Last mile delivery is as challenging as it is important. Learn more about last mile delivery and how you can achieve success in this often unforgiving area.
What Is Last Mile Delivery?
Last mile delivery is the last step in the delivery process that involves transporting a package from a transportation hub to the customer’s shipping address. While last mile delivery might sound simple enough, it’s more complicated than it seems.
However, taking these complications seriously is essential since last mile delivery significantly affects customer satisfaction.
What Are the Steps Involved in Last Mile Delivery?
There are five steps involved in the last mile delivery process, from when the customer places the order with the retailer to when the order is delivered.
Step 1: Order Is Placed
When a customer places an order, the order gets entered into a centralized system. The order is then picked, packed, and prepped for shipment.
Step 2: Order Arrives at Transportation Hub
Last mile delivery begins when the order arrives at the transportation hub closest to the customer’s address.
Step 3: Order Is Assigned to Delivery Driver
Once at the transportation hub, the order is assigned to a delivery driver based on the most efficient route.
Step 4: Order Is Scanned Before Loading
After the order has been assigned to a driver, it’s scanned before it’s loaded onto the truck. When the order is scanned, it updates the tracking status so that the customer can see when it’s scheduled to be delivered.
Step 5: Order Is Delivered
The driver then goes through their route for the day until they reach the customer’s address, at which point they will complete the delivery and obtain proof of delivery if required.
What Are the Challenges of Last Mile Delivery?
The last mile logistics supply chain comes with a whole host of challenges for businesses and logistics providers. Here are some of the real-time issues of last mile delivery according to a survey of logistics providers:
- Delivery efficiency (25%)
- Margins (14%)
- Customer demands (14%)
- Delivery agility (13%)
- Increased costs (13%)
- End-customer satisfaction (10%)
- Missed deliveries (8%)
How Much Does Last Mile Delivery Cost?
Last mile delivery tends to be the most expensive step in the entire shipping process. On average, final mile delivery costs make up 53% of shipping costs. This translates to an average of $10.10 per package delivered.
However, the customer doesn’t foot the entire bill for last mile delivery. Companies often have to step in to cover some of the cost, about 25%, of final delivery to maintain competitive pricing.
Why Does Last Mile Delivery Cost So Much?
Last mile delivery is costly, but why is that the case when a package doesn’t have to travel very far? Here are some of the reasons why last mile delivery costs so much:
- Lower speeds: Since most last mile deliveries are made to residential addresses or local businesses, carriers must use smaller roads with lower speed limits. Lower speed limits mean that it takes longer to get from one stop to another. Driving in cities rather than on the highway also affects gas mileage and higher fuel costs.
- More stops: Last mile delivery usually involves delivering one package at a time. Occasionally, more than one package will be delivered to a single address. However, this definitely isn’t the norm. More stops lead to more idling for drivers.
- Complicated routes: Since there are more stops involved with last mile delivery, it can be challenging to develop an efficient route that incorporates all of the necessary stops. Even with a designated route, drivers can easily lose track of the route and drive unnecessary miles that can increase costs.
- Failed deliveries: Failed deliveries are a common occurrence in last mile delivery that significantly impacts costs. When a delivery fails, that means that it has to be re-delivered at a later date or time. Customers aren’t going to be charged for the failure, which means someone else has to eat this cost that averages around $18.
- Returns and exchanges: You also have to expect a certain amount of returns and exchanges with last mile delivery. This means that the customer has to ship back an item and potentially have another item shipped back in exchange. This essentially doubles your shipping costs which quickly adds up when you consider that 20% of eCommerce products are returned.
How To Minimize Costs and Maximize Success Rates With Last Mile Delivery
Even though last mile delivery can be costly, there are things you can do to minimize costs and maximize your overall success rate. Here are some tips to consider:
Tip 1: Implement Route Planning
Route planning is key to more efficient last mile delivery. However, manual route planning likely doesn’t result in the most efficient routes. Instead, you should use an advanced route planning tool to access tons of data points to develop an optimized route.
Route planning tools consider factors like vehicle capacity, location, traffic, and weather conditions when coming up with a route.
These factors would be nearly impossible to consider when trying to plan a route manually. Using a route planning tool also takes a lot of the work out of the process, allowing you and your employees to focus on more important things.
Tip 2: Perform Data Analysis
If you’re looking for a better approach to last mile delivery, you first need to identify any problem areas so that you can take action to address them. You can identify problem areas by looking at your company’s data — specifically key performance indicators (KPIs) like on-time delivery rates, success rates, distance traveled, idling time, and more.
Tip 3: Provide Electronic Proof of Delivery
Last mile delivery drivers need to obtain proof of delivery to verify that the item was delivered. In the old days, proof of delivery came in the form of a hand-written signature collected directly from the recipient by the driver. However, this method can be time-consuming and, quite frankly, impractical these days.
In 2022, you need to be providing electronic proof of delivery. Electronic proof of delivery meets the technical standards of 2022 and meets the health and safety standards as well. Electronic proof of delivery is a great way to minimize contact between drivers and customers to prevent the transmission of COVID-19.
Perhaps the best option for electronic delivery comes in the form of a photo. Drivers can take a photo of the package on the customer’s doorstep and upload it into a mobile application. The customer can then see that the package was delivered based on the photo provided.
