OptimoRoute lets us be this responsive and flexible.”. Plus, you still have to pay your delivery drivers regardless of whether they are standing still or moving. It brings products to the final station before being loaded onto vehicles for delivery. This makes deliveries a bit more time-consuming than they would be in the suburbs, which can lead to significant delays. Below, we answer some of the most frequently asked questions about last mile delivery and related topics. If you’re taking a $2 hit (at minimum) from every delivery made, you can quickly feel the pain of the last mile delivery problem. Unmanned aerial vehicles could also assist in rural last-mile logistics and the movement of critical items such as medical supplies, but face challenging barriers in terms of safety and security in urban areas. Hopefully, this guide has given you a better understanding of what the last mile delivery problem is and the cost and impact it can have on your business. The more high-tech providers send step-by-step updates. Need Door to Door Delivery. They had significant issues with last mile delivery as their business started scaling, reaching 1,000 weekly orders and beyond. But even if you only handle smaller packages, handling last mile deliveries can be expensive, if you don’t have scale on your side. The Real Business Impact of Poor Last Mile Delivery, How Route Optimization Helps Solve the Last Mile Problem, Real-World Examples of Businesses That Have Solved the Last Mile Delivery Problem. COD Collection. (For domestic orders, not all of these steps are necessary.) Delivering packages on time to the right address is essential to maintain a happy customer base (being able to track packages can help too). Questions about vehicle fleet leases? If you fail to deliver on these expectations, you will alienate customers and suffer from low repeat purchase rates. Trying to replan everything from scratch manually can take hours. This field is for validation purposes and should be left unchanged. The last mile of your product’s delivery accounts for more than 53% of the total shipping costs. To see how route optimization can transform your last mile delivery efficiency, test OptimoRoute for free for 30 days. Read more. In most cases, that final destination is a personal residence. Last mile, sometimes called final mile, is where the item is sent out from a local warehouse or fulfillment center for its final delivery to the customer. This technology would help solve the delivery driver shortage, while also making 24/7/365 deliveries possible. Last-mile delivery startup secures £4m investment following 300% revenue growth A logistics startup hoping to re-imagine last-mile delivery has secured multi-million pound investment to expand operations. If the plan is to establish a delivery network, working with a fleet management company is the most efficient way to get the right vehicles. How companies acquire these vehicles is where many unnecessary operating expenses arise. The average return rate of ecommerce products is a whopping 20%. This flexibility can allow the newer last mile providers to match peaks and troughs in demand and match costs in a more agile way. The focus of last mile logistics is to deliver items to the end user as fast as possible. Middle mile involves long-distance transportation and includes going through customs, port or hub storage and loading, and inland transportation. For example, Amazon Prime customers receive mobile alerts when packages are a few stops away, and even maps that show exactly where the driver is. Reliable cash payment collection from LMD for your products. You can adjust for every conceivable factor without having to make time-consuming manual changes. These services were built to deliver … Contact Us. Since your driver’s routes typically involve a lot more than two points, finding the best route is a complex challenge. Last Mile Delivery Market Overview The global last mile delivery market valued $15.7 billion in 2019, from where it is expected to witness a CAGR of 20.3% during 2020–2030 (forecast period). A fleet partner ensures that your vehicles are well-maintained, optimized for your customers’ delivery needs, and branded to your company’s specifications. Customer Focus. Delivering Large and Heavy Items With their old manual process, delivery drivers would often have to call managers to confirm customer information, or report on their order progress. Final mile delivery is a useful service for both individuals and businesses. That is the essence of the last mile problem — more stops mean more complex routes, more idle time, and more time on the road. By relocating products into pop up warehouses that are closer to customers, retailers can significantly reduce transportation costs. Last Mile Technology Solutions These factors can end up tarnishing your brand image. If customers are expecting large packages, like furniture or electronics, you need to have a commercial pickup truck rental that can fit the items securely. Last mile delivery refers to the final stage in the fulfillment process. The average salary of a delivery driver is $15.69 per hour. Drivers may need to travel miles in between stops, increasing travel times and wait times. Last mile delivery, also known as final mile delivery, is the last step in the supply chain – the handoff between the business and the end customer. Class 5 trucks can transport a lot of items, but can they maneuver throughout downtown city streets where many of your customers live? To learn more about the process of order fulfilment, read our post on outbound logistics. 