9 Challenges of Last-Mile Delivery

If you want to know how to improve your delivery operations, you should first understand these last-mile delivery challenges.

In order to understand the challenges of last-mile delivery, you should first understand what last-mile delivery really means.

Basically, the last-mile is the last leg of the delivery process.

Naturally, every delivery process starts from the distribution centre or hub and ends at the customer’s doorsteps.

The last-mile delivery can vary from a few blocks to 50 or sometimes even 100 miles.

Over time the internet has transformed traditional retail business, and we all know it as e-commerce.

That also brought along a change in customer’s shopping habits.

Nowadays, everyone wants their delivery as soon as possible.

Additionally, with 2020 being the craziest year so far, it became even more challenging for enterprises to meet logistics operations in the last mile.

No matter what, delivery agents need to be beyond the challenges of last-mile logistics.

Biggest Challenges of Last-Mile Delivery

#1 Consumer behavior
#2 High cost of last-mile delivery
#3 Transparency
#4 The efficiency problem
#5 Route Optimization
#6 Customer Nuances and Unpredictability of Transit
#7 Adherence to timelines
#8 Friction
#9 COVID-19

#1 Consumer behavior

Let’s start this list with the most obvious challenge.

You have probably noticed that consumer habits and behaviors have changed.

The reason for this is the fast development of new technologies.

Consumers are forgetting all about traditional channels.

E-commerce shopping gives customers a chance to compare several products at the same time from the comfort of their home.

For example, you may have noticed how companies are upselling and cross-selling with delivery.

Last-mile distribution ends up as a necessary part of the global supply chain, because of the change in consumers’ behaviour.

Their expectations are higher than ever.

They are not only demanding in terms of quality but also in terms of product differentiation, as well as customization.

Delivery time is something that has completely changed, as well.

Waiting “from 5 to 7 business days” for a package is a thing of the past. The modern consumer wants everything now.

In fact, fast and free shipping is the main reason 79.8% of people shop on Amazon.

For most retailers, this is probably one of your biggest challenges. Especially, when you want to know how to compete with Amazon delivery.

Things are looking up, though.

Since the start of the COVID-19 pandemic, people have become more patient.

In fact, consumers are more tolerant of delivery delays but also show less brand loyalty in 2020.

It stands to reason that if you can minimize delays, you might win over customers this year.

So, companies need to re-design and re-think their last-mile delivery strategy and incorporate different delivery tactics to grow operations.

They need to make sure that online services are both profitable and agile in order to be appreciated by consumers.

The change in consumers’ behaviour leads us to the problem of outdated technology.

Outdated Technology

Even though we are living in the modern digital world, almost half of all distribution, delivery, and transportation companies admit their technology is outdated.

So, what’s the impact of outdated technology on their organizations?

Actually, outdated technology can cause you to lose customers.

Without the proper technology, in 2020 companies are not equipped to handle deliveries effectively, to adapt to this crazy time, or to survive this competitive delivery landscape.

That’s why, according to Gartner, the biggest priorities in development included some kind of supply chain optimization and tech investment among retailers:

#2 High cost of last-mile delivery

The high-cost problem is not something that companies haven’t faced before.

But with new and higher customer standards, the pressure on your budget is even higher today.

Even though many customers are ready to pay for expedited deliveries, for most companies it’s challenging to accomplish it without losing money.

The expectation of same-day deliveries has a big impact on the budget.

In fact, 28% of the entire delivery cost actually comes from the last-mile.

Typically, this is passed onto the user. But when that’s not the case, it harms the company.

When it comes to online retail, irregular demands like an increased number of purchases during the holiday season is something that also has a huge impact.

This kind of challenge can be resolved with higher efficiency and better planning.

#3 Transparency

Humans want to understand everything and know everything, it’s in our blood.

As a result, transparency has become one of the key elements of any business.

Many businesses particularly 3PL providers started to generate tracking codes.

This allowed operators as well as users to gain certain visibility over their delivery.

Apart from being very curious, people don’t get easily pleased. That’s why tracking codes are not enough anymore.

