Last Mile Delivery: A Costly Dealbreaker for Retail

It’s not done until it ships. That’s a quote from Steve Jobs. I’m not sure exactly what the context is there, but in the case of logistics, I find these words appropriate.

Until a product arrives at the buyer’s doorstep, the job is not done. From laying dormant on a warehouse shelf, to the back of a truck, and to its final destination, products go on a transportation odyssey. The hope for all parties involved is that the shipping of these products is as fluid as possible.

The last mile of the delivery is fittingly the final step of this process. It also happens to be the most expensive and time-consuming step as well.

The last mile can be frustrating

I was a distance runner in college. So, the words “last mile” strikes a certain fear in me. Say you’re running a ten-mile race. The first nine miles have felt good—in fact better than good—and you are on pace to get a personal best time. But things can change. All the sudden, your legs get heavy and your breathing gets short.

The last mile of the race expends the most energy and effort. If you’re not prepared in advance that last mile becomes your slowest and most disappointing. You’ll get to finish line eventually, but no one wants a weak finish. That’s where you want to look the strongest.

For logistics, carriers certainly want that strong finish. Anything short of that, their buyers will be left frustrated and wondering how the shortest leg of their products’ journey brought them the longest wait.

As a personal consumer yourself, think about the last time you ordered a package and tracked it online. How long did you keep seeing the “out for delivery” status?

After you’ve refreshed the page several times for an update, you likely concluded that the last mile can be an inefficient affair.

Last mile delivery is the most expensive and inefficient leg for retailers

What makes the last mile leg so tricky is that it usually involves multiple stops with low drop sizes. For rural areas especially, delivery points for one route can stretch several miles apart with only a single package or two being dropped off at each point. Heavy traffic and road construction serve up near constant delays for last mile deliveries in more densely populated and urban areas as well.

These typical inefficiencies have been enflamed further in the dawn of the ecommerce boom over the last two years. Consumer demand for retail goods have skyrocketed rendering a drastic increase in the number of packages out for delivery each day.

A lot of retailers too—notably Amazon—boast fast and even free delivery to their customers which grooms expectations that packages will arrive on-time with no additional expense.

And, that’s where costs come into play. Insider Intelligence reports, last mile delivery is responsible for 53 percent of total costs of shipping.

With consumers now coddled with promises of free shipping, they will not be as receptive to opening their checking accounts to delivery fees.

In return, the most expensive part of shipping largely falls onto retailers to negotiate. And, failed deliveries, whether out of their control or not, will cost these retailers customer loyalty and revenue.

What retailers can do to avoid a last mile blunder

In fact, a RetailX survery found that 36 percent of consumers would switch retailers for their next purchase if they have a negative delivery experience. Another 35 percent said they would write a negative review or social media post. Nowadays, online criticism can be a crippling word-of-mouth wildfire against retail.

That said, the murmurs of Black Friday, Cyber Monday, and Christmas can all be heard. Within a few weeks, consumers will be online and ready to spend. What can retailers do to minimize failed last mile deliveries?

Courtesy of SupplyChainBrain, the following are some tips for businesses to consider:

  • Take advantage of API integration – Missed deliveries commonly occur when incorrect addresses are put in by human error. Retailers should check if their last mile delivery partner offers API integration. This can allow fields (like customer-entered addresses) to appear automatically on the delivery end. Allowing customers to enter special instructions as well if they live in a remote area goes a long way in assisting drivers to the right drop off point.
  • Barcoding to avoid sending incomplete or incorrect products – Mix-ups can be prevented if retailers ensure there is process in place to order pick packages accurately at the warehouse or store. Barcoding each order can help employees match it with the appropriate driver and successfully hand it off to them.
  • Set and communicate expectations with customers – Transparency with orders upfront can help curb a recipient’s expectations. Especially during the holidays, heavy traffic, parking, and road restrictions are unavoidable challenges for drivers and can lead to delays. Clearly communicating with customers will eliminate their mystification about where their packages are. Retailers should check if their delivery partners offer real-time tracking. Customers will feel a sense of control over the status of their package and can also reach out to drivers if one of them has any questions.
  • Sufficient last mile delivery capacity – Retailers can be limited by their own assets or sticking with just one or two delivery partners. They should keep their options open to a broader range of partners to not just boost their capacity (especially ahead of the holidays), but to also ensure a fit for every type of delivery. For example, perishable products will need to be delivered as early as the same-day or next-day. A retailer shouldn’t be frantically looking for an appropriate delivery partner after an order has already been placed.

Final Thoughts

This holiday season, I invite you to pay special attention to which retailers have prepared for a strong last mile finish.

When I boot up the Amazon app on my phone and place an order this holiday season, it’s a little clearer now to why free and fast shipping perks apply a certain burden onto last mile operations. More importantly, the pressure it puts on delivery drivers who are at the helm of this final leg of a package’s journey.

Contact one of our team members if you have any questions regarding this topic or any others in domestic logistics.

This is an everchanging industry. Stay current on rail and trucking developments with our weekly Road Map Newsletter.

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