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4 Practical Ways to Wrangle Your Last-Mile Delivery Costs

Discussing the high costs and logistical challenges associated with last-mile delivery, including its significance in the supply chain and impacts on a company's profits.

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Have you ever tried to figure out how much last-mile delivery costs for your business? For many, last-mile delivery is the most expensive part of the entire supply chain. It consumes a significant portion of profit and this could lead to an early demise for a company,.

Do you want your business to be harmed as a result of last-mile delivery costs? Do you know how to cut costs by optimizing last-mile delivery?

If your company offers delivery services and you want to improve workflow management, you’ll need to implement a few important strategies.

We’ve put together four options to assist you in controlling your last-mile delivery costs.

Table of Contents

  • What is Last-Mile Delivery anyways?
  • What are Last-mile Delivery Costs?
  • Why are Last-Mile Delivery Costs Important to Monitor?
  • Four Practical Strategies Help You Reduce Last-Mile Delivery Costs
  • Frequently Asked Questions (FAQs) about Last-Mile Delivery Costs
  • What role does EasyRoutes for Shopify play in lowering last-mile delivery costs?

What is Last-Mile Delivery anyways?

Last-mile delivery refers to the transportation of a package from a distribution centre to a delivery location. It is the last link in the supply chain. The last-mile determines whether or not the package was delivered safely to the customer.

Businesses that require immediate delivery, such as food delivery services, enterprise supply chains, and one-day delivery services, must be cautious about last-mile delivery.

Last-mile delivery has recently gained traction, with global sales expected to reach more than 200 billion dollars by 2027, up from 108.1 billion dollars in 2020.

What are Last-mile Delivery Costs?

Last-mile delivery costs are the costs associated with making the last-mile successful. The last-mile charges are substantial and play an important role.

The last-mile costs account for about 53% of the total cost of the entire process. Furthermore, the difficulties associated with last-mile delivery can make it an expensive endeavor.

As a result, taking steps to control last-mile delivery costs is critical; otherwise, a company’s bottom line will suffer.

Why are Last-Mile Delivery Costs Important to Monitor?

The most expensive part of the supply chain is the last-mile delivery. Because last-mile delivery is time-sensitive, the stakes are high, and the risks are as well. Another indicator that last-mile delivery is an expensive procedure is the challenges involved in making it successful.

The following are some of the challenges that come with last-mile delivery:

Delivery that is time-sensitive

Time is of the essence when it comes to last-mile delivery. Certain e-commerce businesses, such as food delivery, flower delivery, and grocery delivery, are required to keep costs under control and deliver on time.

Any delay can result in a dissatisfied customer who may choose to use another service instead of yours. Faster delivery service is now required, putting additional pressure on service providers.

The unpredictability of the real world

Finding the most efficient route is critical for making on-time deliveries while maintaining profit margins. But who can deal with the unpredictability of the route?

Constant traffic jams, vehicle breakdowns, and rerouting due to roadblocks are all common causes of last-mile delivery delays. Furthermore, these delays increase the cost of the delivery process and can cause the entire schedule to be disrupted.

Route planning must be done with great care, taking into account all of the variables and keeping an eye on real-time data. Otherwise, failure in last-mile delivery operations will become a frequent source of logistical loss.

Deliveries that go wrong

Deliveries that fail are a major setback for e-commerce logistics companies that handle last-mile delivery. This raises your delivery costs and forces you to reschedule your deliveries.

This could happen if the customer is not present at the time of delivery. The failure could also be caused by your delivery drivers arriving late at their desired location. As a result, all failed deliveries raise overall delivery costs and necessitate complicated rescheduling.

Costs of fuel

Fuel costs are a big factor in whether you make money or lose money on delivery. Additional traffic congestion, constant delays in arrival time, and the error of taking a long route all add up to fuel costs.

Another concern is the delivery vehicle’s fuel consumption capacity. The higher the fuel consumption, the higher the delivery cost.

Fuel costs cannot be eliminated entirely; they can only be reduced by implementing certain cost-cutting measures. As a result, addressing this problem is a little more difficult.

Consumer demands are changing

Customers are willing to pay higher prices without hesitation in exchange for faster delivery. Customers expect a better delivery experience; otherwise, they will switch from one business to another for services.

Customers also expect orders to arrive with free shipping. However, as shipping costs rise, it becomes more difficult to manage overall shipping costs and incur additional costs.

Furthermore, same-day shipping increases operational costs, making the entire process very costly for the company.

It can be concluded that rising customer expectations are putting more pressure on last-mile delivery companies to improve their services while maintaining profitability.

This now necessitates strategic workflow management.

Four Practical Strategies Help You Reduce Last-Mile Delivery Costs

Optimization is the process of making the best and most efficient use of a situation. As a result, a last-mile delivery service can be efficient by lowering last-mile delivery costs.

Four main strategies have been listed below to make this possible for any e-commerce delivery system. Let’s take a look at them:

Determine the delivery timeframe

Understanding the importance of a delivery can help you create a better framework and prioritize important deliveries, making work management much easier.

Prioritize same-day delivery for time-sensitive delivery businesses such as food, flowers, and groceries.

These e-commerce logistics packages must be delivered within a certain time frame or they will become useless to the customer.

Then you can check on the packages that need to be delivered the same day. These packages are also time-bound for delivery, but the time frame for same-day delivery is slightly longer than for those that require immediate delivery.

To get the best customer feedback, delivery operations must be carefully managed.

