The demand for delivery services has risen rapidly, and industry experts expect this trend to continue expanding in the years to come. In response to this rapid growth in demand, several last-mile carrier startups have entered the market. These new entrants are offering a variety of innovative features and services that are shaking up the delivery market.
In this article, we’ll take a look at the key features to consider when choosing a last-mile carrier. We’ll look at evolving customer expectations. We’ll also compare five of the top last-mile delivery startups and identify the pros and cons of each. Finally, we’ll offer tips on how to choose the right service based on your organization’s specific needs.
Table of Contents
The Basics of Last-mile Delivery
Before we look at some of the startups providing these services, it’s essential to understand what the term’ last-mile delivery’ refers to and why it’s so important to choose a provider that can meet you and your customers’ needs.
What is Last-mile Delivery?
Last-mile delivery refers to the final leg in the delivery of a product to its destination. This leg relates to movement from the nearest hub or warehouse to the customers’ home. In other words, it’s the final step in the product’s journey. In most cases, this leg is the shortest distance in the journey. However, this leg is the focus of much pressure on the majority of companies in this industry.
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What is Last-Mile Delivery?
Why is Last-Mile Delivery Important?
It is essential because it can be very inefficient. These inefficiencies in the delivery experience and transportation management can end up costing a lot of money and lose the trust of your customers.
Because these carriers are responsible for delivering packages to many residences and businesses, there are many opportunities for inefficiencies to arise. Poorly planned routes could result in unnecessary tracking. Unclear drop-off directions could result in packages left in the wrong location (e.g., front door instead of the back door). Inclement weather and required signatures can also slow down deliveries.
All of these inefficiencies add up. And they affect prices and the bottom line as well. Data suggests that last-mile delivery can account for up to 53% of all shipping costs.
Further, since final mile delivery often involves direct interaction with the customer, a poor experience can reflect poorly on your business. On the other hand, a prompt and positive experience can contribute to higher customer satisfaction.
With bottom-line costs and customer satisfaction both at stake, you can see why it’s crucial to choose a company that will meet your business’ specific needs. The opportunity is open for anyone to use innovation, new methods such as drones, and data analytics to take a bigger market share.
Factors to Consider When Choosing a Last-mile Delivery Service
In this section, we’ll look at several critical features to consider when choosing carriers.
We cannot underestimate the need for delivery speed. Today’s customers are used to receiving packages from logistics companies like Amazon and other big e-commerce retailers very quickly – sometimes within 24 hours. Often they are using a driver and vehicles that ship from warehouses at different routing points.
Of course, there are many stages in the supply chain. This supply chain ranges from original manufacturing to the final destination. The last mile is only one of those legs. Still, with today’s carrier tracking technology, customers can often see information on when a package has arrived at the local hub/warehouse. If the delivery does not happen promptly, customer satisfaction will probably suffer.
Efficiency goes part and parcel with speed in getting to the final destinations. An efficient company will have technology and systems in place to manage every aspect of the delivery – from sophisticated route planning software to well-trained drivers that follow a standardized delivery process at each residence or business. An efficient process reduces things like delays and inventory in all industries (from furniture to appliances to food, or anything else for that matter). It gives a company the capacity to execute and to meet the expectation of everyone they are serving.
Cost always matters, but beware of choosing the cheapest option just because it appears the most cost-effective. If the carrier is skimping on customer service, technology, and other features, you may end up losing customers and spending more time and resources dealing with issues that crop up.
Many new startups in the logistics industry are giving the established dominant players a run for their money with innovative technology solutions. Specialized software can contribute to better delivery data, greater efficiencies, and fewer errors. Everything from route optimization, to machine learning, to transportation management, to proof of delivery, to dispatching can be better managed with sophisticated software. Understanding your business’ needs when it comes to last-mile delivery will help you identify the best technology match.
Don’t discount the importance of exceeding customer expectations. In this day and age, a customer-centric approach is a must. If issues arise, you want to know that you’ll be able to reach the carrier and resolve the problem quickly. On the customer-facing side of the equation, you also want to ensure that the carrier has a solid reputation for excellent customer communication (such as delivery notifications for orders) and delivery experiences during its services. In short, the standard is higher and higher for clients, and meeting their preferences is paramount.
Who Are the Top Last-Mile Carriers?
