5 Last Mile Delivery Optimization Methods That Really Work

Last mile delivery optimization methods that really work
Featured image credit: Andrii Yalanskyi/istockphoto.com

With consumers expecting same-day delivery from eCommerce companies, the majority of them are dissatisfied with the delivery experience. The top causes of dissatisfaction- as highlighted in a Capgemini report– are no same-day delivery, high delivery prices, and late deliveries. So why not invest time and effort to keep customers happy through last-mile optimization? 

But what is last-mile optimization?

Last-mile optimization is about optimizing the final step of a product’s journey from the warehouse to a customer’s door. Optimizing last-mile deliveries is critically important for any delivery business or eCommerce companies. Why? In addition to being key to the customer experience, last-mile delivery is also the most expensive and time-consuming part of the entire supply chain. 

As per the same Capgemini report, 55% of customers will switch to a competing brand if it offers faster and safer delivery. The high costs of last-mile deliveries are eroding into profits because eCommerce companies often charge less than what it actually costs them to deliver orders. To reduce costs, expedite deliveries and improve customer satisfaction, you need to look for ways to optimize last-mile delivery.

Specifically, last mile delivery costs account for over 53% of the total cost of delivery. And this problem is only getting worse – the rise of eCommerce and online orders has led to dramatically increased demand for parcel delivery. The supply chain is strained. Last mile delivery optimization is needed to control delivery costs.

In addition to reducing your expenses, solving the last mile problem will also help you increase your revenue. According to a Capgemini report, 75% of customers will buy more of a retailer’s products if they are satisfied with the retailer’s delivery service.

5 Ways To Deal With The Last Mile Delivery Problem

The challenge with last mile logistics is that you need to lower the cost of last mile delivery while also showing up on time consistently and keeping your customers happy.

Retailers have been experimenting with many different logistics optimization techniques, including expanding the last-mile network to improve the delivery experience. However, building a larger network is expensive. The following five techniques have proven to be especially effective for making last-mile effective:

1. Crowdsourcing

Walmart, the world’s biggest retailer, recently launched Spark Delivery, a pilot run of its last-mile grocery delivery service. Spark Delivery is a crowdsourced delivery platform where independent drivers collect orders from Walmart stores and warehouses and deliver them directly to customers.

The financial benefits of this arrangement are obvious. Finding freelancers for delivery is more affordable than hiring in-house delivery staff. Independent drivers also provide vehicles and are responsible for vehicle repairs, which will save you a lot of money as well.

Another benefit to crowdsourcing is that it allows you to change the size of your team with ease, so you’ll have no problem bringing on extra drivers during peak seasons and scaling back when business slows down.

Want To See For Yourself How Route4Me Can Boost Your Profits?

Whether you want to slash the time it takes you to plan routes for your drivers, increase the number of stops they can make, or keep your customers satisfied knowing that your drivers show up on time… Route4Me helps you achieve that!

2. Route Optimization Software

If you still use pen and paper to plan your routes, you’re making last mile delivery harder than it needs to be.

There are many obstacles you need to anticipate in order to plan optimal routes, such as traffic congestion in high-density areas, construction closures, and more. Then, there’s the added issue that each customer is only available at certain times. Route planning is so complicated that it can take hours to do by hand, and after all that effort the routes you create still won’t be as efficient as they could be. You could even make a mistake that ends up with your driver getting lost, which would lead to serious delays and upset customers.

That’s why you need last mile delivery optimization software. Such software makes your routes much more efficient, so you’ll save on standard last mile delivery costs like fuel and wages. Also, route optimization software reduces the amount of time it takes to plan routes from hours down to just 30 seconds, giving you more time to dedicate to other tasks.

To learn more about how you can leverage the benefits of routing optimization software, read our article on how route scheduling software can make last mile deliveries more efficient.

3. GPS Tracking Software

Do you know what your drivers are doing? Hopefully, whenever they’re on the clock, they’re working hard and doing whatever they can to meet their estimated arrival times.

There’s a possibility, though, that some members of your team have a habit of taking unsanctioned breaks when they should be working. If that’s the case, your last mile delivery costs will be inflated from wasteful time and fuel usage.

The best route planners come with a GPS tracking feature that shows you the real-time location of everyone on your team. That way, you can always confirm that your drivers are doing what you want them to do.

4. Customer Portal

One indirect, and yet significant, way to lower delivery costs is to introduce more transparency into the delivery process.

Customers like to get updates while they’re waiting for deliveries to arrive, especially if there’s a delay. If they’re kept in the dark, they might cancel their order. Worse yet, this one bad experience could convince them to switch over to one of your competitors.

Route4Me has a customer portal that will help you stop this from happening. Every route you create has a unique tracking URL, which you can easily provide to customers via email or text. Then, all the customer needs to do is plug the URL into Route4Me’s online portal to see the real-time location of their order displayed on a map. This will give them some peace of mind and improve your long-term delivery success rate.

5. Dark Stores

The aforementioned Capgemini study also found that 25% of businesses use dark stores for same-day delivery. With this method, these businesses have been able to reduce their delivery costs by an average of 23%.

Dark stores are retail outposts with store-like layouts that serve as transportation hubs for online orders. These stores can process high delivery volumes and provide convenient pick-up locations for end-customers, saving you from the trouble of arranging last mile deliveries.

Last mile delivery alternatives like dark stores allow you to forgo the cost of the last mile entirely. If a business increases dark store deliveries by 50%, their profit margin may go up by as much as 70% due to higher delivery volume and lower costs.

The Last Word On The Last Mile

There is no one-size-fits-all solution to last mile delivery. What works for one business might not work for another. You’ll need to try out different techniques to find the best approach for your business. Once you find the right approach, you’ll be able to make your business much more profitable.

If you have any questions about lowering last mile delivery costs or last mile delivery alternatives, please let us know in the comments section below.

Finally, answering the following three questions correctly will confirm that you know how to reduce last mile delivery expenses:

  1. How can route optimization software help you reduce last-mile delivery costs?
  2. What are dark stores?
  3. How can a route planner help you improve customer experience and control last mile delivery costs?

Want To See For Yourself How Route4Me Can Boost Your Profits?

Whether you want to slash the time it takes you to plan routes for your drivers, increase the number of stops they can make, or keep your customers satisfied knowing that your drivers show up on time… Route4Me helps you achieve that!

Leave a Reply

Your email address will not be published. Required fields are marked *