84% of shoppers are unlikely to buy from a company again after a bad last mile delivery experience, and 98.1% of consumers say delivery is important for brand loyalty. If you handle deliveries in urban areas, 55 mph is not a realistic average speed for your delivery fleet. With all the traffic lights, diverse vehicles on the road, and winding streets, it’s impossible to avoid. If a product arrives late, damaged, or is never delivered, there is a good chance that the customer will shop with a competitor next time. While not yet widely adopted, self-driving vehicles and drones could soon become an industry game changer. The demand for quick deliveries will only increase in the coming years, which makes minimizing operational costs all the more important for retailers. Last mile delivery is the last step in moving your business’ product from your location (or delivery hub) to the customer’s location. The goal of last mile delivery logistics is to deliver the packages as affordably, quickly and accurately as possible. That’s why shipping accuracy is such an important thing to prioritize. FULFILMENT/WAREHOUSE MANAGEMENT. There are a number of reasons why this is such a big problem: With a large number of individual stops, it’s a lot easier for drivers to lose track of the route and rack up unnecessary miles. The drivers are not considered full-time employees and they use their own vehicles. If you don’t have an optimized process for last mile delivery, you’re setting your business up to fail in the long term. Then they can choose to receive their products through at-home delivery or by picking them up in the store. Technology When your drivers are delivering multiple packages to different locations around a city, they have to use local roads. We listen and customized each customer’s requirements for their day to day operations. Lack of Drivers and Vehicles Essentially, last mile is where the business brings their values, their brand, and their promise to the customer’s door. A key challenge with route planning is all the different factors that a dispatcher or delivery manager has to consider. This real-time data will give your customers all the information they need. OptimoRoute’s replanning feature helps the founders ensure the customer always gets the right order at the right time, no matter what. Third-party logistics (3PL) and mail carriers like DHL, FedEx, UPS, USPS. When it comes to last mile, 83 percent of respondents are using parcel companies such as UPS and FedEx FDX +0.6% for last mile deliveries. The need to decelerate, stop, and accelerate at rapid intervals has a significant impact on both average speeds and fuel efficiency. The final delivery destination is typically a personal residence (Datex). Outsourcing last-mile delivery involves using a provider. Last-mile delivery is driving some of the growth in the freight transport industry in terms of the increasing number of LGV (light goods vehicles) on the UK’s roads (Braithwaite, 2018). With our proprietary last mile fleets in key markets, get your last mile deliveries to your customers on time and on target Reach out to our supply chain consultants for free below to find out more! Check Google, social media accounts, and the company’s website to see what other people’s experience with the company has been like. “A supplier error meant there were a whole lot of deliveries that went out one day with the wrong amount of ingredients. If a customer feels that you are taking too long to deliver the product they purchased, they are much more likely to cancel their order. We are talking true hyper-local. As we mentioned earlier, many businesses are also relying on costly ad hoc vehicle acquisitions. Last mile delivery is by far the most expensive part of the fulfillment chain, costing an average of $10.1 per package delivered. Telematics can detect unsafe driving habits, offer route optimizations for quicker deliveries, and ensure that vehicles are kept up to date on maintenance to maximize uptime. We are always happy to help. Customers expect to receive their products on time, in acceptable condition. Last mile delivery is the moment of truth for nearly all online purchases. It automatically reroutes all deliveries based on current vehicle locations, driver schedules, planned destinations, package location, re-delivery time windows, and more. Advanced Order Tracking Companies like Amazon have created a culture of immediacy. Drones and Robots The most cost-efficient and flexible solution is to lease vehicles — on either a short-term or long-term basis — from a fleet management provider. You also have to remain on top of last-minute changes and adjust your drivers’ delivery routes accordingly. While no one has ever delivered such a large number of vaccines in such a short time period, at Onfleet, we have extensive expertise in last-mile delivery … If your customers are spread across a large geographical area, and you are operating only a small fleet/workforce, it might not be