What is Last Mile Delivery? Importance, Trends, and Technology

keyKey Takeaways:
  • Last-mile delivery is the final step in transporting goods from a distribution center to the customer, ensuring timely and safe delivery.
  • Last-mile delivery directly impacts revenue generation, enhances customer experience, and drives overall business growth.
  • Efficient last-mile delivery operations enable businesses to scale operations, especially during peak periods, utilizing technology and third-party logistics providers.
  • Technology adoption, including route optimization and real-time tracking, helps address last-mile delivery challenges and enhances visibility.

In the competitive world of eCommerce, a smooth last mile delivery can make all the difference. With online sales expected to grow by 6% each year from 2024 to 2032, getting products to customers’ doors efficiently has become crucial.

Are missed deliveries, delays, and unhappy customers causing you problems? You’re not alone; many brands struggle with these last-mile issues as they try to meet high demand and customer expectations.

But don’t worry! This guide will help you master last mile delivery. We’ll dive deep into optimizing this crucial step, exploring everything from crowdsourced delivery to AI-powered route planning. You’ll learn practical tactics to transform your delivery operations and ensure smooth, efficient deliveries every time.

Get ready to turn those delivery problems into success stories!

What is Last Mile Delivery?

Last-mile delivery is the final step of the product transportation process, where goods are transported from a distribution center or transportation hub to the delivery destination or end customer. It aims to efficiently fulfill customer orders and ensure that products reach their end customers safely and on time.

For example, for a pizza delivery company, the last mile is when the driver leaves the restaurant and travels along the road to deliver the pizza to the customer’s address.

Thus, achieving on-time delivery in the final stage can significantly enhance the delivery experience. Plus, it will also offer the delivery companies a competitive advantage over others in the market.

Why are Last Mile Deliveries So Important?

Last-mile delivery is important for speedy order fulfillment, impacting revenue, customer satisfaction, and business growth. Let’s take a look at all the points in detail.

1. The changing face of retail

Twenty years ago, stores like Sears were very powerful everywhere, with each household having its own shopping catalog. These companies were successful because they offered convenience: you could find everything you needed in one place!

Nowadays, access and convenience have shifted dramatically, favoring online orders and home delivery. This trend adds complexity to last-mile delivery and logistics overall.

2. Answering consumer expectations

Expectations are rising, with most US consumers considering fast delivery crucial. Many are frustrated due to a lack of transparency, professionalism, and accuracy. This presents a significant opportunity to enhance brand loyalty and deliver exceptional service with proper delivery execution.

So, retailers are looking for ways to keep up with consumer demands for quick order fulfillment. Amazon Prime’s growing market share threatens all third-party logistics providers, making it vital to meet customer expectations to survive.

3. Operational scalability

Last-mile delivery is important for boosting the business’s operational scalability, especially during the holidays or weekends when the orders pile up. Operational scalability can be handled well with increased technological tools, autonomous vehicles, delivery drivers, and efficient resource allocation.

To grow faster and stay competitive, businesses often use third-party logistics providers to satisfy their final-mile delivery demands.

4. Improved customer satisfaction

The products have been compiled and are ready to leave the warehouse or fulfillment center. However, without last-mile delivery, shifting products from the transportation hub to the customer’s residence will not be possible.

If these products are not delivered, the customer’s expectations will not be met. Plus, failure to reach the final delivery destination or late delivery will result in a poor customer experience. Thus, with the right last-mile services, drop-offs can be achieved, and customer satisfaction can also be improved.

5. Adapting to the technological change

New technologies are transforming the industry, especially in last-mile delivery. This shift has led to significant increases in venture capital investments in supply chain management and logistics start-ups.

Technologies like artificial intelligence, automation, delivery robots, drone delivery, and self-driving cars are being explored. Additionally, significant investments are being made in route optimization software and other cost-effective delivery solutions.

What is the Last Mile Problem?

The “last mile problem” refers to the inefficiencies and challenges associated with the final leg of delivery. This last-mile delivery problem arises due to several factors, like:

  1. Cost efficiency: One major issue is the high cost of last-mile delivery. This includes fuel, vehicle maintenance, labor, and additional costs associated with failed deliveries and returns.
  1. Traffic and congestion: Transporting goods through congested urban areas may take time, which can impact delivery timeliness and raise operational expenses.
  1. Failed deliveries: Deliveries missed because clients are not at the delivery address might lead to repeated delivery attempts, increasing last-mile delivery costs and reducing efficiency.
  1. Route optimization: It might be difficult to determine the best delivery routes in real-time, especially during last-minute changes and shifting traffic patterns.
  1. Environmental concerns: Growing numbers of delivery trucks on the road harm the environment by increasing pollution and greenhouse gas emissions, raising concerns among environmentally conscious consumers and businesses.

