Last mile delivery: The definitions, challenges and opportunities

During the era of e-commerce, speedy delivery services that ship to each unique customer’s location are the norm. A survey showed that 31% of online shoppers in Southeast Asia switched brands because they wanted faster delivery¹.

While successful delivery is crucial to a satisfying online shopping experience, small business owners often find it challenging to get a reliable, accurate and low-cost last mile delivery service that enables them to distribute products from their warehouse to customers’ final destinations.

1. Think with Google, e-Conomy SEA 2021: Roaring 20s — The SEA Digital Decade, 2021

What is last mile delivery?

Last mile delivery is the final step of the supply chain delivery process — the point at which a shipment reaches its final delivery destination. In the e-commerce business, it means the process where the packages ship from the warehouse to the customers’ addresses.

Why do online business owners need to optimize last mile delivery?

Delay and failing delivery services can result in increased cancellations and returns of shopping orders. A bad shopping experience can harm the customers’ brand loyalty and discourage repeat purchase behaviors. Having a high-cost and unoptimized delivery service will ultimately lead to higher operating costs and lower profit margins.

The challenges of last mile delivery

The challenges of last mile delivery range from the need for complex route planning for many small packages, each going to a unique destination to the uncertainty of delivery route traffic and inaccurate addresses for the final delivery destination.

Here are some major challenges in delivering packages to final destinations:

Customers expect fast delivery times

Nowadays, as major e-commerce marketplaces offer same-day and next-day delivery promises, customers expect convenient and fast delivery of their shipments. While speedy delivery is widely marketed, small business owners need to balance market demands for fast delivery with economical delivery costs.

To give online business owners flexibility in delivery services, FedEx offers a wide range of shipping options that easily meet different customer needs like faster delivery, lower cost delivery and special solutions to meet specific delivery needs. Plus, to give customers peace of mind, FedEx offers real-time tracking so customers can have full visibility of their shipments at any time.

High cost of last mile delivery

Most online customers expect free delivery once they made a purchase over a certain amount. The problem is that last mile delivery is very costly because delivery drivers often have many small packages to be delivered to unique destinations. More complex routes, stops and idle time leads to an increase in the cost of fuel and the delivery carriers’ labor hours, all of which is compounded by inflation.

FedEx offers solutions for businesses to save costs and streamline their shipping process. For example, International Priority^® DirectDistribution allows customers to have one bulk cross-border shipment that clears customs as one unit and can be distributed to multiple destinations in a single country.

By becoming a FedEx customer with a credit card account, customers can save more with discounts from repeat shipping orders.

Find out more cost saving shipping tips from “5 ways to ship and save.”

Increasing demands of special shipping services

Last mile logistics can get complicated due to various situations, from no one being at the destination to pick up the deliveries from the couriers to rescheduling the delivery time and customers not liking the product and returning it.

For online business owners, it is important that they provide flexibility and give their customers control of their delivery. With FedEx Delivery Manager^®, customers can customize their delivery date and location at no extra cost. They can also receive timely notifications with a link to a secure portal where they can choose from a variety of delivery options. Plus, FedEx offer various delivery signature options so customers have the flexibility to choose how they want their packages signed for.

Technology solutions to optimize last mile delivery

FedEx uses various technologies to optimize delivery routes and ensures shipments arrive as quickly as possible. FedEx also offers options to connect FedEx systems with e-commerce marketplaces; which helps streamline and automate the order fulfillment process. Plus, having the FedEx system on e-commerce platforms leads to special discounts.

Future Trends in last mile delivery

The growing complexity of e-commerce last mile delivery due to the diverse requests of customers means that companies need to get innovative. Already, in collaboration with business partners, FedEx helps businesses offer value-added services to their customers, including faster delivery for an additional fee.

As part of its sustainability efforts, FedEx is dedicated to Environmental, Social and Governance (ESG), which is why the company diligently monitors its last mile delivery to ensure route optimization.

FedEx is also developing some innovative delivery modes, including drone delivery, which is being explored In the U.S., and the introduction of autonomous delivery robots to improve the efficiency of on-demand delivery from retailers to nearby houses.

With continuous efforts to optimize last mile delivery, FedEx will keep providing reliable delivery services and support to small business owners. Learn more about e-commerce business resources at the Small Business Center.

Learn more