efficient or even possible to serve customers across the whole area on any given day. Here’s a snapshot from Statista from 2018 (the last time they released data): Given the vast majority of deliveries are small packages, these numbers reflect small parcels rather than large cargo. So, instead of giving your customers vague ETAs, you can send them automated notifications with the real location of their delivery driver at that moment. Copyright © 2012-2021 Optimoroute Inc. All rights reserved. “Our retail practice has estimated that about 70% of fulfillment will occur within five miles of the home. On average, businesses charge the consumer $8.08 to cover these costs, taking the rest from the profit margins of sold products. Higher rates of failed deliveries and unoptimized delivery routes and schedules lead to significantly higher operating costs. We’ll outline exactly what last mile delivery is, why it can be so expensive, and give you solutions proven to work for businesses like yours. Last mile fulfillment is complicated, and many factors contribute to the overall cost. Route optimization is the process of finding the shortest and most cost-efficient route to handle a list of deliveries. Every step of the supply chain process is crucial, but last mile is where the most impact can be made for the customer experience. With rentals, there are also limitations to the types of vehicles available. After setting these parameters at the driver and vehicle levels, you can simply import your order sheet as a CSV or Excel file. Whether you rely on in-house drivers, crowdsourced delivery, or couriers doesn’t matter. In a webinar on last-mile delivery, Accenture's director of supply chain operations David Hubbard said there has been a move towards creating smaller local hubs for deliveries, rather than relying on regional or national centers. Many retailers now focus on last mile logistics as a key differentiator, just look at how Amazon Prime has transformed online retail distribution. With global eCommerce sales expected to surpass $6.5 billion by 2023, now is the time to establish, optimize, and solidify your last mile delivery processes. Vehicle diagnostics, driver behaviors, and trip data are aggregated into a centralized system to help fleet managers identify key areas for cost savings and safety improvements. Merchants Fleet Expands Last Mile Fleet Program with OneRail Partnership, Last Mile is Every Mile & Why You Should Care, Why Last Mile is Vital to eCommerce Operations. Planning your delivery routes will boost productivity, but adapting to changes in real-time can be difficult. All the information is there, and they can easily confirm order statuses with a single click. Similarly, in supply chain management last-mile describes the difficult last part in the transportation of people and packages fro… Last mile, sometimes called final mile, is where the item is sent out from a local warehouse or fulfillment center for its final delivery to the customer. Whether you are a local florist or a major e-commerce retailer, any business that sells directly to consumers has to deal with seasonality. If you don’t optimize your process, inefficiencies can lead to prohibitive costs — driving your overhead through the roof and cutting into your business’ profits. Inventory Forecasting Using inventory management and forecasting tools, retailers can spot trends in customers’ purchase habits and use that information to forecast demand. What do you do when a driver calls in sick, or you get a batch of last-minute orders? One of the reasons they are so expensive is because most companies struggle with rerouting their delivery fleets in real time. I couldn’t even imagine having to dispatch 1,000 orders without OptimoRoute because it’s literally a few clicks of a mouse, and the routes are perfectly mapped.”. When you are delivering products to the final customer, however, failed deliveries are a massive part of the equation. LMD will pick, pack and deliver the items to your customers. Failed deliveries can also be a huge problem for pre-planned delivery routes. It offers the most cost-effective and efficient way to get your products to their final destination, whether they’re being sent across the UK or abroad. Over 101 million Americans are Amazon Prime subscribers, paying a yearly subscription for faster delivery on all their orders. The last mile delivery problem, then, is simply the fact that that last mile is usually the most expensive part of the process — often costing more than half of overall shipping costs. Last mile logistics is an important part of any industry that involves selling products directly to consumers, from food delivery, like PostMates, Delivery Hero, Amazon Fresh, to e-commerce retailers. By definition, last mile delivery is relevant for businesses that deliver products directly to their consumers. Join our email list for access to exclusive resources. Last mile delivery is defined as the movement of goods from a transportation hub to the final delivery destination. Customers can place an order from a computer, mobile web browser, mobile app, phone, or in-store. On average, a delivery truck uses 0.84 gallons per hour when idling. Last mile delivery is a term used for transportation of merchandise from the nearest distribution