Why is Last Mile So Expensive?

Last mile delivery is the stage of logistics where the goods/product ordered leaves the hub/warehouse and reaches the address mentioned by the customer. Online ordering has boomed and customer expectations have skyrocketed. Fulfilling these orders efficiently and in a cost-effective manner is a question a lot of brands are trying to answer. And last mile deliveries are a critical leg in the entire process. 

In the entire delivery chain, last mile delivery constitutes 53% of the total cost, which is huge! Working with 200+ enterprise customers from 50+ countries, we have listed several reasons for this. Some of the major ones are:

  1. Failed Deliveries: According to our survey with 200+ enterprise customers, 15% of all orders don’t get delivered in the first attempt owing to several reasons ranging from customers not being available at home, a delivery vehicle breakdown, incorrect product getting delivered, or having a wrong delivery address.
  2. Inefficient Routing: With thousands of orders every month and a fixed number of delivery drivers available, orders must be delivered efficiently. Up to 20% of the cost can be reduced just by utilizing the best route optimization technology.
  3. Customer Expectation: Over the past few years, customer expectations have been growing significantly and brands have been one-upping the other in terms of providing a great delivery experience. We see companies offering shorter delivery times to attract more customers.
  4. Delivery Driver Shortage: Another issue we continuously face is regarding delivery driver management. The requirement for drivers is increasing at a pace higher than there is supply and this will necessitate brands to best utilize the available resources.

To consume all these reasons and the solutions for them, we’ve come up with a detailed infographic to help you in navigating the last mile using last mile delivery management software, read on:

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