Last Mile Delivery: The Ultimate Guide for 2022-2023

What’s meant by last mile delivery? How to complete last mile delivery process, and why is it important? Learn more in this guide.

Introduction

As customers seek to integrate technology into every aspect of their life, efficient fulfillment and distribution is no longer a luxury; it is a must. Businesses seeking to gain market share and compete with giant companies such as Amazon must build innovative technologies that accelerate delivery and foster a pleasant consumer experience.

In this article, you will understand the fundamental concept of the revolutionary sectors and the best technological solutions assisting businesses with product distribution. If you manage a business associated with or reliant on last mile delivery, this article will be beneficial for you to improve or expand your delivery techniques.

What Is Last Mile Delivery?

Last mile delivery is the final step of the delivery process that entails getting items from a distribution hub to their final destination. Simply put, it is the part of the process that carries an individual package to its destination. Last mile deliveries are sent within a few miles of a buyer's residence.

Last mile logistics or final mile delivery can refer to the final leg of an item's trip or numerous legs carried out in conjunction with a wide range of transportation modes such as airplanes, railways, and trucks. However, the majority of last-mile deliveries take place in urban areas.

Furthermore, last-mile solutions offer additional services like package sorting or order pickups at nearby places for customers who do not want to go through the hassle of collecting the products themselves. E.g., grocery stores and other necessities. 

Steps in the Last Mile Delivery Process

The following are the six steps involved in a successful last mile delivery:

Step 1: Store Orders in an Integrated System

For all order requests, delivery businesses use several input methods. The orders are properly lined up in a centralized system. You can upload or enter hundreds of delivery locations using an Excel sheet with access to the required technological stack.

Step 2: Route Planning and Optimization

Before allocating these delivery assignments to drivers, make sure they are in the proper sequence. You can't spend countless hours manually preparing delivery schedules for your carriers when making the bulk of daily shipments.

The most scalable method of producing ideal delivery routes is to use software that plans and optimizes a complete route for drivers based on prioritized shipments or vehicle capacity.

Step 3: Load the Parcel Following the Route Order

Arranging your packages according to the delivery route is the finest approach to ensure your delivery driver does not waste time hunting for a parcel at the back of the vehicle.

Start loading the vehicle at the bottom of the list. Keeping a list of products and their locations in the truck can also be advantageous. This list will guide the delivery employees during the delivery process.

Step 4: Consign Routes to Drivers

You most likely have several drivers who need to be available as the routes are optimized and all set to go. Instead of manually configuring everything for your drivers, you can assign routes to them. The last mile delivery system should facilitate the transmission of details and routes to drivers' phones via SMS or email.

Step 5: Improve Transparency in the Last Mile Delivery Process

Without transparency, final mile delivery is futile. The clients must be notified of the shipment's location and expected delivery time.

Customers demand a high level of transparency in the delivery process, from the product’s shipment entails to last-mile details. Transparency in the delivery process can be improved by real-time driver tracking, ETAs, and customer updates.

Step 6: Keep a Record of the Evidence of Delivery

When distributing thousands of products around the city, credible records are essential. By documenting evidence of delivery, a verifiable record can be generated. Evidence of delivery, such as customer signatures or photographs of the delivered goods, can increase accountability and eliminate fraudulent claims from buyers.

What Are the Problems Associated WIth Last Mile Delivery?

Have you ever chased a shipment online in real-time and seen that it was out for delivery for what seemed like an eternity? If yes, you already know that the final mile delivery problem is inefficiency. This is because the last leg of delivery often comprises many stops with small drop sizes.

In remote places, delivery locations along a route may be several miles apart, with just one or two parcels being delivered. The problem isn't much better in cities; what urban locations make up for in stop proximity is rapidly offset by the near-constant interruptions of road congestion.

The expenses and inadequacies of the last mile problem have only been worsened by the continuous expansion of eCommerce sales, which has also substantially increased the number of items delivered each day while simultaneously raising expectations of buyers to include not just quick but also free shipping.

Businesses Affected By Last Mile Delivery

Last mile delivery is vital for businesses that directly supply products to their customers. Some of the businesses affected by the last-mile delivery problem are

  • Couriers
  • Third-party logistics companies
  • Supermarkets offering essential products delivery
  • Food delivery companies
  • Department stores offering delivery
  • Florists
  • Restaurants offering food delivery
  • Pharmacies offering medication delivery
  • Ecommerce businesses offering various products
  • Direct-to-consumer model retail companies

Even if the business deals through wholesalers or retailers in the product's supply chain, businesses may still have a website with an eCommerce store. That implies businesses have to manage shipping, including last mile delivery, for orders received in this manner.

