Optimize your supply chain with last mile delivery. Learn about the challenges of the last mile and how fast delivery boosts customer satisfaction.
A central aspect of modern supply chains is what's called "last mile delivery" — the final leg of the delivery, where the product travels from the distribution center to the customer's doorstep. This phase of the supply chain comes with plenty of challenges and opportunities that have a big impact on your success as an online retailer.
Last mile delivery refers to the final stretch of a supply chain, where goods are transported from the last distribution center or warehouse directly to the end customer. This process deserves special attention because it directly shapes the customer experience and is often the most expensive and complex part of the entire logistics chain.
In E-Commerce, last mile delivery is hugely important. It's the final touchpoint between you and your customer, and therefore decisive for customer satisfaction. Fast and reliable delivery is the foundation of a successful E-Commerce business — it strengthens customer loyalty, while delays or delivery problems do the opposite and quickly spread (for example on review platforms like Trustpilot). On top of that, studies show last mile delivery can account for up to 53% of total delivery costs, making it a major factor in a company's cost structure.
Last mile delivery is the most cost-intensive part of the supply chain. That's mainly down to the many variables involved — fuel costs, courier wages, and vehicle maintenance. On top of that, companies need to invest heavily to guarantee fast and reliable delivery.
Cities are often plagued by heavy traffic and congestion, which can seriously delay on-time delivery. Couriers have to fight through clogged streets while trying to hit narrow delivery windows. Finding a suitable parking or stopping spot can also be a challenge. This easily leads to longer delivery times and higher costs.
Customers today expect full transparency about the status of their orders. Real-time package tracking can be tricky, though, especially when multiple parties are involved in the supply chain. Missing or inaccurate information not only frustrates your customers but also creates extra work for customer support.
Managing returns is another challenge. Returns need to be handled efficiently to keep costs down while ensuring quick processing. That requires well-thought-out processes and systems. We recommend a returns portal that encourages customers to exchange rather than refund, and lets the return process run independently from the customer.
Today's customers expect fast, smooth, and free delivery. That challenges companies to optimize their delivery processes while keeping costs in check. Players like Amazon have set high standards that you need to at least match to stay competitive.
Tech innovations like advanced route planning software help improve last mile delivery efficiency. Real-time tracking systems make it possible to follow package locations precisely and give customers up-to-date information.
Autonomous vehicles and drones could revolutionize last mile delivery in the long run. They have the potential to make deliveries faster and cheaper by minimizing the human factor and the errors that come with it.
Micro-fulfillment centers are smaller warehouses located closer to your customers. These centers make it possible to process orders faster and significantly cut delivery times. They're especially useful in urban areas where space is limited.
Artificial intelligence (AI) and automation play an ever-bigger role in optimizing supply chains. By using machine learning algorithms, you can plan more efficient routes, manage inventory better, and improve overall supply chain performance.
Companies like UPS and GLS have made significant progress optimizing their last mile delivery. UPS, for example, introduced "UPS My Choice," giving customers the flexibility to manage their deliveries. Amazon, on the other hand, combines its own delivery vehicles with third-party providers to ensure fast delivery.
Many companies use modern technology to improve their delivery processes. This includes route optimization software, real-time tracking systems, and automated warehouse management systems. These technologies help boost productivity and lower costs.
Companies are constantly developing new strategies to reduce last mile delivery costs while improving customer satisfaction. These include rolling out micro-fulfillment centers, using crowd-sourced delivery services, and implementing sustainable delivery methods.
Sustainability plays an increasingly important role in last mile delivery. These days, paying a small fee for carbon-neutral shipping isn't enough on its own (e.g. DHL GoGreen). Eco-friendly delivery methods like e-cargo bikes and electric vehicles are being used more and more to cut CO2 emissions and protect the environment. Companies — and especially parcel services — are doubling down on reducing and avoiding harmful emissions.
Many companies are actively working to reduce their CO2 footprint. This includes initiatives to improve fleet energy efficiency, the use of renewable energy, and the promotion of recycling programs.
