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Retail Business Review | Thursday, November 03, 2022
The problem with last-mile delivery is that it is the most complex, time-taking, and expensive step in the shipping process.
Fremont, CA: Final mile delivery is the last link in a long chain of logistics cases. Even if ordering and gathering go smoothly, an inefficient logistics process during transit can adversely impact last-mile delivery costs and, in extreme situations, cause your business to lose valuable customers.
What is the last-mile delivery problem?
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The problem with last-mile delivery is that it is the most complicated, time-taking, and expensive step in the shipping process. Yet it is the most critical. There has been a constant rise in e-commerce activity, substantially increasing the volume of goods transported. Simultaneously, customer expectancy has evolved to comprise fast, if not free, delivery.
This, in a nutshell, is the last-mile delivery problem.
Next, let’s look at the challenges for businesses looking to optimize last-mile delivery processes.
What are the biggest challenges with last-mile delivery?
Most logistics companies would agree that final-mile delivery is the most ineffective part of the supply chain.
Below are typical last-mile delivery challenges that online businesses face:
• On-time deliveries. Last-mile delivery couriers often face difficulties in planning because of the dynamic nature of logistics and countless unexpected circumstances that can emerge on any given day. The final transport phase typically includes many stops for other collections and deliveries in a wordy way. This may raise the expected delivery time.
• Route planning. This may appear obvious, but it can be very hard to plan driver delivery routes effectively because of innumerable variables that must be considered. Yet, ineffective route planning can cause operational delays that provoke a domino effect and may impact many final-mile deliveries.
• Real-time tracking. Outdated technology can also pose problems in last-mile delivery. Even if the tracking denotes “Out for delivery,” the last-mile courier may reach anytime during the day, so this lack of visibility can cause a frustrating customer experience. Customers await real-time follow-up and full transparency during the complete shipping process.
• Consumer demands. Consumers growingly expect same-day courier solutions with much less margin of error. Orders must be delivered to the correct place, to the right person, at the proper time. Even if your last-mile delivery target is in the same city or region, you require a reliable carrier partner to help keep last-mile delivery costs to a minimum while guaranteeing customer satisfaction.
What are the costs for last-mile delivery?
Fuel costs, labor expenses, logistics management software, and unsuccessful deliveries are the principal contributors to last-mile delivery costs. These factors and countless other variables in the logistics process mean that last-mile delivery costs can reach 53% of overall shipping expenses for e-commerce businesses and retailers. On a global scale, final mile operations can surpass 40% of the whole supply chain cost. Moreover, poor final-mile delivery planning can drive costs up even further.
The accessibility of free shipping indicates that consumers are less ready than before to pay. This causes the online retailer to cover the last-mile delivery costs.
E-commerce businesses must invest heavily to optimize last-mile delivery costs as they simply cannot allow losing their customers to competitors. Customer satisfaction is always prioritized because it guarantees loyalty and future business.
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