How to Improve the Last Mile to Save Time and Revenue

How to Improve the Last Mile to Save Time and Revenue

The last mile, when not optimized, can lead to higher staff workloads, longer turnaround times, and higher operational costs. Would you like to maximize your resources, and improve your travel times and on-time rates? Then it’s important that you prioritize and optimize your last mile delivery process.

What is last mile delivery?

Also known as the final mile, the last mile refers to the last phase of your supply chain, or the final leg of a shipment’s path. It includes everything between moving orders from their source location and putting them in the hands of your customers at their final destination.

These are the general steps taken through the final mile:

  1. Your customer pays for an online shopping order that’s confirmed by your back-end system
  2. If not already on hand, products are sent by your supplier(s) to your fulfillment center for dispatch
  3. You allocate the orders to your shipping carriers
  4. Orders are registered and picked up by their respective carrier agents
  5. The order arrives at your customer's door
  6. The agent/courier/carrier receives proof of delivery from delivery personnel

What is the last mile problem?

The last-mile problem is inefficiency, and a costly delivery system that lacks optimization
The last-mile problem is inefficiency, and a costly delivery system that lacks optimization

The last mile problem is inefficiency, and a costly delivery system that lacks optimization.

In today’s competitive eCommerce market, customer expectations around shipping are that it should be fast and free. A reliable and consistent service, which is complementary and speedy, contributes to higher customer satisfaction, loyalty, and retention. Hence, if there were to be a final mile problem, it would be inefficiency. It would be a delivery system that lacks optimization, and it would be costly to run. Optimizing a system means enabling last mile deliveries to be completed in the shortest amount of time—meeting consumer demand for low-cost, quick delivery.

How does the last mile problem come about?

It arises when your business chooses to bear the costs of free shipping, while you deal with dispersed delivery routes and low drop sizes. A low drop size refers to just one or two orders being delivered in a general location. This issue is most common for businesses that ship to many suburban or rural areas.

The last mile problem may also come from dealing with an overwhelming number of deliveries in urban areas. In the well-connected, concrete jungles, traffic congestion can bring delays, and eventually, lost time and revenue.

The final mile becomes more complex as your business grows and scales up. You may have various delivery services, pickup locations, and delivery destinations. Your system could comprise owned delivery fleets and autonomous shipping providers, pickups at distribution centers and physical shops, and deliveries to homes, offices, and parcel stations. The different options and elements create room for more inefficiency, which can lead to fewer happy customers, lower customer loyalty, and a potential loss of future business.

Why should you care about the final mile?

Studies show that last mile fulfillment is the most costly and time-consuming part of the shipping process. It accounts for 53% of the total cost of delivery and is therefore the first segment of the process that should be scrutinized for optimization. This could mean looking for ways to integrate new and advanced technologies.

Also, with many customers seeing free shipping as a given, your business will want to shift toward shouldering this expense, if this isn’t already the case. This means that if cost efficiency isn’t prioritized, you’re allowing your final mile to take up resources and eat into your profits. If optimization isn’t applied, your revenue could decrease by 26% in a 3-year period.

How to reduce last mile delivery costs for your eCommerce business

Reduce last mile logistics costs with advanced shipping and tracking solutions. Your business should be equipped with the following functions:

Alternatives to traditional delivery

Fast delivery to your customer's door isn't the only option you should offer for the final mile. Consider these alternatives:

  • BOPIS / BOSS: Do you have a physical store location? Offer customers the ability to buy online and pick up in-store (BOPIS) or buy online and ship to store (BOSS).
  • Slower delivery at a discount: Some customers don't mind waiting for items that aren't time-sensitive. Offering a discount for a longer delivery window can help save on last mile costs.
  • Consolidated deliveries: Allow customers the choice to consolidate their deliveries into one package instead of shipping items as they become available.
  • Enable delivery windows: Giving customers the option to choose when their items are delivered allows for better route optimization and streamlined logistics.

Carrier visibility and live order tracking for better route optimization

Carrier visibility and live order tracking ensure that you’re on top of routing activity, and can see the performance of each carrier, along with the distribution paths taken. With this information, you can have a better master plan, listing and consolidating items, and allocating orders to their respective carriers, and an easier way toward route optimization.

Comprehensive analytics and data-driven, timely customer engagement

With carrier visibility, live order tracking, and optimized route planning, you’re armed with detailed information on your last mile, which you can share with your customers. This communication is an opportunity for practical and strategic engagement, such as providing updates and timely delivery estimates at key stages. These points of contact include ‘dispatched from warehouse,’ ‘package being picked up by carrier,’ and so on. As your customers are kept informed of the status, location, and timing of their deliveries, their satisfaction and confidence levels, and loyalty to your brand, go up. This translates to more repeat business, and more savings on time and costs.

An advanced shipment tracking solution

Integrating advanced solutions, such as AfterShip Tracking, with your retail business, is a quick and simple way to access your last mile tracking data and analytics in a single portal.

The AfterShip Tracking dashboard displays comprehensive information about your post-purchase customer experience alongside actionable insights into your shipping performance and last mile. The web and mobile adaptive tracking solution is seamlessly synced with over 1,000 carriers worldwide, to enable evaluation and optimization of your delivery rate, exception rate, delivery time, and courier performance. You’ll be able to understand where longer transits are occurring, and when extra days are accumulating, to optimize your delivery process and reduce holding costs. And most importantly, a solution like AfterShip can scale up and grow with your business, allowing continuous optimization of your last mile delivery process.

Book a demo now to find out more.