Sustainable practices are increasingly being woven into the entire supply chain. This includes using eco-friendly packaging, optimizing delivery processes to reduce energy use, and partnering with sustainable suppliers.
The future of last mile delivery will be heavily shaped by technological innovation and shifting consumer demands. Forecasts suggest autonomous vehicles and drones will play an ever-larger role. Demand for fast and flexible delivery options is also expected to keep climbing.
New technologies like AI, IoT, and blockchain will continue to revolutionize last mile delivery. Consumers increasingly expect personalized, seamless delivery experiences, which forces companies to keep optimizing and adapting their processes.
The potential for innovation in last mile delivery is enormous. From developing new delivery methods to implementing advanced technologies that boost efficiency, the possibilities are nearly endless. Companies that are agile enough to adapt quickly to new trends and keep innovating will succeed in the long term.
What challenges do you see in the last mile that have emerged over the past 5 years?
Over the past five years, several challenges have emerged in the last mile that we at GLS Germany have tackled head-on. It's been particularly important to respond dynamically to changing market conditions through agile action. The surge in parcel volume driven by booming E-Commerce and the COVID-19 pandemic from spring 2020 onwards required ongoing adjustments to our logistics processes. On top of that, urban areas with rising traffic density make city deliveries increasingly complex. It's good that the German federal government has now agreed to introduce urban loading zones. By continuously questioning and adapting our processes, we meet growing customer expectations around faster and more flexible delivery options. Of course, social and environmental sustainability aspects are also gaining ever more importance. On the last mile in particular, e-bikes and electric delivery vehicles have become indispensable. Our top priority remains ensuring supply security for the population — and doing so as conveniently and pleasantly as possible for our customers, both senders and recipients.
What opportunities have arisen from this for GLS, or what solutions have you developed for your customers?
The developments of recent years have opened up numerous opportunities for GLS to develop, test, and integrate innovative solutions into everyday parcel operations. A major opportunity has been optimizing our delivery processes through cutting-edge technology. We've invested heavily in digital tools and real-time tracking to give our customers maximum transparency and control over their deliveries. It's important to us that both senders and recipients can participate in the delivery process. This translates, for example, into the ability to influence the delivery while it's still happening — for instance regarding alternative drop-off locations. On the operational side, we've gradually expanded our network of micro-depots and out-of-home touchpoints. By now, more than 7,500 GLS parcel shops and lockers boost the efficiency of our parcel deliveries.
How do you see the future of the last mile evolving?
It will be heavily shaped by technological innovation and sustainability efforts. We expect the use of automation and artificial intelligence to keep growing, in order to improve the efficiency and precision of delivery processes. Thinking a bit outside the box, this could even include drones and autonomous delivery vehicles for areas that are particularly hard to access or heavily trafficked. Demand for environmentally friendly delivery solutions will also keep rising. Going forward, we'll continue to focus on low-emission and zero-emission vehicles, and to pilot and roll out alternative transport methods. The buildout of micro-depots and parcel lockers will also continue, to optimize supply chains and minimize environmental impact. Our self-declared goal is to exceed customer expectations through tailored logistics solutions.
To realize our ambitions, we depend on strong partners. Cooperation with local partners and municipalities — a triad of politics, business, and society — will become even more important to improve infrastructure and logistics networks and to develop efficient last mile solutions. All these developments give us confidence that the last mile will become even more customer-friendly, sustainable, and technologically advanced in the future. We want to play a proactive role in shaping that.
Last mile delivery is a decisive factor for E-Commerce success. Despite the many challenges it brings, technological innovation and sustainable practices offer huge opportunities to improve efficiency and customer satisfaction. Companies that master these challenges while meeting consumer expectations will succeed in the increasingly competitive world of online retail.
We know the last mile is one of the most important factors in your customers' shopping experience. That's why we launched our premium shipping option Zenrush® a few years ago as Europe's first Prime equivalent. Since then, we've kept optimizing our 1-day delivery option to give your customers the best possible delivery experience — at the most competitive price on the market!
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