Last Mile Delivery Cost

Customers are less likely to pay a delivery price as free shipping choices become more prevalent, pressuring merchants and delivery logistics partners to bear the expense. 

More than 53 percent of overall delivery expenses are held by the last mile of your delivery. Any inadequacies in the process can raise the expense and lower your earnings if it is not streamlined.

Last mile delivery is by far the most expensive element of the fulfillment chain, charging $10.1 per package delivered. Businesses charge consumers an average of $8.08 to meet these costs, with the remaining taken from the profit margins of sold items.

Consumers are ready to pay just an average of $1.40 for each delivery for last-mile service. Because of these data points, this has become such a major issue, capturing the interest of fulfillment centers, shipping businesses, and supply chain professionals.

The following are the five major expenses associated with last mile logistics or overall shipping costs:

  1. Fuel charges account for 10-25 percent of total last-mile delivery expenses.
  2. Labor expenses account for 50-60 percent of total last-mile expenses.
  3. The costs of delivery management software are often high. However, these are inexpensive because they help you save money on other expenses.
  4. Failed deliveries can significantly impact the bottom line of last mile logistics.
  5. Other fees include vehicle maintenance, parking, and rescheduling.

Why Is Last-Mile Delivery So Expensive?

Every day, companies with last mile delivery operations deal with thousands of shipments that must be delivered to various customers. Last-mile deliveries are excruciatingly complicated due to the number and different drop-off locations, not to mention traffic, weather conditions, and vehicle breakdowns. When it comes to expenses, there are several aspects to consider.

Failed Deliveries

Businesses that disperse commodities to logistics network associates or distribution hubs are not liable for failed deliveries. On the other hand, companies that deliver goods directly to the user deal with the issue of failed deliveries daily. 

Reasons for failed deliveries:

  • The buyer was away because the driver missed the delivery date.
  • The buyer was unreachable as they were not expecting the delivery 
  • Customers have no delivery scheduling alternatives.
  • The address was incorrect.

Fuel Costs

Different drop-off places complicate last mile delivery. Some buyers reside in remote locations, which means delivery drop-off places are hundreds of miles apart. Dropping off parcels in urban cities may appear uncomplicated, but it is not. This is owing to congested highways and limited parking spots in cities, which offset the shorter distance between drop-off destinations.

Delivering in cities necessitates slower speeds, leading to fewer miles per gallon. Drivers must halt, speed up, and decelerate at regular intervals. Delivering products to rural regions allows vehicles to go faster, but drop-off places are widely dispersed, making practical routes challenging in terms of distance.

Thus, both routes with heavy traffic and long-distance driving necessitate excessive fuel usage.

Idling and Downtime

When drivers are driving and dropping off parcels in cities, there is a lot of idling. Regularly, drivers must contend with various cars, multiple traffic signals, and curving routes. When idle, a delivery vehicle consumes around 3.17 liters of fuel every hour, which may quickly mount up.

Complex Route Miles

With the huge number of stops they make, drivers sometimes lose sight of their dispatchers' route plans—especially if those routes are difficult to remember. 

Refunds, Credits, or Reductions

The standard return rate for online items is a whopping 20%, making eCommerce fulfillment a particularly difficult task. If you sell consumer goods online, you may expect at least one out of every five consumers to return their purchase, either for a refund or for a new item (which you must ship for free).

How Last Mile Delivery Problems Negatively Impact Businesses?

Many logistics firms are trying to optimize last mile logistics. It is critical to implement creative business models that fulfill customer demand while focusing on quick and timely delivery. The expenses and complexities of the last mile problem can result in dissatisfied consumers and many other real business difficulties. The last-mile delivery problem can significantly higher total costs, dissatisfied customers, and many other challenges.

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  • Higher Expenditure on Last Mile Deliveries

Because of the new and higher customer criteria, the organization's overall shipping costs have increased. Most businesses are struggling with the rising costs of last-mile logistics, but the problem can be swamped with more efficiency and better planning. The key issues that can increase the overall cost of last-mile delivery are penalties for late deliveries, poor route design, delivery equipment expenses, reverse logistics charges, and so on.

