WHAT IS LAST MILE DELIVERY?
Last-mile delivery refers to the movement of goods from a transportation hub or fulfillment center to the final delivery destination, such as the consumer’s residence. It is the last part of the process, like when UPS delivers a package straight to your front door.
Last-mile delivery is one of the most important parts of the distribution process, but it also happens to be one of the most expensive and least-efficient stages. This part of the delivery is crucial in maintaining customer satisfaction, but retailers have little control over the process. Retailers primarily partner with large parcel carrier companies such as USPS, UPS, and FedEx. Some, like Amazon, make many of their own deliveries.
Optimizing last-mile delivery can be an involved process, but technology makes it easier, more cost-effective, and more efficient.
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LAST MILE DELIVERY CHALLENGES
What are some common last-mile delivery issues? This process tends to be more costly and less efficient — and it’s crucial to customer satisfaction. Below, we’ll explore each challenge more closely.
Last-mile delivery consists of 53% of the total cost of shipping. Today, customers are unwilling to spend a great deal on shipping, especially with the prevalence of free shipping increasing. This change means retailers and businesses must pay this expense. Customers are also increasingly demanding faster delivery, real-time order tracking, and free returns, which raises costs. A delivery fleet’s overall operating costs are also expensive.
WHY IS IT SO EXPENSIVE?
Drivers who deliver last-mile carry many small packages — all with a unique destination. These drivers have lower average speeds and spend more time on the road, which means they get a lower gas mileage. They have to make many stops, which causes the vehicle to idle and uses up fuel. Routes are sometimes complex, and drivers can end up in the wrong spot, causing deliveries to be late and fuel to be used excessively.
More drivers and delivery vehicles are needed since each truck can only deliver to a small area. Additionally, the drivers need a salary, and the vehicles require fuel and maintenance, which heightens the costs exponentially.
Failed deliveries are a costly problem as well. For example, a survey of U.K., U.S., and German retailers revealed that a single failed delivery costs a retailer $17.78 on average. A delivery can fail because of the customer putting an incorrect address, the package being sent to the wrong area, or the customer not being home to receive it. While two out of those three things may seem like the customer’s responsibility, it is the retailer’s job to prevent these issues since they foot the bill.
One reason why costs are so high is that the delivery process is not efficient. Complex, unoptimized delivery routes cause expenses to go up and speeds to go down. Retailers could avoid some failed deliveries with address response verification and accurate delivery notifications.
Last-mile delivery significantly impacts customer satisfaction. People expect their packages to arrive on time and in good condition. Damaged or late packages and long delivery times cause customers to be unsatisfied and ultimately take their business elsewhere. However, retailers can’t always control the last-mile delivery process due to partnering with carriers such as UPS and FedEx.
HOW TO OPTIMIZE LAST MILE DELIVERY
Optimizing last-mile delivery decreases costs and improves efficiency. Here’s how drivers and delivery companies are making changes to improve delivery rates.
Route optimization is important in managing and improving your last-mile delivery. Route optimization involves finding the shortest route to complete deliveries. Deciding on the most cost-efficient route can be difficult since drivers typically have dozens of stops to make.
Vehicles can only carry a certain amount of packages, drivers have different schedules, and parcels go to various locations. How can companies manage all these factors to plan a route successfully? They can use software to automate route planning around numerous variables. Employing software allows them to save on costs and be more efficient. GPS route optimization can also help drivers when there’s traffic congestion or an accident by rerouting them to the next most efficient path.
While route optimization is helpful, it’s only one of several things retailers and delivery companies can get from delivery software. Some companies use GPS tracking to track package locations in real-time. This ability allows them to send the consumer an estimated arrival time (ETA) and notifications about their delivery. Package tracking can remove problems involving delivery failure due to the customer not being home to receive the package.
Drivers can also use apps that, along with planning the fastest route, prompt them to show proof of delivery. You may be familiar with apps like DoorDash using photos to confirm deliveries. In some cases, drivers can use technology to contact the customer if a problem with their delivery occurs.
Both these technological advancements are part of making the delivery process more transparent to the customer. Logistics respondents report full visibility is the second most demanded service from customers. The next most requested service is same-day delivery, with next-day delivery taking the top spot. This factor is why speed is important in the distribution process.
Customers can sometimes cause failed deliveries by accidentally typing in the wrong address. Technology can implement response validation, which confirms shipment can be delivered to that address. Sometimes people forget to put a unit or apartment number, but retailers can prevent this by asking about the type of housing or making sure there’s a spot on their form for a number.
WAYS TO IMPROVE LAST-MILE DELIVERY
Last-mile delivery is a crucial part of the distribution process, but it comes with its challenges. It often introduces high costs, struggles with low efficiency, and can affect customer satisfaction. However, optimizing last-mile delivery is possible! Through route optimization, GPS, and other technologies, improvements in last-mile delivery can decrease costs, increase speed and efficiency, and contribute toward high customer satisfaction.