What is last mile delivery?

In a product delivery process from a warehouse to the final destination of the end customer, last mile delivery is the last step in the supply chain operation. The final mile delivery is an essential part of the delivery process, and it should be done well to ensure fast delivery. In this article, we go through the process, importance and advantages of last mile delivery.

With the rising demand of customers, many businesses now need a robust strategy to ensure a fast and effective shipping process. In fact, delivering products on time is crucial for businesses, as late or even failed deliveries can have a significant impact. Not only does it upset customers who are expecting to receive their purchase, but it can also lead to lost sales and damage business reputation. 

In Loqate’s report on ‘Fixing Failed Deliveries 2021: Stamping Out Faulty Fulfilment’, 8% of first-time deliveries fail at an average cost of US$17.20 in the United States. About 7% of failed deliveries in Germany and 6% in the United Kingdom cost business an average €14.69 and £11.60 apiece respectively. In addition, 45% of American businesses also incur a chargeback cost of between US$1 and US$20 for each failed delivery, which 55% of British and 54% of German businesses can relate to. 

The costs can add up quickly, especially for businesses that have a high volume of deliveries. As the final step in fulfilling a customer’s order, last mile delivery not only plays a critical role in the overall customer experience but also saves businesses both time and money. Businesses that can effectively manage this will have an advantage over many of their competitors. 

What is the process of the last mile delivery?

Based on a survey in 2017 by Statista, it was found that around 73% of e-commerce logistics concentrate on improving their communication with their last mile consumers to enhance their experience. It is essential for businesses to have a good understanding of this important process to minimise errors.

The last mile delivery process is usually conducted in a few stages. First, the orders sent in by shoppers are digitally recorded into a centralised system. This system confirms the availability of the stock and offers payment options for them. 

Next, the orders are delivered to a transportation hub for processing. At this stage, orders are assigned to a delivery personnel with relevant details. This includes recommendations on the route to take and the location where the order is to be sent. Finally, the orders are scanned and loaded onto delivery vehicles to be sent out to the customer. 

Why is last mile delivery important?

Most consumers do not have a good understanding of the supply chain process and will rate a merchant according to their service delivery standards, including last mile delivery. Without reliable last mile delivery, customers don’t have the confidence that their orders will reach safely and on time. This could harm the profitability and reputation of the business, resulting in loss of potential and existing customers.