Nowadays, users want absolute real-time visibility. What does that exactly mean?

Basically, they want to see every step of the last-mile.

They want to see where the driver is and how long it will take him to arrive at their door.

Even if the delivery is on the same day, they still want to know the exact time of the arrival.

With delivery management software, consumers can receive real-time updates about the movement of their shipment, including ETAs.

Customers can track the shipment until it reaches their door.

Uber may have started this trend, but now people expect this kind of service and visibility for everything.

That’s why it’s one of the top forecasted delivery management trends, as well.

#4 The efficiency problem

Efficiency, efficiency, efficiency! This is what customers want. This is what companies want, as well.

The new business model is focused on the fast delivery of both products and services.

Increased efficiency aids last-mile delivery logistics.

And technology plays a key role when it comes to same-day and last-mile delivery.

To keep up with consumers’ desires, delivery logistics management uses last-mile delivery software.

With its help, you can streamline deliveries all the way from the warehouse to the buyer’s front door.

With last-mile delivery software, companies can simply re-route their workforce if they receive some last moment changes.

This is perfect because it can help with all the delays that are caused by last moment changes.

This can play a crucial role in making last-mile delivery more efficient.

Last-mile delivery software works through route optimization, dispatching, delivery analytics, proof of delivery, and customer alerts.

With all of this, businesses can stay in non-stop communication with customers and speed up delivery.

This is crucial especially when it comes to poor address location.

Address Location & Delivery Allocation

Actually, most failed deliveries are caused by incorrect addresses.

To understand the severity of the problem, you should know that the cost of a failed delivery can be as much as $16.58.

Therefore, it’s not unusual that in most cases, the wrong address is a serious problem.

#5 Route Optimization

Unless you are a professional, route planning is often utterly confusing and mentally taxing.

Maybe the worst part is that it depends on a variety of factors (from fuel efficiency to environmental regulations).

But it’s important.

Route optimization is one of the key elements in last-mile deliveries.

Route optimization has a big impact not only on cost but has a direct influence on ETAs (estimated time of arrival).

You have probably experienced a routing delay sometimes, so you know how bad that is.

Road works change street directions. Stoplights and other signals prevent the continuous flow of traffic.

At the same time, traffic congestion during peak hours is a constant problem.

The frequency of traffic also increases the chances of accidents. And other unexpected situations on the road.

Then, there are also rural customers. So, sometimes your delivery agent has to go beyond the boundaries of the city to fulfil an order.

All of this makes route optimization a complicated matter. But surely a necessary one.

There are a couple of ways to improve routing efficiency. And the best way is to use route optimization software.

But you need to take a look at last-mile delivery density, as well.

Last-Mile Delivery Density

Imagine how hard it is to deliver packages in a dense urban area like London or New York.

Order volumes are higher, so delivering them is a massive undertaking.

Add to that same-day delivery, and you can imagine how challenging this is for any company.

On the one side, there are your capabilities. And on the other, there is your capacity.

To balance them, you need to look for the best last-mile delivery scenario. And that requires technology.

Typically, delivery management has 4 different use-cases:

• High-density long distances
• High-density short distances
• Low-density long distances
• Low-density short distances

Managing each scenario is a problem on its own. But last-mile delivery software helps you with that.

Not only does it streamline your operations, but the tool also raises your number of capabilities.

At the same time, it optimizes how you use your resources. So, you can improve last-mile delivery even when demand exceeds your capacity.

#6 Customer Nuances and Unpredictability of Transit

Whenever drivers are in transit, there is always a chance of something unpredictable happening to them.

Sadly, this is something that you can’t control.

But poor transportation is also the result of poor infrastructure. (Particularly in developing countries)

This raises the unpredictability of last-mile distribution, which means inefficient routes, long journeys, and sub-sufficient transportation.

Translate all of this into costs and time lags, and you will see how bad the situation can be.

The only thing that you can do is streamline communication and create a contingency plan.

If a delay does happen, you and your teams will know how to react.

On the one hand, drivers can notify dispatch and operators as soon as it happens.

