Last mile delivery challenges are for real. Global e-commerce is expected to grow 10.4% in 2023 with an estimated $6.3 trillion in sales. The global pandemic amplified the online retail boom and the trend continues.

Here is the core of last mile delivery challenges.

Consumers expect cheap, fast delivery. According to Forbes, 77% of consumers abandon purchase orders due to unsatisfactory shipping options. According to the same report, free shipping leads to 84% more sales.

However, it is not always easy to keep shipping costs down. E-commerce is a complex process that involves everything from coordinating with wholesalers and manufacturers, receiving and preparing customer orders, and arranging distribution. Oftentimes, a majority of the distribution costs are incurred in the final part of the process known as last-mile delivery.

What is last mile delivery?

Last mile delivery is a term used for distribution networks that refers to the last stage in the delivery process when a package is moved from a local transportation hub to its final destination. It is also the most visible part of the process. Most of us have seen last-mile delivery in action via a plethora of box trucks patrolling the streets.

Economically, it is an incredibly important part of commerce.

Supply Chain Dive sums up the significance.

“Each last-mile delivery connects, depends on, and is relied upon by various stakeholders in the supply chain.”

In other words, it is the last step that links business to other businesses and customers. It gets goods into the hands of the final recipient.

But with the growth of e-commerce comes predictable headaches and last-mile delivery is no exception.

Is last mile delivery inefficient?

Last-mile delivery has been bedeviled with a variety of challenges including costs, route optimization, mistakes in addresses, costs of missed deliveries, and redeliveries.

Since it accounts for most of the overall shipping costs, it bears added significance.

Improving the process is the best way to help retailers retain customers and increase sales. Delivery services that can meet these challenges stand to best position themselves as trusted partners.

Let’s examine 4 challenges and solutions associated with last-mile delivery.

Rising costs create many last mile deliver challenges

There are a variety of factors that contribute to the cost of last-mile delivery. Rising fuel prices directly affect distribution companies’ profit margins, but other issues include the complexities of delivery routes based on different drop-off points, traffic and urban congestion, order cancellations, and missed deliveries.

Real-time visibility

Many online stores provide their customers with tracking codes to check the status of packages. But the process for referencing those tracking codes is often cumbersome, forcing customers to navigate to carrier pages that don’t always provide adequate details if any at all.

Visibility is a particularly vital element that helps businesses manage customer service by providing detailed updates on the package locations.

Late and failed deliveries

A failed delivery means a re-delivery. Naturally, this action increases a company’s expenses.

According to statista.com the average cost of a failed delivery in the U.S. is about $17, €15 in Germany or £12 in the U.K. In Japan, nearly 12% of door-to-door deliveries had to be redelivered in 2022.

Delivery delays are an easy way to draw the unwelcome ire of a customer, and if too frequent, can hurt a company’s reputation.

Customer Nuances

Customer nuances can be one of the biggest – and least controllable – challenges associated with last-mile delivery.

Phenomena include incorrect addresses, remote locations, cramped delivery locations that lack easy accessibility, last-minute order cancellations, absence of the customer to receive the package, returns, etc.

The unpredictable nature of these issues makes anticipating associated costs extremely difficult.

Solutions

Maintaining optimum delivery routes and pickups, avoiding costly delays, and ensuring customer satisfaction are difficult challenges to overcome, especially all at once.

While many of the challenges associated with last-mile delivery fall into different categories, they are linked by a similar solution: delivery management software.

Before widespread digitalization, many businesses managed their deliveries with analog methods. However, in order to adjust to customer expectations like same-day shipping, they need solutions that are more dynamic.

Wise Systems

For example, Mitsubishi Fuso deployed a solution in Japan called Wise Systems, which uses AI-driven technology for optimizing and dispatching truck routes.

It calculates route plans while factoring in the unique variables and constraints of each operation – the number of ordered goods, delivery conditions, vehicles, and drivers.

Wise Systems uses data gathered from an application installed on a driver’s smartphone to predict vehicle performance and to enhance the accuracy of future routes while minimizing vehicle mileage and driving time.

Dispatchers can monitor their fleets through live maps and check delivery progress and ETAs as well as driver performance.

Drivers receive interactive routes and delivery details, as well as tools such as customer notifications, notes, proof of delivery, and barcode scanning that helps them manage their days and offer better customer service.

Important considerations for sofware solutions

Logistics provider Upper Route Planner recommends seven main considerations when looking for a software solution:

Excel importing, route optimization, report generation, GPS tracking, single-click dispatch and proof of delivery, route scheduling, and customer notification.

Ensuring last-mile delivery is done in a timely manner is critical for business growth, customer satisfaction, and loyalty.

Despite last-mile distribution challenges, companies are increasingly discovering that software is streamlining solutions that are saving time and money and minimizing delivery turnaround time.

A decade ago, using software solutions may have been a preference depending on a business need. However, considering the continuous increase in e-commerce and customer demand, companies that employ technical solutions will best adapt.