Now that we know what the last mile problem is, let’s find out the steps involved in making a last-mile delivery successful.

What are the Steps Involved in a Successful Last Mile Delivery?

Each last-mile operation is unique, but following these steps can ensure smooth final deliveries that satisfy customers and boost business growth.

Step 1: Load orders into a centralized system

Delivery companies must input all the order requests into a centralized system. With access to the right technology stack, businesses can easily upload or input hundreds of delivery points using an Excel sheet or CSV file.

Step 2: Optimize & schedule routes

The next step is optimizing and scheduling routes in the most optimal order. You can’t spend hours manually planning delivery schedules for your drivers when doing hundreds of deliveries throughout the day. Once the routes are optimized, you can assign the delivery tasks to the drivers.

Step 3: Load parcels according to the route order

Efficiently load parcels in your delivery vehicle by organizing them according to the delivery route. Begin loading from the bottom of the list, and consider providing your drivers with a list of parcels and their corresponding locations in the truck to streamline the delivery process.

Step 4: Dispatch routes to drivers

The next step is to allocate optimized routes to your drivers for timely deliveries. Moreover, a final mile delivery solution can dispatch routes directly to drivers’ phones via email or SMS, eliminating manual setup.

Step 5:  Improve visibility into the last-mile delivery process

Last-mile delivery works best when customers know when and where their package will arrive. Further, businesses can enhance this visibility by providing real-time driver tracking, ETAs, and notifications throughout the delivery journey, from order placement to doorstep delivery.

Step 6: Make sure you record proof of delivery

Verifiable records are important when delivering thousands of packages across the city. Capture proof of delivery, such as customer signatures or package images, to enhance accountability and prevent false claims from customers.

How Can Technology Help Address Last Mile Delivery Challenges?

Ensuring smooth and efficient last-mile delivery is crucial for providing exceptional customer service. But how can you master this final stage?

Upper is designed to help you achieve excellence in last-mile delivery and is trusted by companies such as Parkwood Products Limited. Our platform offers a complete suite of features, including automated route planning, efficient dispatch, real-time driver tracking, communication tools, and detailed analytics.

Here are five ways Upper’s last-mile delivery solution can optimize your delivery operations:

  1. Last-mile deliveries can be completed faster than normal with a powerful last-mile delivery algorithm and route optimization solution. It reduces the time needed to complete deliveries and enhances the overall delivery experience.
  1. Real-time route optimization can help logistics companies reduce the number of delivery drivers needed in a given day to complete a certain number of deliveries. This can reduce significant expenses like labor and fuel without compromising last-mile profitability.
  1. A feature like proof of delivery is essential in a sector where accountability and transparency are always demanded. Businesses can be held responsible for each shipment brought to the customer’s doorstep by capturing proof of delivery through driver notes, photos, or signatures.
  1. A solution that offers easy communication between dispatchers and drivers contributes to a more efficient delivery process. When customers are notified regarding their deliveries along with the contact details of the driver, the lines of communication are made evident. 
  1. Daily reporting of last-mile deliveries can help identify weaknesses and also create opportunities for improvement. Dispatchers and managers can use reports to determine why a certain delivery took longer than anticipated or why a particular stop was not covered.

This is how technology can help businesses overcome challenges related to the last mile. Going ahead, let us take a look at the top last-mile delivery trends to look out for in 2024.

Below are some of the final-mile delivery trends to check out in 2024:

1. Improved traceability

Modern consumers want to know where their product is at every delivery stage; this is called traceability. With smartphone technology, end users can track their packages step-by-step. Drivers use bar codes, scanners, and other devices to provide this information. Improved traceability not only enhances customer satisfaction but also reduces the risk of lost or misplaced packages.

2. In-house delivery service

eCommerce giants like Amazon are starting their in-house delivery services to carry shipments from distribution centers to customers. By using their vehicles and drivers, companies can:

  • Expand on their local delivery services;
  • Generate improved customer experience;
  • Control last-mile delivery costs; 
  • Opt to deliver around the clock or even on weekends.

In-house delivery services give companies more control over the shipping process, ensuring timely and reliable service.

3. Quick order fulfillment or same-day delivery

Retail and online stores must fulfill orders quickly to meet same-day delivery demands. This requires expanding the reach and improving delivery efficiency nationwide. 