On the other, operators already have a plan of action. They can quickly dispatch replacement drivers to ensure 100% order fulfilment.

Another reason why communication is so important, and why you should use technology such as last-mile delivery software, is to ensure customer availability.

The last thing every delivery agent wants to experience after reaching his destination is that the customer isn’t home or is otherwise unavailable.

While a missed delivery can lead to a less-than-comfortable experience for the customer.

This may sound a bit unfair, but customers are pretty demanding and they often feel entitled.

To avoid all of this from happening, companies need to ensure good communication and seamless collaboration: internally (between teams) and externally (between you and your customers).

Regardless of the fact whether you use an internal vs external delivery fleet.

#7 Adherence to timelines

This is one of the biggest battles that companies face.

As we mentioned earlier, a missed deadline (time to deliver) is very expensive for companies in every single way.

Let’s take food delivery management at restaurants as an example.

Most companies can’t charge the delivery to customers if they miss the time of arrival.

That’s because customers aren’t prepared to wait long times for meal delivery to arrive.

In fact, only one in four customers will accept delivery after waiting an hour or more for it:

But that’s not all. That can ruin the reputation of your brand, as well.

So you have to know how to plan better delivery schedules and give drivers enough time to complete all the deliveries on their route.

In this way, you can fulfil orders the way customers want.

But that’s not all.

#8 Friction

A frictionless delivery streamlines performance and cut costs of your last-mile.

One of the biggest causes of friction is dealing with customer inquiries and requests about how and when the package should be delivered.

So, frictionless delivery can’t be created without technology since it allows communication between the delivery agents and the customers.

If you use last-mile delivery software, you can reduce the chance of customers calling and wasting their time and the time of your customer service.

The same goes for any other member of your team.

Instead, you can use delivery management software to set up automatic notifications.

That reduces the need for direct communication between customers and your employees, while you still provide information to customers about their deliveries.

And the more information customers receive the less frustrated they are, and the less chance they will frustrate your employees.

Which means less friction across the board.

#9 COVID-19

Ok, this is a pretty new challenge. But it’s one you have to address because it has disrupted many things. Including delivery.

When it comes to the last-mile delivery logistics, Covid 19 has had a rather dramatic effect on it this year.

First, more and more people are shopping online because they can’t leave their homes.

On the one hand, that means more business, which is great.

But on the other hand, it’s a problem to handle the flood of high delivery volumes.

That’s putting a lot of pressure on deliveries to meet the increase in demands, as they rely on capacities built before the pandemic.

The state of delivery in time of the coronavirus has also changed customer expectations.

We’ve mentioned how customers have become more tolerant since the start of the pandemic.

But that doesn’t mean customers will give up a fast delivery.

Which means despite the increase in order volumes, companies still have to provide fast options like next-day and same-day delivery.

At the same time, many people have lost their jobs since the first lockdown.

So, more people than ever want free delivery. If you don’t offer a free option for online delivery, you may miss out on a potentially large target group.

But these problems don’t stem only from changing customer expectations.

The problems associated with COVID-19 also have to do with the raised safety concerns, and how they affect the delivery process.

Specifically, the health and safety of your employees (and their families) has to be your top priority.

But at the same time the prescribed measures are:

• Slowing down delivery operations
• Short-staffing teams and reducing capacity

So, it’s necessary to re-think last-mile delivery and adapt it to the New Normal.

For example, many companies have introduced curbside pick-up since the start of the pandemic to minimize contact between people.

Others have used doorstep delivery (leaving orders on customers’ doorstep), or lockers.

But speed suffers here, as well.

So, the disruption of COVID-19 has prompted many more delivery owners to introduce technology and optimize delivery operations.

Specifically, companies are relying more and more on delivery management software to handle their last-mile delivery operations.

Which has allowed them to tackle all the problems at once, and head-on.

Including your biggest concerns, like urgency, limited capacities, and inadequate capabilities.

And that leads you to a solution that optimizes the entire last-mile of delivery.

We have everything you need to start improving your delivery.