  • Inefficient Routing

Inefficient route planning has a direct impact on the estimated time of arrival as well as costs. Route optimization is vital in lowering total expenses by examining fuel economy, traffic circumstances, environmental standards, and more. It is critical to select the correct route optimization application software that can give the customer an accurate ETA.

  • Transparency

In today's modern day, providing tracking codes to verify the status of a delivery item has become an ancient custom. Customers increasingly want to see the many stages of last-mile deliveries. Real-time visibility has become a vital component in ensuring long-term client loyalty since consumers want detailed information about their item and when it will arrive. The team must be trained to manage last mile logistics so that the company can meet client expectations without problems.

Businesses must incorporate automatic location updates of delivery packages at every touchpoint in the distribution process. Notifications and communications sent to clients via email or SMS can also improve the real-time visibility experience.

  • Delayed delivery

The failure to provide results on stated dates and adhere to set deadlines is one of the most critical issues your delivery firm may face. If you commit to delivering at a certain price, delaying or failing to fulfill might raise operating expenses and reduce earnings. Besides revenue loss, delivery delays can raise customer turnover, harm your brand's reputation, and hamper business expansion. With the delivery business expanding and customers requesting same-day delivery, businesses must eliminate friction in the last mile delivery process and meet the customer's expectations.

Products can be delivered on time if businesses have an efficient and optimized last mile delivery infrastructure integrated into their organization.

  • Same-Day Delivery Is Becoming Extremely Prevalent

Now, shoppers are ready to pay more to have the items delivered faster. The growing demand for same-day delivery has compelled businesses to meet customers' expectations.

Keeping up with customer aspirations can be a new difficulty because the other challenges outlined have made timely delivery practically impossible. Furthermore, accelerating the delivery process to same-day delivery may conflict with other delivery legs.

Another impediment to same-day delivery is that most of it involves small-sized goods. With small-sized items, leveraging the delivery vehicle can be difficult and may bring another issue in terms of lowering last-mile delivery costs.

Furthermore, businesses do not have enough time to wait until a particular quantity of items can be fully loaded onto the delivery vehicle. This may result in a delay as it will require more time, and delivering items on the same day may fail and affect customer satisfaction.

Advanced Technological Solutions to Solve Last Mile Delivery Problem

Here’s how Mobile app technology solutions can solve and support the final mile delivery experience:

  • Route Layout and Optimization Reduces Delivery Time

A competent route optimization solution and a robust last-mile delivery algorithm can perform final mile deliveries faster than normal. It saves delivery time and resolves the issue quickly by improving the delivery process and rendering it more financially viable.

  • Mobile App Helps in Cost Savings and Reducing Service Time

Real-time route optimization solutions can assist organizations in lessening the drivers' number necessary in a day to complete a specific amount of deliveries. This can benefit businesses by reducing expenses such as fuel and labor without impacting last-mile revenues.

  • Provides Digital Proof of Delivery

Evidence of delivery is an essential aspect of a business that continuously demands openness and responsibility. Evidence of delivery, such as signature, photograph capture, or driver records, may assist businesses in being answerable for each parcel handed to the customer's door.

  • Improves Communication

Using a mobile application that enables dispatchers and drivers to interact easily contributes to a more efficient delivery procedure. When consumers receive updates about their scheduled delivery, as well as the contact information for the driver bringing their product, the channels of communication are highlighted properly.

  • Reporting Improves Accountability

Daily delivery reports can assist in finding vulnerabilities and provide prospects for advancement. Using reporting, dispatchers or supervisors can determine why a specific delivery was not fulfilled or why a specific delivery took more time than intended.

Conclusion 

The significance of streamlining last mile delivery cannot be overstated. Maximizing last-mile delivery is a challenging task that will likely become much more as customer expectations rise, online sales expand, and technology advances. However, companies must address these challenges to retain customers and maintain a competitive edge. Ensure that you have a suitable mobile application solution to support your last-mile delivery. 

Zorp, a drag-and-drop app builder, lets you create tailor-made apps for last mile delivery fulfillment. A mobile app provides field agents with proof of delivery capture, push alerts, easy navigation, and barcode generation for authentication and optimized routes service. It is the most user-friendly solution for managing and operating all last-mile delivery activities. Zorp's simple web dashboard interface lets you see everything in one place. You can also add customizations by using downloadable templates related to your business's operations.