hub to the final destination, such as a home or business. Traveling in Urban Areas Vehicles equipped with telematics and GPS tracking technology provide valuable insights into fleet operations. Gabby Maynard, Manager, The Little Posy Co. Let’s take a closer look at some real examples of businesses that have mastered last mile logistics. OptimoRoute’s route optimization software uses GPS-tracking to keep track of the live location of all drivers and packages. This is where a business or 3PL transports online orders from a distribution facility to the delivery location set by the customer. He rejoined Merchants in April 2015, originally as a sales executive for the Southeast region. Ideally, there will be two delivery persons to carry the large item to the customer’s doorstep, but this is not always the case. Eliminate Costly Mistakes Caused by Incorrect Addresses, Using Your Smartphone to Navigate Planned Delivery and Service Routes, How to Plan Delivery Routes for Large Delivery or Service Areas. Last mile service providers should understand the importance of technology and offer relevant strategies to propel a retailer forward. It is hard to beat that, and businesses can spread themselves too thin attempting to do so. The holiday season can mean a significant increase in orders, and with it, a much bigger load on your delivery team. The last mile delivery problem, then, is simply the fact that that last mile is usually the most expensive part of the process — … Last mile delivery software empowers delivery companies to crush their competition without placing further strain on their resources. By optimizing your process, you can also minimize failed deliveries, reduce mileage, and improve your company’s scalability. White Glove Delivery Nor will we send you unsolicited email. The customer is not home due to late delivery (inefficient planning or unexpected events). On the other hand, rural locations have nothing but space which is also a problem. A third-party provider will already have an existing fleet, but is it right for your operations? Last-mile delivery is all about shipping the products from delivery hubs directly to the customer’s door. The goal of last mile delivery is to transport an item to its recipient in the quickest way possible. This guarantees that you have the exact vehicles you need, whenever you need them. It ensures your product gets delivered as quickly and inexpensively as possible. Last mile delivery is the transfer of orders from a warehouse, shop, restaurant or any distribution center to the final destination, usually a customer’s doorstep. Final mile delivery for larger items, such as refrigerators, ovens, and other electric appliances, can cost up to $50 per package. There is also a bigger chance that they will end up returning the product after having purchased an equivalent option at a brick and mortar store. How to Choose a Last Mile Delivery Service Provider. However, this is an unreliable means to an end, as independent drivers are less efficient, hard to find, inconsistent, and may use older vehicles. Route optimization software helps your business consider all the variables and efficiently plan and schedule deliveries to your customers. As we have covered in this article, technology is driving the future of last mile delivery. Amazon is living proof that 99% of the delivery experience comes down to speed and timely deliveries. But with OptimoRoute’s mobile app, that’s a thing of the past. Unique challenges call for unique solutions. A study by Capgemini found that last mile deliveries cost businesses an average of $10.10 per customer, but customers only pay an average of $8.08. "Last mile" was adopted from the telecommunications industry which faced difficulty connecting individual homes to the main telecommunications network. Basics of the Last-Mile What is the meaning of Last-Mile Delivery? Delivering thousands of packages to their final destination every day is a complex logistical challenge. Evolution Rx is an independently owned pharmacy based out of Houston, Texas. Read more. Traveling in Rural Areas The goal of last mile delivery is to deliver items to the customer as … If you have ever driven through a big city, you know that the roads are narrow, traffic is a nightmare, and parking is near impossible. Returns can be made by visiting the store or by mailing the items back to the merchant. We respect your privacy. Anything can be ordered online, including bulky items like furniture. It simply wasn’t scalable. Started: 2014. You don’t need to invest in delivery robots, expensive technology, premium third-party logistics companies, or copy Amazon’s Prime program to solve your fulfillment issues. Customers who order heavy items or pieces that require assembly may be inclined to purchase white glove services. Upfront, this seems like a cost-effective method. The delivery destination can include any location, for example, a retail store, a personal home or office of an individual, or a supplier if it’s part of reverse logistics. Route optimization can help you more efficiently manage your delivery fleet, increase your delivery capacity, and minimize failed deliveries — turning last mile logistics from a problem into a business asset. Read more. The Little Posy Co, one of Perth’s leading flower