As soon as a customer makes a purchase, the last mile process begins. There’s a lot that happens behind the scenes between them tapping ‘buy now’ and their order arriving at their door, but it’s the retailer’s job to create the smoke and mirrors and make the process as smooth as possible.
In this article, we’re going to explore what last mile delivery is, the steps that make up the last mile delivery process, and most importantly, how and why we should optimise this process.
In this article
What is last mile delivery?
Last mile delivery refers to the final leg in a product’s journey to the customer. The last mile usually begins when a customer makes an order, and ends once the product has been successfully shipped to its final destination.
eCommerce businesses are obsessed with optimising last mile delivery because this step in the supply chain has the biggest impact on the customer experience. The biggest impact your customers will feel, at the very least.
Both the cost and speed of last mile delivery is critical. The lower costs you pay for shipping, the more profit you can make and the most cost-savings you can pass to customers. The quicker you ship your products, the shorter your delivery promise will be and the happier your customers will be.
The last mile delivery process
The last mile delivery process begins with a customer making an order from your website or other online storefront, and ends when their order arrives at their door. Of course, a lot of magic happens between these two steps, so let’s take a look in more detail.
The customer buys a product from your storefront, choosing their preferred delivery option. Your fulfilment team is notified via the inventory management system and order processing begins.
Items are retrieved from storage, double-checked for quality purposes, and safely packed in the most suitable packaging. Shipping labels are usually printed at this stage, with the inventory management system communicating which option was selected by the customer at checkout.
Order is placed into the dispatch area to await collection from the chosen carrier. Smaller scale operations may need to arrange orders to be dropped off at the suitable carrier depot.
Orders are collected by the carrier and taken to a depot. From there, the order will then be sorted and prepared for dispatch, either to the end-customer or another depot.
Local orders are collected for a final time, and are delivered to the customer via the carrier. International or non-local orders are collected and delivered to a depot nearer to the end customer, before being collected one final time to begin the last leg of their journey.
The last mile ends as soon as the order has been safely delivered to the customer or left at a premise of their choosing. If delivery fails for any reason, or a customer decides to return their order, the reverse logistics process begins.
Optimising last mile delivery
Improving and optimising the last mile delivery process requires you to have a deep understanding of your customer’s needs, great relationships with supply chain partners, a good grasp of inventory management, and more.
Here are some effective ways to improve the last mile delivery process through cutting costs and increasing customer satisfaction.
Learn about your customers
Ultimately, optimising the last mile is about making a better shopping experience for your customers. It’s vital, therefore, that we understand our customers’ expectations and preferences.
Do they prefer cheaper shipping or faster shipping? How important is next-day delivery to them, or are they happy to wait? In what countries do most of your customers live? By answering these questions, you’re able to create a last mile delivery solution that works for your customers.
Gathering this information can be done via your website or online marketplace, with warehouse management tools, surveys, and good old-fashioned conversations!
Where you play your inventory in relation to your customers plays an important role in last mile delivery optimisation. It makes little sense to place your inventory in the UK, for example, when the majority of your customers are in the US.
Smart inventory positioning can make your shipping times more competitive and your shipping costs much cheaper. Rather than shipping orders far distances one-by-one as they come in, consider moving inventory in bulk to a storage facility that’s geographically close to your customers.
Working with carriers that best meet the needs of your businesses and your customers is key to optimising last mile delivery.
Having a selection of carriers at your disposal will ensure you can meet the shipping needs of every customer, wherever they live, whatever their budget, and whatever their preference.
Shipping high volumes with particular carriers might also give you access to reduced rates, as can working with a 3PL.
You should carefully monitor the performance of each carrier and investigate carriers that regularly fail to deliver, take too long to ship, or fail to satisfy your customers’ needs.
It’s important to set customer expectations before they make a purchase with you. Delivery promises should be displayed on your website at point of purchase, and should be adhered to outside of extenuating circumstances.
This way, you shouldn’t have customers complaining about slow deliveries, and the last mile process works better for everyone.
You should also communicate with customers regularly about potential and actual delays or problems. This could include postal strikes, adverse weather conditions, staff shortages at ports, and so on.
Keeping customers in the loop makes them more understanding and less likely to complain or return a product.
Embracing technology to optimise the last mile delivery process is a must for businesses that want to stay competitive. A lot can be automated, too, whether it’s the printing of shipping labels, selecting the most cost-effective carrier service, calculating routes, and much more.
