Why Last-Mile Delivery Companies Are the New Norm
Let’s face it, the landscape of deliveries has changed.
During COVID-19 lockdown restrictions, customers wanted everything on their doorstep as fast as possible with minimum physical interaction. This led to an uprise in online delivery companies and startups.
Last-mile logistics in North America was estimated to reach up to $50.95 billion in market size in 2022.
During COVID, many traditional businesses had to shift online to survive - even those who had never sold goods online. Companies had to pivot and adapt overnight to deal with the higher demand and meet the standard of customers' expectations during the most turbulent times in history.
Now that the world is healing, are companies ready to keep at it?
The answer is, ‘they have to.’
Fast deliveries are no longer just a marketing gimmick, they’re what customers want by default. And this new norm of quicker and overnight deliveries is accelerating the emergence of last-mile delivery companies and the need to move and respond quickly.
What is last-mile delivery, and why is it a new buzzword in the world of logistics? Here’s a comprehensive take on its importance.
What Is Last Mile Delivery?
As the name suggests, last-mile delivery is the last leg in the product's journey. The journey begins from the production or manufacturing plant to the warehouse (1st leg), and then the warehouse to the distribution centers (2nd leg), and then from there, splits into individual delivery packages ready to reach their final destination, i.e., customer doorstep (last leg).
Last-mile delivery companies are responsible for ensuring that the package reaches its final destination on time and in the right condition. Any mishap during the last-mile journey leads to a dissatisfied customer, regardless of the quality of the product.
A modern example of a last-mile delivery company is Amazon, which in many cases, has set the precedence in this entire industry.
Why Is Last-Mile Delivery Important?
Thanks to Amazon, fast and overnight shipping is no longer a nice feature. It's required by default.
According to PWC, 41% of consumers are now willing to pay a little more for same-day deliveries of products. The same report highlights that 44% of millennials now have an Amazon Prime membership.
What can we take from this?
This reflects the importance of last-mile delivery on both ends - the value chain and customers.
Importance in Logistic Value Chain
Think of it as a piece of a puzzle. If you’re a direct-to-customer business aiming to manufacture and deliver the top-standard product, then your value chain has to be streamlined and optimized from point A to Ziing.
A strong value chain requires a perfect balance of demand and supply. Even if your business can fulfill the demand by manufacturing the best product possible, the supply side of the value chain is always dependent on last-mile delivery companies.
Importance in Customer Satisfaction
Another angle of why last-mile delivery is critical is the direct engagement with customers. Just consider the following statistics:
- Nearly 90% of customers say their shipping and delivery experience directly impacts their decision to shop with a merchant again.
- 70% of them say a negative experience impacts their impression of the brand, not the carrier.
- 1 in 3 consumers leaves negative reviews online after a poor delivery experience.
The importance of last-mile delivery in customer satisfaction is evident. A single bad delivery experience could jeopardize your relationship with a customer and damage your brand reputation.
And if you don’t work with a last-mile delivery company and remove it as a part of your value chain, customers will have to locate a distribution center to pick up the product.
Would any customer want it? The answer is no.
Customers want the convenience of shopping online and having it arrive at their doorstep. When those expectations are compromised, the risk of losing a customer is real.
How Does Last-Mile Delivery Work?
The entire last-mile delivery process contains five steps, and sometimes more if the shipment is international or distributed through multiple intermediaries. Here's what a normal process looks like:
Step 1: Customer places an order on your website or any marketplace where you have listed your products, like Amazon, Etsy, or eBay. All orders go to a centralized system where the manufacturer or supplier is notified.
Step 2: After receiving the order requirements, the supplier or manufacturer starts preparing the order and takes it out of inventory to send it to the distribution warehouse for its final mile delivery. The order number is generated at this step and tracking information becomes available to the customer.
Step 3: This is where the last-mile delivery companies take over and assign the deliveries to fleet managers. Fleet managers optimize routes and delivery schedules to manage costs and save time.
Step 4: Each item is scanned before being loaded into delivery vehicles. Customers are notified that their package is on its way to delivery. Some companies also make calls to customers, ensuring they’re available to receive the order. This step is required for high-ticket items where customer signature and proof of delivery documentation are necessary.
Step 5: This is the final step in a last-mile delivery process. In most cases after COVID, last-mile delivery companies do porch or contactless deliveries and notify the user to pick it up. But in some cases, it's in-person delivery to obtain proof of delivery records for a high-ticket item.
The end user receives the product, and if the delivery standards and process meet the expectations, the job is well-done.
But wait, is that all?
What else do customers expect other than timely delivery? Let's find out.
What Do Customers Expect?
Other than receiving goods on time to their doorstep, here are some other expectations customers have:
Real-time Order Tracking
Real-time order tracking is when the customer can track and trace deliveries in real-time. The tracking begins when the order is shipped and continues until it’s delivered to the customer's address.
Before last-mile delivery companies offer real-time order tracking to their customers, they need to have that visibility for themselves. Companies can make this possible by giving cloud-based software/apps to drivers to track their geolocation and share it with customers in real-time.
Instead of a general indication through text message updates, which is a hit or miss, real-time tracking leads to a great customer delivery experience every single time.
