporting goods between businesses and in ensuring rapid order fulfillment. With the help of last-mile delivery, B2B sellers can achieve operational efficiency, enhance supply chain fluidity, and reduce production delays.

Best Practices for Last-Mile Delivery

Implementing effective strategies for last-mile delivery can streamline the delivery process, minimize distribution costs, and improve customer experience. Some key optimization strategies include:

Utilizing Local Warehousing

Strategically located warehousing optimizes last-mile delivery by minimizing the distance between products and consumers. This can reduce delivery time and delivery costs.

Implementing Real-Time Tracking

Last-mile delivery tracking enables businesses and customers to monitor the precise location of the delivery driver in real time. It ensures transparency and helps companies predict delays and address issues promptly.

Using Crowdsourced Delivery

By leveraging crowdsourced delivery, businesses can scale their delivery, especially during peak seasons. This approach provides flexibility, enables companies to meet sudden increases in demand, and ensures efficient last-mile deliveries.

Offering Flexible Delivery Options

Providing customers with flexible delivery options can increase customer satisfaction. Allowing customers to choose their preferred delivery time and location helps companies align their resources to meet consumer demand and optimize overall efficiency.

Automating Delivery Schedules

Companies can use automated delivery scheduling tools, such as Onfleet, Tookan, Track-POD, and so on, to streamline the delivery process. These tools help automate delivery assignments, manage delivery time slots, and allocate resources efficiently.

Automating Route Plans

Utilizing automated route planning software minimizes delivery times, fuel consumption, and wasted resources. This software uses advanced routing algorithms to find the optimal delivery route, enabling companies to deliver more and minimize delays.

How 3PLs Can Help With Last-Mile Delivery

Last-mile delivery has transformed the landscape of logistics and supply chains, benefiting both consumers and businesses. By following evolving trends to optimize last-mile delivery, companies can increase efficiency and focus on customer satisfaction. If you want to leverage 3PL services for compliant and efficient last-mile delivery, Encore Fulfillment is here to help. We use data-driven strategies and a broad network of integration partners including Shopify, WooCommerce, Amazon, Magento, BigCommerce, Etsy and Walmart to fulfill your delivery requirements. Partner with us to scale your business.