Sky-high customer demands surrounding their delivery experiences have changed the way businesses are addressing their delivery and fulfillment operations. Studies show that 45% of customers expect a two-hour delivery window or less, to the 80% of eCommerce customers who expect real-time delivery tracking. These customer demands are forcing businesses of every type—including retailers, restaurants, grocers, logistics service providers, and many others—to redefine how they manage the last mile.
While it is becoming increasingly difficult for businesses to meet these rising expectations, doing so is crucial for improving conversion rates, increasing brand loyalty and generating sustainable, long-term growth.
What is last mile logistics?
Last mile logistics refers to the operational capabilities (including physical spaces, software systems, delivery fleets, human resources, etc.) that businesses have in place. The ultimate goal of this complex operational setup is to enable businesses to provide their customers with the best possible last mile delivery experience, which ends when the goods or services they ordered are in their hands. .
In today’s eCommerce landscape, where Amazon is not the only innovator and increasing numbers and types of businesses are offering impeccable delivery experiences, optimize their last mile logistical operations is an imperative for any business with goods or services that need to be delivered.
The Challenges of Last Mile Logistics
Some of the challenges businesses face when it comes to last mile logistics include:
Gaining visibility and data on the supply chain
This crucial component of any delivery operation requires up-to-date data on not only into the exact location of the orders and related inventory, but also on the number of open orders from every ecommerce site; the related internal processes; the internal or external fleets that are available to make the deliveries; and more. By having data on the delivery flow, as well as customer data, businesses will gain insights that are crucial for understanding and optimizing delivery operations. These improvements will then enable businesses to offer the speed, flexibility and convenience that customers expect.
Managing multiple fleets and/or crowdsourced fleets
Businesses which rely on fleets beyond their own internal ones face a unique set of challenges that must be addressed. This is especially relevant considering the external delivery personnel who are the ones making the critical last mile touchpoint with customers. Businesses employing multiple and/or crowdsourced fleets must find ways to maintain full control over the entire delivery process to ensure that their business needs surrounding branding and quality of service are met. Only by maintaining this control will they be able to ensure that they’re able to meet and exceed their customers’ delivery expectations.
Building and maintaining multiple delivery models while controlling costs
While businesses providing deliveries must work to optimize their customers’ delivery experiences, they also need to reduce related costs in order to maintain a positive ROI. Doing so while scaling and expanding to offer a variety of delivery models (planned, on-demand, etc.) creates various problems across different parts of the delivery ecosystem.
Below are five key steps businesses can take to address these challenges and orchestrate more efficient last mile logistics operations.
5 Steps to optimized last mile logistics
1. Centralize your data
Regardless of how many channels delivery-related data is coming from or what those channels are, businesses must centralize everything that comes in from fleets, aggregator sites and other external providers, as well as their internal systems. Only by being able to access their data from one centralized system can businesses truly understand what’s happening in their delivery ecosystem and make the adjustments needed to provide the ideal last mile experience.
2. Use data to inform your decisions and optimize processes.
Being “last mile blind” is no longer an option for businesses seeking to differentiate themselves with an optimized last mile offering. To properly make the improvements needed to meet and exceed customer expectations at the point of delivery, businesses need to gain accurate, real-time insights and data into every aspect of their delivery operations—and they must use these insights to inform any decisions they make regarding process optimization.
3. Automate, automate, automate
To manage last mile logistics in a way that enables businesses to provide the best delivery experience possible, automation is a must. Today, businesses of any size, in any industry, have access to technologies that can enable them to cost-effectively provide faster, more efficient deliveries using their existing resources.
4. Choose forward-thinking technology
Speaking of technology, businesses taking control over their last mile logistics must opt for technologies that enables them to digitize and connect every step of their last mile logistics. Only then will they be able to provide the convenience that customers demand while achieving efficient, cost-effective processes that support a positive ROI.
5. Embrace a gradual scaling process
Scaling is key for businesses that want to achieve long-term growth. Businesses need to first test delivery-related technologies or updates under real conditions at only a few stores or locations, before scaling them up to a country or chain-wide offering.
Many of today’s customers consider the ideal delivery experience to be more important than their satisfaction with the item they’ve received. With this in mind, it’s no wonder that market share is now dictated in part by how businesses manage their last-mile logistics. Those hoping to differentiate themselves must do so by offering exceptional delivery experiences, which are built upon a tested and solid approach to managing their last mile logistics.
Frequently asked questions:
Last mile logistics is the last step in the delivery process. The last mile begins as soon as a customer places an order. The brand or logistics provider gathers and prepares the order for delivery and then delivers to the customer in the method chosen.
The main issue in the last mile is cost. 50% of total shipping costs occur in the last mile and therefore shipping providers have to add surcharge fees and don’t have the capacity for many shippers. At the same time, shippers have to place some of the delivery cost on consumers, a method that can endanger their attractiveness in the very large and competitive retail and eCommerce markets.
A last mile delivery center is the warehouse or place where shipments are prepared to make their way to customers. Last mile delivery centers must use technology and automation to ensure that their work is efficient to meet customer demands.