As online shopping grows in popularity and ubiquity, retailers and logistics providers have tried to find innovative ways to fulfill consumer expectations. While order fulfillment is still the backbone of retail businesses, today’s customers want fast delivery times. Thus, the main challenge for businesses is to deliver fast while keeping costs low.
The modern customer’s expectations of fast delivery come from online retail speed. By choosing products and finishing purchases with the click of a single button, they get into the mindset that their purchases should be delivered quickly. That’s why ensuring your product arrives at the customer’s door as soon as possible is essential to maintaining customer satisfaction.
Order fulfillment starts when the customer puts the order in and finishes when the item arrives at their door. For most companies, the final leg of the fulfillment process, often called last mile delivery, is the most challenging and expensive.
Keep reading to learn more about last mile delivery and how you can use it to optimize order fulfillment.
Understanding Last Mile Delivery
Last mile delivery is the final part of the order fulfillment process, where a product leaves the warehouse on the way to its final destination: the customer’s home, in most cases. The key challenge of last mile delivery is to ship items as fast as possible while keeping expenses down.
Last Mile Delivery in eCommerce
Last mile delivery can make or break an eCommerce retailer because the customer can find other stores that offer faster or cheaper shipping if you don’t fulfill their expectations. Unfortunately, last mile logistics are expensive – sometimes taking up more than half your logistics costs.
Online retailers and third-party logistics (3PL) companies usually face a dilemma regarding last mile delivery. To offer free or low-cost shipping, they must pay for delivery out of pocket or impose order minimums to cover costs.
Factors That Influence Last Mile Delivery
When you shop online, you may notice a gap between your item being marked “out for delivery” and arriving at your doorstep. This gap and lack of transparency signify an inefficiency in the last mile delivery process.
The last leg of order fulfillment operations usually involves an independent shipping carrier delivering the package from your warehouse to the customer. Several factors influence how long this process takes, such as:
- Shipping company or 3PL provider size
- Number of orders it handles daily
- Carrier pickup frequency
- Distance between fulfillment center and recipient
- Area characteristics (e.g., rural or urban regions)
- Number of deliveries/stops along the route
These hindrances to last mile delivery are usually out of your control and influence shipping times differently. For instance, smaller 3PL companies in rural regions may pick up items every two or three days, while larger logistics providers in urban regions typically schedule multiple pickups daily.
Last mile delivery is becoming necessary as eCommerce gains more ground in the United States. Moreover, the increased popularity of the free shipping movement means more pressure for you to foot the bill or implement minimum purchase amounts to reduce expenses.
Recent Last Mile Delivery and eCommerce Trends
The eCommerce scene is constantly evolving, so online retailers and 3PL companies have to change along with it. Adapting to the latest industry trends lets you capitalize on new opportunities and optimize your fulfillment strategy according to consumer demand.
Here are some eCommerce and order fulfillment trends you should watch out for:
- Crowdsourcing and gig economy
- Instant order fulfillment
- Rise of USPS carrier services
- In-house shipping carriers
- Last mile delivery upselling
- Smart and predictive technology
- Fulfillment networks
- Real-time package tracking and delivery updates
- Autonomous delivery vehicles
- Predictive shipping
Let’s dive into each trend and see how they can influence last mile delivery and other aspects of your business.
1. Crowdsourcing and Gig Economy
Crowdsourcing and gig-based delivery services have been rising these past few years. In addition to transport, companies like Uber and Postmates offer delivery jobs to their independent driving partners. While this system is less predictable than traditional route-managed delivery systems, it’s a flexible alternative that companies can use whenever they need something delivered quickly.
2. Instant Order Fulfillment
Thanks to the ubiquity of the Internet and online retail, people can find the products they need within minutes. As the purchase process becomes faster, customers expect fast delivery, resulting in high demand for same-day, one-day and two-day shipping.
As an online retailer or 3PL provider, you most likely use warehouse management software to assist in order fulfillment. However, even the most advanced software has limitations. You must work extra hard to provide same-day order fulfillment if you work in fast-moving industries like pharmaceuticals or food & beverage.
3. Rise of USPS Carrier Services
While private shipping carriers like UPS and DHL are still the most popular shipping choices for online retailers and 3PL companies, the United States Postal Service is also gaining some ground in this field. The USPS has started delivering eCommerce packages to compensate for declining traditional mail deliveries.
USPS often offers free package pickups, making them a strong choice for retailers and 3PL companies who want to save money.
4. In-House Shipping Carriers
Some retailers and logistics providers save money by using their own company vehicles and offering in-house delivery services. While cheaper, this shipping method is only viable in your company’s immediate area.
5. Last Mile Delivery Upselling
Most retailers already upsell on their product pages, but some are adopting last-minute upselling. With predictive technology, companies can guess what other products customers might want and offer them at checkout.
Some companies take upselling even further and stock their delivery vans with items the customer might want, so they can sell an additional item in person. Because this upselling method hinges on impulse purchases, it’s mostly implemented in food delivery.
6. Smart and Predictive Technology
Modern technology benefits both sides of the eCommerce coin. Customers know where their items are at all times through real-time tracking, and they can even monitor their status through temperature and humidity sensors.
Meanwhile, smart technology predicts the weather for retailers and 3PL providers to ensure that perishable and easily-damaged items aren’t compromised.
7. Fulfillment Networks
One of the best ways to improve delivery times and offer same-day delivery is to expand your fulfillment center network. Amazon, which is capable of two-hour deliveries, is one of the prime examples of great fulfillment center usage.
While most fulfillment center networks aren’t as big as Amazon, many companies rent warehouse space out in major cities to provide faster delivery.
