fbpx
Site Map Privacy Policy
Home » BLOG » What is Last-Mile Delivery?

Last-mile delivery is a term used in supply chain management and logistics. It is the movement of goods from a transportation hub to the final delivery destination, which is typically a personal residence. This stage is the last step in moving the product from a business to the end-user. 

The USPS, UPS, FedEx, and Amazon vehicles that drop packages off at your house are all part of last-mile delivery. When you track a package online, and it says “out for delivery today,” this means it is finally undergoing the last-mile delivery process. When you order pizza delivery, last-mile delivery is when the pizza is in the driver’s car and on the way to your house.

Though this part of the delivery is often the shortest, it tends to be the most important and expensive step. Timeliness and accuracy are crucial in gaining customer satisfaction. If the product is damaged, the wrong item is delivered, or the delivery is late or missed altogether, the business suffers. 

CHALLENGES OF LAST-MILE DELIVERY

The amount of online orders has surged in the last few years and has increased due to COVID-19. Most retailers partner with large carriers such as UPS, FedEx, and USPS to get products to consumers. Last-mile delivery is often costly, as drivers are carrying many small packages that go to different destinations. These drivers have lower average speeds, make more stops, and spend time idling, which means they get fewer miles per gallon. 

Failed deliveries are also a costly issue. Routes tend to be complex, and drivers can experience delays. When these delivery channels get backed up with many orders, the business loses customer satisfaction.

When compared to earlier delivery stages, last-mile delivery comprises over half of the overall shipping costs. Shipping large quantities of items on trailers that all go to one destination is much more efficient. The trucks travel at high speeds and get better gas mileage, there’s no chance of a failed delivery, and the delivery route is simple. 

Another challenge of last-mile delivery is inaccurate inventory counts. This issue is especially true in situations where retailers ship from a store location. A store’s inventory accuracy is typically lower than that of a warehouse. Businesses like Amazon promise delivery in a certain time frame. This situation creates the problem where a consumer could be promised an item that day, but the inventory count is wrong, and the product is unavailable.

These challenges have led businesses to optimize their last-mile delivery and expand their omni-channel retailing.

WHAT IS OMNI-CHANNEL RETAILING

The Omni-channel retailing definition is defined as companies allowing consumers to shop and make purchases from various retail channels. These different channels include websites, mobile apps, catalogs, and physical stores. Companies offer delivery advancements, online payments, and special apps that allow them to sell in more ways. Many stores have added a feature where you can pay online or through the app and pick up everything in-store. It helps them gain a competitive advantage by having both a digital and physical presence. 

Many companies have begun selling on multiple digital platforms, such as their own website, a mobile app, Amazon, and partner sites. This structure is part of omni-channel retailing and also serves as a marketing strategy. It allows businesses to reach people wherever they may be, whether it’s through their phone, computer, or a physical location.

Amazon Packages

USES OF OMNI-CHANNEL RETAILING

Stores such as Target and Walmart have been selling goods on their websites and apps for years now. Recently, they have expanded their channels even more. Walmart and Target both offer a free drive-up service, where you make your order online and pull into a designated parking spot. An employee then loads your car or hands you the items. This feature gives consumers a new way to fit shopping into their schedule and eliminates last-mile delivery problems.

Many businesses sell their products on Amazon. Amazon is known for its last-mile delivery efficiency. They offer two-day shipping on many items and even same-day shipping in some instances. When businesses sell products in-store and on Amazon, they become omni-channel retailers.

Another example of omni-channel retailing is using crowdsourced delivery through third-party apps. This concept includes services like Shipt and DoorDash. Services like these also impact Last-mile delivery — third-party employees do the final delivery instead. These apps allow consumers to get food or groceries delivered straight to their door in a specific time frame without using typical delivery services such as UPS and FedEx. Employees of the third-party app use their own vehicles to deliver products straight to the consumer.

Companies have many ways to utilize omni-channel retailing. Some examples include:

  • Online orders delivered right to your door.
  • Online orders sent to the store to be picked up.
  • In-store purchases of out-of-stock items that will be delivered at a later date.
  • Orders picked and shipped straight from the store.
  • Mobile orders.

THE FUTURE OF LAST-MILE

With so many consumers expecting faster delivery now, companies are beginning to use micro-distribution centers rather than large warehouses. Having smaller buildings that hold products outside many major cities means businesses can get inventory to the end-user more quickly. This option is likely to have a few warehouses in the country that must ship products over long distances to arrive at their destinations. 

The limitation of this is that these small fulfillment centers can usually only stock the most common items. But with all of today’s technology, even this small setback can be overcome with sophisticated inventory management systems.

Another recent consideration is that businesses have little control over the customer’s final experience — the last-mile delivery. Any problem in the last-mile delivery will impact the customer’s view of the company. This fact has caused some retailers to start exploring technologies to make last-mile delivery more efficient. The process has evolved into many different delivery solutions, such as drones, services like Uber delivery, in-store pickup, and more. 

What does the future hold? Improved tracking, Sunday delivery, delivery to lockers, choice of delivery time, and other improvements are being researched. Who knows what new technology will disrupt the last-mile delivery industry next?