If you’re reading this, you know that last-mile delivery is the most complex and costly expense in order fulfillment. It’s also the most critical, tremendously impacting your customers’ experience and satisfaction. As a result, lowering your last-mile delivery costs is a vital component of your enterprise’s survival and success. It must be efficient and cost-effective to earn brand loyalty. As consumer expectations grow, with many preferring free and same-day delivery, companies must be agile enough to optimize delivery processes and expenses so they remain competitive.
Whether you manage an e-commerce site, a logistics company, or a physical storefront, these 5 ways to lower last-mile delivery costs will help your business grow, improve your bottom line, and increase customer retention.
Method #1: Provide Visibility Over Deliveries
When you’re expecting a package, knowing where it is and when you can expect it is a valuable asset. It assures you that your transaction hasn’t been neglected and the company behind it is working on delivering it. Hence, the Small Business Coach Association’s first recommendation is to let your clients know which order fulfillment stage their order is in.
You can implement this step through automated emails, real-time GPS-enabled maps, push notifications, your order management system, and more.
Incorporating this feature also has the added advantage of reducing calls and emails to customer service, reducing the load on your after-sales team.
Pro Tip: If your processes allow your logistics team to communicate directly with clients, they can agree on more precise deliveries, preventing incidents where no one is around to receive the package.
Method #2: Use the Most Efficient Routes
The farther your customers are and the more parcels you need to deliver, the more complex and costly your delivery routes become. As your business grows, determining the most efficient routes becomes highly essential.
To optimize them, you can group deliveries by geography, establish distribution centers closer to customers, identify bottleneck areas, adjust your routes based on relevant factors (like weather, delivery windows, and traffic), maximize vehicle loads, and employ routes with multiple drops.
A great way to implement all these at once is to employ route optimization software. The most widely used options include Route4Me, Onfleet, and OptimoRoute. Their features include real-time tracking, automated dispatch, expected time of arrivals (ETAs), and smartphone accessibility.
Pro Tip: Perform a regular vehicle inspection to prevent breakdowns and delays, ensuring smoother, more efficient delivery routes that reduce last-mile expenses.
Method #3: Adapt To Delivery Preferences
Some consumers are willing to pay premium rates for same-day deliveries, while others don’t mind the wait. Ensure your order management system offers flexible delivery times to avoid failed deliveries, wasted time, and cancelled orders.
Additional measures that can help lower last-mile delivery costs include:
- Providing centralized pickup points and delivery lockers where customers can get the items themselves
- Allowing buyers to schedule deliveries
- Tracking customer preferences for long-term strategic planning
- Charging higher prices for faster delivery and lower rates for longer wait times
By listening to your customers and giving them opportunities to exercise their preferences, you can function more efficiently, enhance your delivery services, and improve your reputation.
Method #4: Incorporate Proof of Delivery
Businesses that rely on deliveries for order fulfillment experience missing packages, one of the most expensive and time-consuming last-mile delivery challenges. Fortunately, you can minimize these instances by incorporating proof of delivery into your fulfillment processes.
Taking photos of actual deliveries serves as evidence that the goods were delivered in good condition and that the intended recipient successfully received their items. Additionally, it reduces your reliance on physical documentation, improves transparency, boosts trust and satisfaction, lowers after-sales inquiries, and makes your delivery partners more accountable.
Method #5: Have More Than One Logistics Partner
If you’re outsourcing your deliveries to other companies, it pays to rely on more than one logistics partner. Diversifying your logistics reduces your risk, helps ensure more competitive rates, and allows you to serve a wider area.
Certain logistics companies may offer lower fees in specific locations. Their services can also complement each other, allowing you to outsource delivery to various companies for different legs of the journey.
Moreover, this strategy lets you maintain business continuity should one logistics provider experience operational disruptions. If this happens, you can move your products to another vendor with zero to minimal delays.
Conclusion: Satisfy Customers While Improving Profitability
If you aren’t careful, last-mile delivery expenses can eat up a big chunk of your profits. A worldwide study spanning 2018 to 2023 showed that this unavoidable expenditure represents up to 53% of shipping costs.
Though that may sound unnerving, your last-mile delivery budget can be managed. Make it a point to:
- Offer transparency over the delivery process
- Optimize routes
- Respond to delivery preferences
- Incorporate proof of delivery
- Diversify your logistics suppliers
Taking proactive measures such as these will help keep your customers happy, your bottom line growing, and your last-mile delivery costs low.
For more helpful articles like this, visit the Small Business Coach Association’s blog section. You can also schedule a call for more tailored advice.
Graham Perry specializes in business technology innovation, writing about logistics supply chain optimization topics and their impact on modern business operations. With expertise in fleet management and transportation technology, his articles empower businesses to navigate the dynamic world of logistics with peace of mind.