Amazon excels at this with its widespread fulfillment centers. Rapid order fulfillment not only meets customer expectations but also improves brand loyalty and customer retention.

4. Smart technology sensors

The increased consumer demand for real-time tracking information of their order at every step. They want to know the shipment process from the last-mile distribution centers, the transit, and updates to the final destination.

The last-mile delivery technology we have today has made this distinctly possible. Many fulfillment centers can now control their warehouse’s temperature, air quality, and humidity levels. Plus, sensors can also be added to packages to detect the humidity or temperature levels of the inventory. 

5. Crowdsourced delivery and the gig economy

Another big trend is the rise of supply chain management and logistics start-ups, particularly in the “gig economy” or “crowdsourced delivery” space. Venture-backed capital in San Francisco and other cities is lining up to invest massively in this sector.

Crowdsourced delivery not only provides flexible job opportunities but also allows companies to scale their delivery operations quickly and cost-effectively.

6. Self-driving delivery vehicles

There is a growing interest in autonomous last-mile delivery vehicles to reduce labor costs. The delivery fleet includes trucks, cars, drones, and any robot that can deliver a parcel to a recipient. 

Robotic delivery is the next big thing. 

Companies like Tesla and Amazon are investing heavily in these technologies. Amazon, in particular, has invested $530 million in its self-driving car company called “Aurora.” Self-driving delivery vehicles not only reduce operational costs but also improve delivery efficiency and reduce carbon emissions.

7. Upselling

The final trend to be aware of is upselling, with a higher probability of selling to existing customers than to new prospects. Delivery service companies use mobile technology, data analytics, and predictive intelligence to boost online sales. Upselling not only increases revenue but also strengthens customer relationships and encourages repeat purchases.

Frequently Asked Questions

Last-mile delivery logistics refers to the broader planning and execution of processes, including route optimization, resource management, and overcoming challenges like traffic and unsuccessful deliveries to guarantee prompt and effective delivery.

Yes, the last-mile delivery business is profitable because rising consumer demand and post-pandemic industry trends have increased the demand for such services.

Several variables impact the last-mile distribution process, including the distance between customers and the warehouse, customer availability, and the daily delivery volume. However, without efficient last-mile delivery, you will incur higher costs, lose out on consumers, and eventually fail to expand the business and its operations.

Some key practices involved in transforming last-mile delivery operations include implementing planning to adapt to trends, smart outsourcing to handle delivery spikes, using technology for route planning and real-time tracking, enhancing customer management with 24/7 support, and building a skilled team for enhanced efficiency.

Optimizing last-mile deliveries involves using advanced route planning software, which helps reduce inefficiencies and boost productivity. This technology can analyze traffic patterns, predict delays, and determine the most efficient routes, ensuring timely deliveries and enhanced customer satisfaction.

The last-mile logistics approach allows delivery service providers to become delivery partners. As a retail store or online shopping store, the best way to choose a last-mile delivery process partner or supply chain partner is to check if they are offering the following benefits: reliability, transparency, scalability, and an improved delivery experience for customers as well as drivers.

The 5 major mile delivery costs associated with last-mile logistics or total shipping costs are fuel costs (10-25%), labor costs (50-60%), delivery management software costs, costs of failed deliveries, and other miscellaneous costs, including vehicle maintenance, idling, and rescheduling.

The solutions involve implementing cost-effective measures, avoiding delays and failed deliveries, and adopting the latest technology to enhance delivery services, meet customer expectations, and ensure profitability in last-mile logistics.

Simplify the Last Mile Deliveries for a Smooth Experience

To sum up, understanding last-mile delivery is crucial for businesses striving to satisfy customers and thrive in today’s competitive market. Companies can ensure efficient and reliable last-mile logistics by addressing challenges like cost-effectiveness, timely deliveries, and technological advancements. 

Additionally, embracing solutions such as route optimization and real-time tracking enhances delivery services, meeting customer expectations. With the right strategies in place, companies can deal with the complexities of last-mile and emerge as leaders in customer satisfaction and operational excellence.

Author Bio
Rakesh Patel
Rakesh Patel

Rakesh Patel, author of two defining books on reverse geotagging, is a trusted authority in routing and logistics. His innovative solutions at Upper Route Planner have simplified logistics for businesses across the board. A thought leader in the field, Rakesh's insights are shaping the future of modern-day logistics, making him your go-to expert for all things route optimization. Read more.