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How Do I Optimize My Last-Mile Delivery and Make It Profitable?

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  • Post last modified:January 25, 2022
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The growth of e-commerce has led to an exponential increase in the volume of deliveries. But the customer expectations, especially on the delivery front, are high these days. So, the last-mile delivery is increasingly becoming an enabler for growth and a competitive differentiator for e-commerce businesses. Doing last-mile logistics correctly through an efficient last mile delivery management system will lead to repeat business and loyal customers. 

Is Last-Mile Delivery Profitable?

  • While the customer expectations on the delivery front are high, the costs associated with meeting such customer expectations are also increasing. Apart from rising complexities and delivery inefficiencies, businesses face the challenge of the increasing costs of last-mile deliveries.
  • Last-mile delivery is the most expensive and time-consuming part of the entire supply chain. Research studies indicate that the cost of the last mile of your product’s delivery accounts for more than 53% of the total delivery costs. Also, the cost of last-mile deliveries can increase two to four times based on how narrow the promised delivery time windows are. All these high costs of last-mile deliveries eat up profits. If you don’t optimize your delivery operations, inefficiencies can lead to prohibitive costs that cut into your business profits.
  • Moreover, e-commerce companies and logistics providers cannot shift the burden of costs on the consumers because this will leave them unhappy and dissatisfied. So, businesses must take proactive measures to improve the efficiency of their last-mile delivery services and reduce delivery costs to maintain a healthy profit margin.  
  • In another study, 84% of shoppers say they are unlikely to buy from a company again if they face a bad delivery experience. Also, more than 98% of consumers say that last-mile delivery is key to brand loyalty. 
  • That is why last-mile delivery optimization is critically important for any e-commerce and logistics business with a delivery component. Now, let us discuss how you can optimize your last-mile delivery operations with the help of the right tools, tactics, and last-mile delivery software.

How to Optimize Your Last-Mile Delivery?

The following are five proven techniques to optimize your last-mile delivery services:

  1. Outsource Delivery Drivers
  • Consumer demand for same-day self-service delivery is going off the charts.  If you don’t have your fleet, it is best to use an outsourced delivery platform to helps you find independent drivers who can collect orders from your stores or warehouses and deliver them directly to your customers.
  • The financial benefits of outsourcing delivery to independent drivers are evident. Since overheads associated with employee-related taxes, insurance, and benefits are significantly high, using freelance drivers for your last-mile delivery is more affordable than maintaining in-house drivers. Moreover, independent drivers provide their own vehicles and are responsible for their vehicle repairs, which saves you a lot of the cost of vehicle maintenance.
  • Another benefit to outsourcing drivers is that you can dynamically adapt to customer demand without incurring ongoing fixed costs. So, you can bring on extra drivers during peak seasons and scale back when business slows down. 
  • A centralized dashboard that shows truck and order statuses in real-time can offer visibility and seamless delivery to your consignees. A unified last-mile delivery software provides a centralized dashboard that helps companies manage all drivers regardless they are owned or outsourced.
  1. Plan Optimal Routes (Effective Route Planning)
  • For companies having thousands of deliveries scheduled per month, the assignment of those deliveries must consider the most optimal routes.
  • To plan optimal routes, you need to consider several challenges, such as traffic congestion in high-density areas, construction closures, and the availability of each customer at certain times.
  • That is why you need last-mile delivery software or route optimization software to make your routes more efficient and save on costs like fuel and wages. 
  • Lastly, the last-mile delivery route optimization will help you increase your top-line revenue. 
  1. Track Your Vehicles and Drivers 
  2. Careless drivers can inflate your last-mile delivery costs from wasteful time and fuel usage. A commercial GPS tracking system shows you the real-time location of your drivers, so you can always confirm what they are doing.
  • Moreover, it helps you know if there is a vehicle breakdown, an accident, or an emergency during delivery. This visibility can help you resolve delivery delays within the shortest time and minimize losses. 
  • Some last-mile delivery software systems have a re-optimization feature that helps you re-route routes and assign another driver nearest to the affected customer to make the delivery on time.
  1. Provide Last Mile Visibility to Customers
  • Customers now demand greater visibility into last-mile delivery (that is, the visibility a customer has over his delivery). They expect a high level of visibility and experience, wherein they can see a real-time map on their mobile phones, watch the driver on their route, and know exactly when he will arrive. Customers should also be able to use a tracking number or their Account ID and track the statuses of their packages. Customer engagement features, such as direct communication with the driver, are also important.
  1. Keep Proof of Delivery
  • With high volumes of deliveries, companies need to have more visibility and transparency into the last-mile delivery process. An Electronic Proof of Delivery helps companies keep a verifiable record of when a delivery is made. The system requires a driver to get a signature and scan a bar code before leaving the last mile delivery location. So, the electronic Proof of Delivery provides insights on when drivers deliver packages, who signs them, and where they are dropped. This information is then directed to a central system and logged. In case a customer claims that the item was not delivered, the company has verified proof of delivery.

Conclusion: To summarize, you should invest time and effort in optimizing last-mile delivery so that you can provide a great delivery experience to your customers and ensure repeat business from them. The five ways enumerated above have proven to be highly effective in optimizing last-mile deliveries. So, are you ready to invest in last mile delivery management software to optimize your last-mile deliveries?

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