Four major companies are serving the United States. Three of them are private companies: FedEx, UPS, and DHL.
The USPS (United States Postal Service), run by the US government, is another big player. It has an advantage over the Big Three in that it has operated for a more extended period. Until recently, the Big Three focussed primarily on getting parcels to the local hub/warehouse and partnered with USPS for the final destination delivery.
Startups in Last-mile Delivery
In recent years, many startups have emerged in the last-mile delivery space. These startups have developed SaaS and other technology solutions to make delivery more efficient. Many partners with local couriers to execute the final deliveries. Others have innovated their in-house carriers, including robots and autonomous cars.
The following five US-based startups are proving to be top last-mile delivery contenders:
1 – Postmates
Based in San Francisco, Postmates is a logistics platform that offers customers the ability to place deliveries with local restaurants and retailers by connecting shipments with local couriers. Their mission is to ’empower communities to shop local and empower businesses to grow through our marketplace, as well as through tapping into our API to offer delivery.’
Postmates boasts over 500,000 fleet members (called Postmates), as well as 600,000 merchants. They serve 80% of US Households across many locations in all 50 states.
2 – Starship
The future has arrived. Starship is changing, literally changing the face of shipment and delivery by building and deploying a network of robots’ ready to serve you anytime, anywhere.’ Founded in 2014, the company partners with local restaurants and retailers in urban areas to make local deliveries faster and more cost-efficient. Currently, its robots have a delivery radius of 6km and travel at pedestrian speed.
While its fleet of robots does present some limitations at present, robots will probably increase. Once these challenges are met, and capabilities evolve, it’s just a matter of time until consumers and markets catch on to the trend. At this conjecture, Starship will likely increase its share of the market and boast a first-mover advantage in the space.
3 – Deliv
Deliv is another Silicon Valley-based company touting its solution to last-mile delivery. They offer same-day delivery services to thousands of businesses across the US, including Best Buy, Blue Apron, Home Depot, and Blue Apron. Leveraging SLAs, GPS-enabled smartphones,s and integrated enterprise solutions, the company boasts that ‘for the first time in history, the fastest and most flexible same-day delivery is now also the cheapest shipping option.’
Deliv is positioning itself as a long-term business partner in the same-delivery space, as evidenced by its multiple platforms: Deliv Small Business, Deliv Enterprise, Deliv Fresh (for groceries and meal subscriptions), and Deliv Rx (for pharmacies, hospitals, etc.)
4 – Ship Hawk
Headquartered in Santa Barbara, CA, Ship Hawk offers a SaaS platform to manage deliveries. Their proprietary software enables automated order fulfillment and ensures every order is shipped from the right warehouse, packed in the right box, and delivered to its destination by the most suitable carrier.
5 – Matternet
The sky’s the limit for Matternet, a California-based company that offers an innovative solution to last-minute delivery through its drone technology. UPS has already partnered with Matternet to provide drone delivery services.
As their company states: ‘Our products enable organizations around the world to build and operate drone logistics networks for shippers transporting goods on-demand, through the air, at a fraction of the time, cost and energy of any other transportation method used today.’
It’s hard to imagine a future delivery operations system that doesn’t take advantage of drone technology and the sky.
What Companies are Major Players in the Last Mile?
Currently, the four major carriers serving the United States are FedEx, UPS, DHL, and USPS. There has been an explosion of this industry since the advent of e-commerce. Many startups today are looking to disrupt this industry and challenge the dominance of the major players.
How does Last-Mile Delivery Work?
Last-mile delivery is a new service that has arisen drastically since the 1990s. In short, it’s the portion of the delivery from the last warehouse to the door of the consumer. For the most part, it happens with the use of trucks and delivery drivers. Many would say that Amazon and eBay jump-started e-commerce sales in North America.
There is no one last-mile service that beats out all the competition in the entirety of the supply chain. The key message here is there are a lot of options: this is not your good ol’ post office anymore. It comes down to finding the right match for your business or organization’s specific needs. If you’re an urban grocery store serving local customers, the best service for you is probably not going to be the same as it is for a nationwide retailer with urban and rural delivery options. We must also note that for this article, we have included Amazon Flex, as they are not considered a startup at this time. Knowing what your business needs now and anticipating how these needs will evolve in the future will help when it comes to choosing a last-mile carrier,