This simply means that the quality of service will never be compromised, regardless of whether the delivery is traditional or instantaneous.

Make dispatching and routing more efficient

This is the most important step in optimizing last-mile delivery to its maximum potential. Loading and dispatching processes can be improved to relieve delivery drivers’ workload and ensure faster delivery.

To do so, you’ll need to:

  • Make a list of the orders in ascending order based on their location and urgency.
  • Download the orders into the delivery vehicle in the order that they appear on the list.
  • Allow orders to be delivered to locations close to the front door.

Then give the same list to the delivery driver so that the right parcels can be delivered to the right places.

This will lessen the chaos that can arise if the parcels are not properly organized.

Following the loading, you then need to concentrate on determining the most efficient route to the delivery locations.

Choosing a multi-stop route to make multiple deliveries can be the most cost-effective option. You’ll need a route planning and optimization app like Roundtrip’s EasyRoutes for Shopify.

EasyRoutes’ route planning and optimization tool is built to make quick deliveries affordable and simple on Shopify. Now you can collect proof of delivery, dispatch routes, and much more.

Provide customers with more convenience

No matter what business you’re in, if your customers aren’t happy, you won’t be able to stay in business for long.
Customers will appreciate it if you provide them with more convenience.

To achieve better results, two major factors must be improved: business efficiency and customer satisfaction.

Providing more convenience to customers not only improves their experience, but it also increases their trust in your brand.

You can provide real-time package updates to your customers as soon as they place an order with a tracking link and order tracking page.

Another game-changer that can reduce the chances of a failed delivery is allowing customers to track their package when it is out for delivery. Because once a customer learns that a package is on its way, they are obligated to remain at the delivery location until the package arrives.

Any delivery delays, as well as the customers’ unavailability, could result in a failed delivery.

A clear order tracking page can be provided to the customer where they can track their package and estimate the time of arrival in order to avoid the extra cost of failed deliveries. This will save them a lot of time while also increasing the value of your brand and gaining customer trust.

Plan and optimize driver routes using technology

Last-mile delivery cost breakdown is possible with proper last-mile delivery process optimization. To keep up with the size of the last-mile delivery market, many last-mile delivery logistics have begun to use software to optimize workflow.
Driver routes can be planned and optimized using technology.

A delivery optimization software can assist you with a variety of parameters to simplify management. The following are some of the most important advantages of last-mile delivery software:

  • Route planning that is dynamic
  • Routes with multiple stops
  • Costs of vehicle maintenance are kept on file
  • Feedback from customers
  • Payments made via the internet
  • Delivery fleet management
  • Enhanced delivery effectiveness
  • Taking care of high-density delivery
  • Costs of rescheduling are reduced
  • Drivers of delivery trucks are given jobs
  • Costs of the supply chain are calculated

Overall, using a last-mile delivery optimization software can help make last-mile operations more cost-effective while also improving customer satisfaction.

Frequently Asked Questions (FAQs) about Last-Mile Delivery Costs

What is the definition of last-mile delivery?

Last-mile delivery refers to the transportation of a package from a distribution center to a delivery location. It is the last step in the supply chain, and it determines whether the package has arrived safely at the customer.

How do you make delivery operations more efficient?

To improve delivery operations, do the following:

  • Make a workflow plan
  • Deliveries’ main records
  • Route planning should be optimized
  • Put the customer’s experience first
  • Invest in optimizing software to automate your business.

What factors contribute to the efficiency of a delivery service?

A delivery service’s efficiency is determined by the strategies it employs to generate profits and avoid incurring additional costs. Prioritizing important orders in order to increase revenue and lessen the impact of failed deliveries can help to ensure the delivery service’s efficiency.

In the supply chain, what is the last-mile?

When a package is dispatched from a distribution hub or warehouse to a delivery location, which could be residential, commercial, or an e-commerce lockbox, it is referred to as last-mile.

What are the last-mile delivery costs?

Last-mile delivery costs are the costs associated with making the last-mile successful. The last-mile charges are substantial and play an important role.

What are the difficulties of last-mile delivery?

A last-mile delivery service faces the following challenges:

  • Delivery that is time-sensitive
  • Costs of fuel
  • Obstacles to Route Planning
  • Deliveries that go wrong

What role does EasyRoutes for Shopify play in lowering last-mile delivery costs?

EasyRoutes is a route planning and optimization app with a lot of features. It is the delivery management solution that delivery companies on Shopify should use to plan and optimize their last-mile delivery routes.

EasyRoutes can assist you in a variety of ways. It can optimize routes automatically based on a variety of options you can pick, like how many routes you want, time spent at each stop, or the avoidance of tolls (even most savings on your last-mile delivery costs).

Companies can focus on their core business operations and reduce manual planning and scheduling hours with EasyRoutes , while the algorithm takes care of the rest.

Get EasyRoutes on the Shopify App Store
Get EasyRoutes on the Shopify App Store

About Roundtrip

Roundtrip's mission is to equip every business with the software tools they need to deliver products to their customers in a delightful way. Thousands of worldwide choose EasyRoutes to power their local deliveries across dozens of product categories, from meal kits and groceries to coffee, cupcakes, kibble, and so much more. Our easy-to-use route planning and delivery optimization app is certified Built for Shopify, a two-time Shopify staff pick, and the top rated local delivery app on the Shopify App Store.

"Easy Routes is great, it made a task that was taking me an hour take literally a minute! I use it every day for my business and still can't believe how much time it saves me!"
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