Reverse logistics is part of overall last-mile delivery operations that deal with returns and refunds. As much as customers want a product on time and in the right shape, they also want a seamless process to return those items, just in case.
If the return of the items costs them more than the actual purchase or if they have to drive 8 miles to return it, all the efforts go in vain.
Last-mile delivery companies with a smooth return and refund process have a higher chance of leaving customers satisfied compared to those who don’t accept returns and refunds.
Security and Insurance
With each delivery, there is a considerable risk of the item getting lost or damaged during transit. Customers don’t expect a damaged good on their doorstep. They expect the same product they saw on the website.
If the last mile delivery service provides a guarantee that they take responsibility for any damaged or lost product, it's half battle won already. The other half can also be won if you provide an insurance benefit to compensate the customer in case of any mishap during delivery.
Specialization is when a last-mile delivery company designs its processes in a way that targets a specific industry that requires a special fleet or type of equipment.
For example, we previously discussed the importance of last-mile delivery companies in the pharmaceutical industry.
Customers expect last-mile delivery services to be equipped with the right fleet and equipment to protect their package delivery. If the product needs a certain temperature and environment, it’s an unsaid expectation that the last-mile delivery company has it figured out.
Customers also expect companies to care about the environment and the consequences of their actions. They expect last-mile delivery companies to go green and reflect zero carbon emissions in their operations.
According to a survey, 91% of e-commerce customers want a green shipping option at checkout. More than half of them are willing to pay an extra 10% for eco-friendly shipping options. Even 73% of those who said green practices aren’t important still want a sustainable shipping option.
As much as customers want the convenience of fast delivery, they now truly understand the importance of being more sustainable, too.
According to the 2018 Last Mile Logistics Whitepaper, 56% of consumers demanded better transparency in the delivery process. The issue of transparent operations and services was also exacerbated during COVID when contactless delivery became a norm.
While accurate real-time location tracking improves transparency, customers now also expect proof of delivery documentation. Proof of delivery can be a time-stamped photo of when the parcel was delivered or a recipient's e-signature to confirm that the order has been delivered to the right location and the right person.
Features and Services to Look For
When looking for a last-mile delivery company to work with, here is a list of features you should keep in mind:
- If your business has special logistics requirements, look for companies that have previously worked in the space. Inquire about their portfolio, capability statement, and fleet details to evaluate if they fit your needs.
- If your business deals in direct-to-consumer goods and offers free returns and refunds, ask your last-mile delivery company about its reverse logistic process. Is it a door-to-door pick-up return? Do they partner with any other stores? Do they charge customers for returns? The more clarity you would have on their reverse logistic operations, the better you can serve your customers. For example, Amazon offers free returns, and on some prime deliveries, it also offers a 'try before you buy' perk to reduce the return cost incurred as a merchant fee.
- If sustainability is your business's strategic goal, look for last-mile delivery companies that offer sustainable shipping and delivery options. Shipping accounts for around three percent of CO2 emissions annually, and switching to electric vehicles seems like a great option to combat this issue. Look for last-mile delivery companies encouraging alternate fuel vehicles and offering a dedicated, greener fleet to tackle your shipping footprint.
- Route planning is another key feature to look for. A professional last-mile delivery company will offer great route optimization to handle more deliveries in less time and space. UPS hopes to reduce 100 million delivery miles using artificial intelligence to analyze, optimize, and plan its routes. Look for companies that follow similar practices for a win-win outcome.
- Packaging materials are another key feature to consider. Many customers believe that businesses use excessive packaging to deliver an item. On the other hand, according to UNEP, over a third of all plastics produced are used in packaging, and over 80 percent of this ends up in landfills or as unregulated waste. Sustainable last-mile delivery companies care about this issue and follow recent innovations in the sustainable packaging industry to offer recyclable, reusable, or compostable packaging, so it doesn't end up in landfill or trash.
- Technological innovation is another key feature to look for in a last-mile delivery company. Although last-mile delivery is the shortest distance in a product’s journey, it’s usually the most costly, estimated to be 53% of the total cost of delivery. Using technology can make the last mile delivery more efficient, cut costs, and increase your profitability. When looking for a last-mile delivery partner, look for companies that adapt to technological innovation happening around the world. The use of technology in last-mile delivery includes everything from software to optimize routes and provide accurate real-time tracking to autonomous robots, drone delivery services, and trucks. Companies also use Artificial intelligence, big data analytics, sensors, and blockchain technology to eliminate the friction points that cause delays and waste money during the last mile delivery operations.
Driving Mindful Mobility from A to Ziing
Ziing’s last-mile delivery solutions provide non-traditional last-mile delivery services that give you new options, capabilities, and insights that help you manage costs and access new markets.
We offer a sustainable last-mile distribution system equipped with vetted drivers, electric vehicles, and cost-effective route planning for the needs of your business.
Work with us to:
- Experience transparency in how your budget is spent and how your customers are served.
- Choose an ideal delivery model for your business, blending distributed and dedicated services.
- Seamlessly integrate your order processing system and our delivery platform at the click of a mouse.
Let's work together to explore how our sustainable last-mile delivery service can help your business.