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Retail Business Review | Thursday, September 29, 2022
Last-mile delivery is the final leg of shipment and typically involves multiple stops with low drop sizes.
FREMONT, CA: As consumers increasingly turn to ecommerce for all their shopping needs, speedy fulfillment and distribution aren't just a "nice to have"—it's the expectation of every online shopping experience. And if logistics companies and their retail associates want a shot at foiling the ever-looming threat of Amazon Prime, it must be a priority.
Consequently, businesses have started racing to develop new technologies and experimental supply chain models to raise parcel volume, expedite deliveries, and delight customers — all while trying to cut costs. Regrettably, one of their biggest expenses and challenges is same-day, final mile delivery.
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What is last-mile delivery?
In a product's journey from the warehouse shelf, to the back of a truck, to the customer's doorstep, the "last mile" of delivery is the final step of the process — the point at which the package lastly arrives at the buyer's door. Along with being a key to user experience, last-mile delivery is the most expensive and time-consuming part of the shipping process.
What is the last mile problem?
If you've ever tracked a package in real-time online and saw that it was "out for delivery" for what felt like forever, you already understand that the last mile problem is inefficiency. That's since the final leg of shipment typically involves multiple stops with low drop sizes.
In rural areas, delivery points along a specific route could be several miles apart, with only one or two packages getting dropped off each. In cities, the outlook isn't so better; what urban areas fabricate for in-stop proximity is quickly negated by the near-constant traffic congestion delays.
The costs and inadequacy of the last mile issue have only been further compounded by the continuous rise of ecommerce in US retail sales, which has dramatically increased the number of parcels delivered each day and raised customer expectations to include not just fast, but also free, delivery.
What are the costs of last-mile delivery?
As a share of the total shipping cost, last-mile delivery costs are high—comprising 53% overall. And with the increasing ubiquitousness of "free shipping," customers are less willing to foot a delivery fee, forcing retailers and logistics partners to shoulder the cost. As such, it's turned into the first place they're looking to implement new technologies and drive process improvements.
Technology solutions to enhance last mile logistics
With the climb of the gig economy, many consumers are already familiar with local crowdsourcing services through digital platforms like Uber, Airbnb, and Postmates. Location-based crowdsourcing enables consumers to open a mobile app to hail a ride, book a place to stay, order coffee to the office, hire a handyman to mount a TV, send flowers to that special someone, or even schedule takeout to arrive just as they're walking through their apartment door.
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