What Is Last-Mile Delivery? How to Optimize It?

What Is Last Mile Delivery?

Last mile delivery is the transportation of goods from a distribution hub to the final delivery destination — the door of the customer. The goal of last mile logistics is to deliver the packages as affordably, quickly and accurately as possible. 

Many retailers now focus on last mile logistics as a key differentiator, just look at how Amazon Prime has transformed online retail distribution. 

But it’s not an easy thing.

The last mile of your product’s delivery accounts for more than 53% of the total shipping costs.

If you don’t optimize your process, these costs can be prohibitive — driving your overhead through the roof and cutting into your business’ profits.

In this article, we’ll give you a complete guide to how you can optimize your last-mile delivery. We’ll outline exactly what last-mile delivery is, why it can be so expensive, and give you solutions proven to work for businesses like yours.

What Is the Last-Mile Delivery Problem?

Last-mile delivery is the last step in moving your business’s product from your location (or delivery hub) to the customer’s destination. The last-mile delivery problem, then, is simply the fact that that last mile is usually the most expensive part of the process — often costing more than half of overall shipping costs.

What makes last-mile delivery such a challenge?

Unlike with large-scale shipping and dissemination, you’re not sending a large number of products to a single location. 

Instead, your delivery drivers carry a large amount of smaller packages, each with unique destinations.

That is the essence of the last mile problem — more stops mean more complex routes, more idle time, and more time on the road. That means you have to maintain a larger fleet of delivery vehicles and drivers to ship a small number of products.

What businesses are affected by the last mile delivery problem?

By definition, last mile delivery is relevant for businesses that deliver products directly to their consumers.

These businesses include (but aren’t limited to):

  • Couriers
  • Third-party logistics companies
  • Direct-to-consumer retail companies
  • Food delivery companies
  • Supermarkets offering delivery
  • Department stores offering delivery
  • Florists
  • Restaurants offering delivery
  • Pharmacies offering delivery
  • Ecommerce

Even if your company collaborates with wholesalers or retailers in the supply chain of your product, you might have a website with an ecommerce store. 

That means you still have to handle shipping, including last mile delivery, for the orders that come in that way.