All across the country at a rapid rate, consumers are turning to the internet for all of their shopping needs. In today’s digital age, a fast fulfillment time isn’t just a nice thing to have. It’s what customers expect from every online shopping experience.
If you want your company to have a shot at beating out Amazon Prime, fast fulfillment and shipping have to be your top priority.
Because of this, businesses have scrambled to create new technology and supply chain models. This allows them to ramp up their volume, make deliveries faster, and improve their customer experiences. And they do this all while trying to cut their prices as well.
Unfortunately, same day, final mile shipping is one of the most costly expenses they face.
In this article, we’re going to look at the logistics behind shipping, what the issue with the “last mile” is, and how you can change and work around the challenges of shipping your products.
What is Final Mile Delivery?
Your product begins a journey from the minute a customer purchases it. It starts on the shelf and ends when it gets to your customer’s doorstep. The “final mile” is considered the last step in the process, or the point where the item gets there.
This final mile delivery is key to the satisfaction of your customers. It’s expensive and time-consuming, but also the most important factor in the shipping cost.
Basically, the last mile is a metaphor that businesses use to describe the way goods move from the fulfillment center to their final destination. It’s the “out for delivery” part of the process.
What is the Final Mile Problem?
Think about the last time you ordered a package online and were able to track its delivery. As soon as it says “out for delivery” you probably felt like it took nearly forever.
If you’ve done this, then you know that the final mile issue is how inefficient it is. This is because the final part of shipping involves a lot of stops that have small drop sizes.
In rural areas, the delivery points on a route can be miles apart with only one or two packages being dropped off at a time. In cities, it doesn’t get much better. While urban areas make up for in the closeness of the drops, they lose out on the sheer volume of traffic congestion and delays.
The cost and the ineffective methods in the final mile delivery just get worse as e-commerce rises in the US. This is because more packages are delivered every day and customers just continue to raise their expectations for fast, free delivery.
What Does Final Mile Delivery Cost
Final mile delivery costs 53% of the overall total cost of shipping. And this only winds up hurting your bottom line, as free shipping is a mandatory aspect of the customer experience.
This means that more and more, retailers and logistics partners have to front the cost of shipping themselves.
Because of this, final mile delivery is the first place they look to use new strategies, technologies, and improvements.
With gig economy on the rise, consumers are already pretty familiar with things like Uber, Airbnb, and Postmates. These services crowdsource their services over digital platforms.
Location-based crowdsourcing lets consumers open an app and catch a ride, find a place to stay, order McDonald’s to their house, hire a handyman, send flowers, schedule takeout to arrive the second they walk through their front door or virtually any other service they might require.
This model has been pretty popular in transportation, hospitality, and food delivery for a while. Retailers are starting to think of it for its low startup costs and the asset-light operations.
With this technology, businesses can directly connect with local couriers who use their own vehicles to deliver goods. This means that companies can get their products out to their customers at a much faster rate, and customers can get their goods when they want them.
This freedom to make on-demand and scheduled deliveries alike provides the options for customers to schedule deliveries when they will be home, which completely eliminates the need for additional delivery attempts.
With the way automation has been integrated and enhanced in all industries, we might even see delivery robots, drones, and self-driving cars make drop-offs in the future.
However, in current times, not even Amazon has managed to completely crack the crux of the final mile completely. They still haven’t been able to perfect a same-day delivery service.
They’re still grabbing with whether or not they should outsource all of their delivery or do some of it in-house, allowing them to control the most important moment of the customer interaction. So Amazon still relies heavily on USPS, UPS, and FedEx, but it’s testing out its own shipping network in places like San Francisco.
The Last Leg
As Amazon continues to dominate the market in terms of prices and shipping, companies of all sizes are trying desperately to discover a way to keep up. In order to build a loyal customer base, your business has to control the most important part of the delivery process and understand what your customers need and want.
At the end of the day, e-commerce customers don’t like to wait. The internet has conditioned us to expect instant gratification. In order for a business to be successful, they have to be able to keep up.