April 14th, 2023

Proven Ways to Reduce Last-Mile Delivery Costs

We live in an era where lightning-fast delivery is now the new norm. But that isn’t surprising given the most recent technological breakthroughs, which have raised consumer expectations to a record-breaking high.

While customers like this fast-paced experience, retail supply chain and logistics organizations are continuously under pressure of managing and ensuring that these last-mile deliveries are viable and lucrative.

In simple terms, you must optimize your delivery process to be up on the game and reduce last-mile delivery costs. But what causes the increase in delivery costs?And how can you reduce these costs?  

What Causes Last-mile Delivery Cost to Rise

Failed Deliveries

Same-day delivery has significantly improved the shopping experience, no doubt. However, there is still room for enhancement. 

For instance, the buyer sometimes has no idea when the shipper will arrive at their door. As such, the delivery person may come when no one is home. Such situations are classified as failed deliveries.

Complexity & Inefficiency of Last-mile Delivery

The last-mile delivery process may sometimes prove complex and inefficient.  In a rural area, for instance, delivery terminals may be several miles spread, with fewer products to be delivered at each.

Similarly, delivery points in an urban region can be closely situated. However, this advantage is often countered by traffic delays and congestion.

Shipping cost

It’s no secret that customer expectations evolve with time, and companies must be adaptable enough to keep up. Well, the same goes for delivery services.

Based on a poll of 323 logistics companies, 57% of respondents reported that their customers want same-day delivery. Due to the rising demand for same-day delivery, logistics companies are under immense pressure to optimize their last-mile delivery, potentially raising the overall shipping costs.

6 Proven Ways to Reduce Last-mile Delivery Costs

• Auto-dispatching Technology

Uber is the world’s largest taxi-hailing company, available in over 60 countries and known to provide cab services in minutes. The company employs sophisticated algorithms to match the most suitable drivers to the ride requests with the most eligible drivers. 

Logistics companies and retailers could employ such algorithms when allocating requests after the batches are created. By leveraging the auto-dispatch technology, you can efficiently assign or allocate orders at the right time and place and to the right driver.

• More Delivery Options

Assume a customer is looking to make an online purchase, and same-day delivery is the only shipping option. But they’re about to head out to run errands and late evening is probably the earliest they’ll get back.

They could still place an order, but the last-mile delivery costs will skyrocket since your driver will be racing to fulfill a same-day delivery for a customer who isn’t even around.

So, while same-day delivery is great, it’s not always the ideal option for everyone. In fact, according to a report by Capgemini Research Institute, 73% of buyers prefer a convenient delivery time slot to fast delivery.

• Continual Route Optimization

The shipping cost is proportionate to the distance separating the delivery points. And so, it is crucial that you optimize the multi-stop route by ensuring the time needed to complete all deliveries is as short as possible.

Luckily, most last-mile logistics software incorporates route optimization capability that considers multiple factors to suggest optimized routes. These factors include things like:

• Driver capacity
• Location
• Traffic
• Time
• Distance

Even more impressive, most of these advanced solutions also provide an option to interact with drivers in real time. This feature proves helpful to the admin in terms of identifying and analyzing the cause of delay, if any. 

• Real-time Tracking

We now live in an era where information is vital; people like to understand what’s happening, particularly regarding their deliveries. Investing in the right software can provide you and your customers with real-time delivery information and enhance their overall shopping experience.

With such software, one can view data such as:

• Covered distance
• Miles per task
• Average time per task
• No. of successful and failed deliveries
• No. of completes tasks
• Idle time

Customers who can track their delivery are more likely to receive their delivery on time, reducing the likelihood of botched deliveries considerably.

Most importantly, giving customers the required delivery information increases loyalty and fulfillment.

According to the aforementioned  report , 74% of customers who are pleased with their last-mile delivery service will spend more on that company, and 82% will tell their family and friends about their satisfactory experience.

• Verify Deliveries

You can easily get proof of delivery by taking advantage of last-mile delivery technology. Typically, this includes a clear record of who signed the package, where it was dropped, and when it was delivered.

Drivers can gather critical information such as signatures, images, notes, and barcodes in a matter of seconds using a smartphone application connected to a sophisticated last-mile delivery system.

The data obtained can be easily retrieved afterward, offering critical insights that can assist you in detecting roadblocks, verifying delivery, and streamlining operations.

• Smart Warehousing

Customarily, warehouses were typically located on the periphery of the actual delivery region. However, that’s no longer the case; the situation is now changing with the increase of hyperlocal and on-demand deliveries. 

By reducing the distance a parcel must cover before reaching the customer, you can save money on delivery costs. Moreover, strategically situating your warehouse in the center of an urban area makes it convenient to reach your customers and fulfill short delivery time windows.

Similarly, if most deliveries come from the outskirts, it only makes sense to locate a warehouse nearby.

Streamline Your Last-mile Delivery Today

The last mile phase of the logistics and retail supply chain industry can be pretty expensive and any company that succeeds in keeping a lid on it is likely to be successful. 

We’ve explored the numerous factors contributing to the rise of last-mile delivery costs and even discussed several approaches to addressing them.

Investing in an innovative and reliable last-mile delivery system is essential if you’re in the supply chain and logistics business. Such systems can help cut down your last-mile costs and help you become profitable.

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