8. Real-Time Package Tracking and Delivery Updates
Modern customers expect to receive orders quickly and track the entire shipping process. Fortunately, tracking technology makes real-time product shipping updates possible, giving your customer base complete visibility from when their item ships to when it arrives at their door.
9. Autonomous Delivery Vehicles
The availability of delivery drivers dictates shipping times. Since drivers are human and labor shortages happen, you can’t expect them to deliver goods 24/7. However, recent developments in self-driving cars and drones might mean that 24/7 delivery will eventually be a thing.
There are many gray areas regarding regulations and rules, but there’s also potential in self-driving delivery vehicles. Amazon has already invested $530 million into self-driving cars. Additionally, Amazon debuted the Amazon Scout delivery drone in 2019, with trials as recent as 2020.
10. Predictive Shipping
Reducing delivery times is the most common way to decrease last-mile shipping costs. But what if there’s almost no delivery time at all?
Major online retailers like Amazon are trying predictive shipping, which anticipates product demand based on consumer shopping habits. These companies often use predictive algorithms to determine high-demand seasons for certain items (e.g., fireworks leading up to the Fourth of July) and pre-ship items to local warehouses in anticipation of these demand spikes. This cuts down on delivery time and cost because the products are already halfway there.
Distributor Storage With Last Mile Delivery
Distributor storage is an integral part of last mile delivery. Most fulfillment companies or last mile delivery providers have a network of fulfillment centers where they store your products before shipping them out to customers.
When picking a 3PL provider, look for one with a good spread of fulfillment centers so you can offer high delivery speeds anywhere in the country.
Top Last Mile Delivery Companies
Last mile delivery companies ship items from fulfillment centers to customers. Different companies offer different benefits, so choose wisely.
Here are four great delivery companies used by many businesses and 3PL providers:
FedEx is one of America’s biggest shipping companies, delivering packages all over the planet. It’s one of the best options if you’re looking for fast package deliveries and detailed shipment trackers.
However, FedEx’s rates are often higher compared to its peers.
UPS is another favorite among online retailers because it offers weekend pickups and deliveries. This company also provides same-day and next-day deliveries, which are indispensable for when your customers need their purchases delivered quickly. Moreover, UPS offers a high-volume discount if you’re shipping many packages simultaneously.
But while UPS offers affordable rates for small packages, you may need to pay extra fees and surcharges for heavier items.
DHL’s global presence means you can easily ship anywhere in the world. DHL also boasts great customer service with quick issue resolution and free pickup fees.
However, DHL doesn’t have a strong American presence compared to its counterparts, so finding a DHL office stateside may be a little more challenging.
USPS is one of your best options for small and lightweight packages, thanks to its low rates. With Saturday delivery and free home pickups, USPS is perfect for new online retailers who can’t spend too much on shipping.
Unfortunately, USPS doesn’t have a strong tracking system, so customers might not get full shipping transparency. Its customer service has also gotten a bad rap because of numerous unresolved issues.
How ShipHero Improves Logistics and Fulfillment
ShipHero is one of the best 3PL companies for eCommerce business owners. We outsource order fulfillment for over 5,000 stores to boost their shipping times and foster growth.
Here’s why you should choose ShipHero as your 3PL.
Distributed Fulfillment Centers
Keeping your entire stock in one warehouse may lead to high fulfillment costs and shipping delays. At ShipHero, we use distributed fulfillment centers to store your products at warehouses across the country. When your store receives an order, we forward it to the nearest fulfillment center to ensure faster and cheaper delivery.
ShipHero has negotiated shipping discounts with carriers like UPS, USPS, FedEx, DHL and more. This lets us pass the discounts on to you, so you spend less on shipping.
2-Day Delivery and Overnight Delivery Capabilities
Want to build brand loyalty on par with Amazon and grow your market share? ShipHero lets merchants offer 2-day and overnight delivery to help compete with Amazon FBA sellers and other major retailers.
The solution to last mile delivery challenges is not one-size-fits-all. An online retailer or third-party logistics provider may find that a combination of improved technology and analytics could be the solution to rising last mile delivery costs.
There’s no singular solution for last mile delivery issues and challenges. However, using the right technology and analyzing relevant data helps your company develop the best cost-saving measures.
No matter your line of business, last mile delivery is an integral part of it. Always watch the trends and developments to capitalize on new cost-saving opportunities and measures.
ShipHero is a leader in order fulfillment. Contact us today to learn how we can help your eCommerce store.
Last Mile Delivery for eCommerce FAQs
What is eCommerce order fulfillment?
eCommerce order fulfillment encompasses the entire process of taking your product from the factory floor to the customer’s doorstep. Order fulfillment involves your supplier, warehouse manager, 3PL providers and shipping carrier.
What is the difference between drop shipping vs order fulfillment?
The key difference between drop shipping and order fulfillment is the party handling the order. With drop shipping, orders are delivered directly from the manufacturer or supplier. With order fulfillment, purchases are handled by the merchant or 3PL providers.
What are the bottlenecks in the order fulfillment process?
There are many bottlenecks in the order fulfillment process, like inaccurate orders, long packing times and courier delays. To eliminate these bottlenecks, examine your order fulfillment process and identify the cause before engineering a solution.
About ShipHero: We make it simple for you to deliver your eCommerce. Our software helps you run your warehouse, and our outsourced shipping solutions eliminate the hassle of getting your products to your customers. With over 5,000 brands and 3PLs relying on us daily, we’re here to help with all your logistics needs.
Let us know how we can help you today by scheduling a call HERE.