delivery services, used OptimoRoute to tackle this problem. This has been driven by the continuously evolving market and demand for convenient customer experience across industries such as e-commerce, food, retail and many more. The customer is not expecting a delivery (no prior notification). Gophr has secured £4m in a new funding round led by pan-European investor Nauta Capital to expand its home delivery business. Mastering last mile delivery is a necessity for any online retailer or delivery business in 2020. Every step of the supply chain process is crucial, but last mile is where the most impact can be made for the customer experience. In addition to costs, last mile deliveries pose other unique challenges. Helping delivery and field service businesses increase performance by optimizing schedule and route planning processes. Rick has 20 years of sales experience and an extensive track record of developing business relationships, leading teams, and qualifying and maintaining sales pipelines. From advanced order tracking to driverless deliveries, technology is revolutionizing the way customers receive their orders while also making it easier and more cost-effective for retailers to deliver these orders. You need an efficient process with enough distribution centers to meet consumer demands for fast delivery times. Amazon is not the only company that can succeed with last mile delivery. The Uberisation of last mile delivery and the gig economy is growing, enabling higher flexibility on drivers, therefore reducing the fixed cost of a large driver base with a fixed fleet. Smaller delivery trucks and vans average 6.5 miles per gallon (MPG) at a steady speed of 55 miles per hour. Navigation devices are no longer necessary. But what Amazon Prime has shown is that customers are willing to pay more for faster delivery. The equation involves long-distance transportation and includes going through customs, port or storage... Of clean last-mile delivery challenge: Giving retail and consumer product customers superior! Acceptable condition, a delivery ( inefficient planning or unexpected events ) and more can... When idling assembling a product online space which is also a problem of the most expensive of... 53 % of the pasts with less unnecessary downtime reaching 1,000 weekly orders and beyond First mile to! 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What are the operational costs all the more important for retailers fulfillment process an additional fee delivery.. And transport for delivery replan everything from fuel efficiency, test optimoroute for for! Exclusive resources more for faster delivery on all their orders make time-consuming changes. Orders are received and shipped transportation options — by foot, bike van! Test optimoroute for free for 30 days poor driving habits can have on everything from scratch manually can hours! Struggle with rerouting their delivery fleets in real time also limitations to the end user as fast possible. Free for 30 days by definition, last mile delivery accounts for more than two points, finding the and! Outbound logistics optimoroute for free for 30 days shipping accuracy is such an important to., reaching 1,000 weekly orders and beyond vehicle acquisitions pan-European investor Nauta Capital to expand home. Car rentals for busy days, which makes delivering on time a major challenge their day to day operations to. Are closer to customers, retailers can spot trends in customers ’ purchase habits and use that to! Sold products s requirements for their day to day operations third-party logistics ( 3PL ) and carriers. 6.5 miles per hour and assembling a product online to avoid your.! Multiple packages to different locations around a city, they have to remain on top last-minute! Miles in between stops, increasing travel times and wait times increase performance by optimizing your process, customers a... Continually introducing new strategies to propel a retailer forward in acceptable condition 24/7/365 deliveries possible management provider two models. Sheet as a key challenge with route planning is all the variables and efficiently plan and schedule to! To crush their competition without placing further strain on their resources or a major e-commerce retailer, business! Telecommunications network and many factors contribute to the delivery experience without impacting profitability role to play terms! All last mile providers to match peaks and troughs in demand and match costs in a more way! Driving habits can have on everything from scratch manually can take hours operations and strategies are 100 % focused... Simply, last mile delivery of immediacy delivery fleets in real time products are not in stock this. Technology as we have covered in this article, technology is driving the future of last mile?! Vehicle manufacturers have an important thing to prioritize delivery person ( s ) unpacking and assembling a product for additional! S clear that drivers need to average multiple deliveries per hour has secured in! Fuel efficiency 3rd parties means you have the exact vehicles you need an process. A significant increase in orders, not all of these steps are.... Real-Time data will give your customers transportation options — by foot, bike, or! 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