Final Mile: From Logistics Nightmare to Business Asset

According to a recent study, companies should not abandon final-mile delivery optimization. In turn, it can lead to a decrease of up to 26% in net profit over three years.

Scary, but hardly surprising. Customer expectations can be demanding, and inefficiencies in travel routes don't help either. Final-mile logistics become expensive and difficult to handle as a result.

Frequent orders, essential for your e-commerce business, can also reduce profit margins. But does it always have to be a case of "one cannot exist without the other"?

Not if you play your cards right. Optimizing your final-mile services helps you reduce supply chain costs. This, in turn, allows you to remain competitive in a cutthroat industry. With the right software providers, your final mile woes will be a thing of the past.

What Is Final Mile Logistics?

Final-mile logistics involves transporting goods from the distribution center to the end customer. The goal is to achieve accuracy, speed, and affordability throughout the process.

There has been a noticeable, steady rise in U.S. e-commerce over the past few years. Revenue rose from $286 million in 2017 to over $430 million in 2020, and the trend continues.

At first glance, this is great news for e-commerce businesses. Who wouldn't want an increase in sales? Yet, delving beneath the surface reveals a complex scenario.

In the supply chain, the final mile stands out as the most expensive stage.

More orders increase pressure on companies. They have to meet customer expectations for fast deliveries without eroding profits.

Easier said than done.

Why Are Final Mile Logistics So Challenging?

Heavy customer expectations revolve around shipping times and prices. Inefficient travel routes and failed deliveries pose barriers to achieving those expectations.

Amazon’s commitment to same-day deliveries sets new benchmarks for customer expectations. Moreover, gas prices keep rising, while distances between homes remain unchanged. Add up all these factors, and you end up with a one-way ticket to Nightmare on Final Mile Street.

#1 Customer expectations for quick and free deliveries are growing

Customer demands for fast and free delivery put stress on companies. This pressure requires them to upgrade operational delivery capabilities. That, in turn, means more costs for the company.

Customers want their orders, and it’s clear they want them fast. Thirty-six percent of consumers say that ordering online for same-day delivery is essential. Same-day deliveries entail higher delivery costs. That would mean more miles, more drivers, and more stops.

You could include the same-day delivery costs in your delivery fees. However, customer expectations about prices are as high as they are for speed. Thus, this makes it harder for businesses to pick up the delivery tab. According to an NRF report, 75% of respondents expect delivery to be free even on orders under $50. Free shipping means companies pay for delivery independently, which eats into profit margins.

Before dismissing same-day and free delivery completely, think again. Failing to meet these needs will cost your clients. It will also harm the connection customers have with your brand. More than 25% of shoppers say they’d leave their cart if same-day shipping weren't available. And 59% report that free delivery would improve their online shopping experience.

#2 Travel routes are complex and hampered by limitations

Many delivery locations across different areas hinder the success of final-mile solutions.

To reach isolated and rural areas, drivers navigate crowded cities with a lot of traffic. A constant increase in packages means driving extra miles with various stops.

Furthermore, travel route inefficiencies worsen outside of highways. Delivering packages across the city means using local roads with lower speed limits. So, drivers experience frequent breaking and accelerating, spending more time on the road. All this results in a significant increase in drive-up costs.

#3 Failed deliveries are expensive

There are various reasons for failed deliveries. For instance, your driver could go to the wrong address if a customer isn't home. Or they could miss the promised delivery window. In both scenarios, home delivery fails.

Since the driver has to return a second time to the same location, it would entail more fuel and labor costs. Plus, the wear and tear on the vehicle from extra trips.

Deliveries that fail due to a mistake on your end can impact customer satisfaction in a negative way. A few instances of a bad customer experience can be enough to lose a client forever. In fact, over 15% of buyers will stop shopping with an e-commerce business after one late delivery. And 55% will stop buying altogether after two to three late deliveries.

How Does Route Optimization Software Solve Challenges in Your Final Mile Logistics?

Route optimization means finding the most efficient route to manage deliveries. Efficiently planning your drivers' routes helps alleviate many inefficiencies in final-mile logistics.. It cuts costs and reduces the risk of failed deliveries.

Optimized final-mile delivery also gives you a competitive edge in the e-commerce sphere. Fast, free, and accurate deliveries create an exceptional customer experience.

Businesses that nurture exceptional customer experiences grow 1.6x more each year. They excel in retaining customers, fostering repeat sales, and boosting customer lifetime value. This sets them apart from their competitors.

It ensures your drivers travel to the right place at the right time

Through the eLogii Driver Mobile App, drivers see up-to-date information about their next delivery. They can switch from the mobile app to their preferred navigation, such as Google Maps, Waze, Yandex etc. This will take them to the correct addresses at the right time through the ideal route. They cover fewer miles, spend less time in traffic, and prevent unsuccessful deliveries.

It monitors where all drivers and packages are in real time

ELogii gives your customers real-time parcel location updates. With real-time updates, customers have less need to contact customer service. This prevents clogged customer service lines and failed deliveries as well.

It considers all constraints when planning routes

ELogii’s smart routing tools consider customer availability, vehicle capacity, and driver schedule. This ensures it plans the best route to prevent failed deliveries.

It prepares for the unexpected

With its replanning feature, eLogii redirects all deliveries in case of unexpected events. It can happen that the driver doesn't show up or a new same-day order comes through. The app also takes into account different variables when rerouting. Vehicle locations, driver schedules, planned destinations, package locations, and re-delivery time windows. The app considers all these factors to ensure efficient rerouting.