Tip 4: Offer Two-Way Communication
Offering two-way communication is a great way to address one of the main complications of last mile delivery — missed deliveries. When a delivery is running late or early, two-way communication makes it possible for the driver to contact the customer directly to inform them of the delivery status and make sure that they can accept the delivery upon arrival.
A lot of this communication can be automated to make it easier for drivers to handle.
Tip 5: Use Live ETA Tracking
Another potential solution to missed deliveries involves using live ETA tracking. Live ETA tracking is a particularly appealing option for those looking for a more efficient approach to last mile delivery. With live ETA tracking, customers can track the location of their delivery driver and obtain an accurate ETA.
When customers have access to this information, they’re more likely to be present at the time of delivery. We’ve all been in a situation where we’re expecting a delivery between 1:00 p.m. and 5:00 p.m. — this is a large window to have to sit at home.
With live ETA tracking, you can get a better idea of when your delivery is going to arrive so that you can plan accordingly.
How To Find a Last Mile Carrier
As you now know, last mile delivery can be extremely challenging for carriers. Consequently, it can be just as challenging to find a carrier to transport your products the final mile. Here’s what you can do to find a reputable last mile carrier that meets your needs:
Step 1: Search for Qualified Carriers
Begin by searching for qualified carriers that offer last mile delivery and operate in your area. Google is a great place to look. However, if you have friends or colleagues that utilize last mile delivery, you should ask them if they have a carrier that they’d recommend.
Step 2: Research Potential Carriers
Once you have some contenders, you need to research each of them to make sure that they’re qualified and reputable. In terms of qualifications, the best place to look is the Federal Motor Carrier Safety Administration (FMCSA) database of registered and insured carriers. And in terms of reputation, the best places to look are the Better Business Bureau (BBB) and Google.
Step 3: Compare Prices From Potential Carriers
Based on the information you’ve gathered thus far, you can narrow down your list of carriers to a few final contenders. After that, it’s time to reach out to these remaining carriers for a quote based on your shipping needs. Some carriers offer instant quotes online, whereas others require a phone call or an email.
Step 4: Make Your Final Decision and Start Shipping
Make your final decision, keeping in mind that price isn’t everything. You tend to get what you pay for last mile carriers. As a result, you need to consider reputation, qualifications, and price together.
How to Package an Item for Last Mile Delivery
Last mile packaging differs from packaging in other stages of the shipping process. Instead of being packed in crates and placed on pallets, these parcels need to be packaged specifically for the customer. Here’s a quick guide on how to package an item for last mile delivery:
Step 1: Choose Your Outer Packaging Components
First, you need to choose your outer packaging components. Some popular types of outer packaging for last mile delivery include corrugated cardboard boxes, padded mailers, and poly bags. The outer packaging you choose should be based on what you’re shipping.
Corrugated cardboard boxes are great for shipping all sorts of different products since they’re protective, crushproof, puncture-proof, and lightweight. Padded mailers are great for shipping small and flat products like books, documents, jewelry, CDs, and DVDs.
Finally, poly bags are ideal for lightweight shipping products like apparel and shoes that don’t require a lot of protection during the shipping process.
When choosing your outer packaging components, it’s important to consider size and weight since you’re often charged based on the size and weight of your package.
Extra packaging materials can result in higher shipping costs. As a result, it’s crucial to prioritize lightweight packaging materials that offer a snug fit.
Step 2: Choose Your Inner Packaging Components
Second, you need to choose your inner packaging components. Not all products will require inner packaging components, but these packaging extras are often used for particularly fragile or sensitive items.
Examples of inner packaging components include bubble wrap, packing peanuts, inserts, dividers, tissue paper, filler paper, and air pillows.
For particularly fragile items, you may want to consider using custom product inserts made out of styrofoam or cardboard to restrict movement and minimize the risk of damage.
However, non-custom products like air pillows and bubble wrap should do the trick.
Step 3: Consider Branded Packaging
While you’re thinking about your packaging components, you may want to consider using branded packaging. Branded packaging is often used for last mile delivery as it’s something that the customer is seeing. Believe it or not, customers care more about packaging than you think.
“Unboxing” has become a trend as of late, and customers have come to expect their products to arrive in fancy packaging that’s exciting to open. To better understand this trend, just search “unboxing videos” on YouTube, and you’ll get millions of results.
Step 4: Effectively Pack and Seal the Package
Now that all your packaging components are in order, it’s time to pack your products and seal the package for last mile delivery. Make sure that your items fit snugly in their packaging to prevent damage. Make sure that your packaging is properly sealed with packing tape or another form of adhesive.
Conclusion
Last mile delivery requires effort from the company, carrier, and customer. However, all three parties can ensure a successful last mile delivery strategy. Coordinating deliveries is easy when working with an experienced logistics provider like RPM.
RPM has nearly a decade of shipping experience, an extensive network of vetted carriers, and a high volume of shipments — making them the perfect partner for last mile delivery. Contact RPM today to see how they can help with your last mile delivery needs.
Sources:
The Challenges of Last Mile Delivery Logistics and the Tech Solutions Cutting Costs in the Final Mile | Business Insider
Last Mile Delivery: Average Cost 2018 | Statista
4 Things to Know About Ecommerce Returns to Minimize Lost Profits and Keep Customers Happy | Entrepreneur