Work with a 3PL
A 3PL can do a lot of the heavy lifting for you when it comes to making last mile delivery more efficient. The two main measurables of the last mile are speed and cost, and a 3PL can help you reduce both of these significantly.
For improving last mile specifically, 3PLs can help with:
- Inventory positioning
- Carrier flexibility
- Carrier rates
- Quick, accurate fulfilment
- Customer research
- Customer tracking information
Benefits of optimising last mile delivery
Last mile delivery is perhaps the most important aspect of the fulfilment process, especially when it comes down to customer satisfaction. Similarly, there’s plenty of work you can do in the optimisation process to make the last mile more cost effective.
By optimising inventory positioning and transporting goods closer to customers before they make an order, you can get orders to them faster and make them more likely to buy from you, and much happier when they do.
Rather than shipping orders vast distances one-by-one, you can ship orders in bulk closer to the last-mile starting point, resulting in significantly cheaper shipping costs for both you and customers.
This is achieved by paying less taxes and duties per order, and getting discounted shipping rates due to bulk shipments.
By strategically placing your inventory, you can offer customers more flexibility when it comes to delivery options. You can serve all kinds of customers, whether they want to pay a premium for urgent same-day or next-day delivery, or are happy to pay a lower rate for a slower delivery service.
Increased sales and customer retention
Customers are more likely to buy from you – and buy from you again – if you have an efficient last mile delivery process. It results in a better customer experience, which translates into more sales, higher average order volumes, and repeat custom.
Deeper understanding of customers
A byproduct of optimising last mile delivery is garnering a deeper understanding of your customers. By collecting the necessary data to improve the last mile, you’ll also have better knowledge of where your customers are based, how often they buy from you, their favourite products, and much more.
You can use this information to improve many other areas of your business, such as demand planning, logistics planning, and overall inventory management.
Improve last mile delivery with James and James
James and James are an industry-leading 3PL that specialises in improving last mile delivery processes for eCommerce brands.
We offer a comprehensive fulfilment service, including storage, picking, packing, dispatch, and returns management. Our international network of fulfilment centres makes it easy for you to position inventory effectively and cut down the length of that important last mile!
Powered by our award-winning inventory management platform, ControlPort, eCommerce businesses also enjoy unrestricted, real-time access to inventory data. Check the status of your orders, improve inventory health, and scale your business more effectively with this feature-rich tool.
For more information about our 3PL facilities, services, and inventory management platform, don’t hesitate to get in touch with one of our fulfilment specialists.
Last Mile Delivery FAQs
Is last mile delivery part of logistics?
Yes, last mile delivery is a highly important component of the logistics process. Other parts of the logistics process include procurement, inventory management, warehousing, first mile delivery, demand planning, and reverse logistics.
Each step in the logistics operation impacts the customer experience differently, but the last mile has arguably the most direct impact. At this stage, slow delivery, poorly packaged items, or damaged goods can mean the difference between an unhappy customer and a loyal customer for life.
The last mile is also one of the challenging parts of logistics, as customer expectations need to be juggled with route optimisation, traffic congestion, fulfilment speed, and more.
Who are the biggest companies in last mile delivery?
The last mile delivery industry is vast, with many last mile specialists competing across a range of niches. Some of the biggest companies in this space include Royal Mail, DHL, FedEx, DPD, and USPS.
You also have the likes of UberEats and Deliveroo specifically in the food delivery industry.
What are the KPIs for last mile delivery?
Last mile KPIs tend to measure two primary goals; customer satisfaction and cost effectiveness. With that in mind, most last mile delivery companies have common KPIs such as:
- Cost per mile
- Delivery time
- Order accuracy
- Returns rate
- Fuel consumption rate
- Damage claims
What is the difference between last mile delivery and fulfilment?
Last mile delivery is the final part of the fulfilment process. Fulfilment, in addition to last mile delivery, consists of order processing, tracking, storage, picking and packing, shipping management, and returns.
What is last mile delivery in B2B?
In B2B, the principle of last mile delivery remains the same, however rather than goods being delivered to the customer’s door, they’re delivered from the warehouse or fulfilment centre to a retailer or other business’ premises.
Last mile B2B usually consists of much larger orders, as retailers will be stocking their shelves with various products, rather than a single order being delivered to the consumer. B2B last mile delivery is generally handled by carriers and logistics services that specialise specifically in B2B, rather than D2C eCommerce.