One of the most pressing issues for delivery and e-commerce companies is the last mile delivery cost, which has become one of the most important challenges. The last mile delivery process is considered one of the most important and accurate operations, which e-store owners need in particular.
Through which the best services can be provided to customers, thus maintaining their satisfaction and doubling the profits achieved. Today, delivery and e-commerce companies are experiencing an unprecedented boom in their business. In this article, we will address the problem of last mile delivery cost, with some solutions to reduce that cost.
How much of the total shipping costs go to the last mile?
Last mile delivery is defined as the movement of goods from warehouses or fulfillment centers to the final delivery destination.
And is the final step in the shipping process, which ends with the package reaching the customer’s hand.
The goal of last mile logistics is to get packages to the buyer as quickly and inexpensively as possible.
So last mile delivery cost accounts for a large percentage of shipping costs in general.
That amounts to more than 50% of the total shipping cost, which can cost businesses significant expenses.
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What is the last mile delivery problem?
The last mile delivery problem is very costly and can have a huge impact on customer satisfaction and retention.
This makes companies incur more costs for its application, and at the same time bear a greater risk of not using it in their business.
Especially since last mile delivery affects the customer’s final experience and impressions of the store they dealt with.
Recently, customers who do not receive their products quickly enough are looking for their products elsewhere that offer better delivery options.
What makes last mile delivery so costly?
The problem of high last mile delivery cost hinders many companies from starting its application and use, especially since it greatly affects customer satisfaction.
Last mile delivery builds a solid relationship of trust between the customer and the online store that deals with it and maintains its survival.
But due to the high last mile delivery cost, it has become difficult for many stores to implement it in their business.
There are many reasons and factors that increase the last mile delivery cost. And the following are the most important points that explain the reasons for the high last mile delivery cost:
1. High shipping costs
One of the reasons for the high last mile delivery cost is the high shipping costs in general, especially as companies compete to provide the best customer service in terms of delivery.
Urging companies to use technology, infrastructure and manpower to meet customer demands,
To compete with large retailers, brands try to invest in technology and infrastructure and ship quickly while also keeping costs low.
This is in order to maintain gross profit margins, which makes last mile delivery cost an obstacle for companies and retailers.
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2. Difficulty implementing same-day delivery
It is difficult to control the speed of delivery once the package has left the warehouse for delivery.
As the efficiency of last-mile delivery depends on several factors that may be outside the company’s control.
These factors can include many variables, such as the number of orders that are categorized and packed each day, and the number of times that packages are received.
As well as the proximity of delivery points to the warehouse and fulfillment centers, in addition to the location of the warehouse itself.
3. Reliance on traditional guidance models
Without highly efficient routing tools and strategies, it is difficult or even impossible to ensure the effective implementation of last mile deliveries.
Traditional routing models rely heavily on manual processes, which makes it difficult to understand and take into account all the factors that affect the selection of highly productive routes.
4. Weak and rigid logistical vision
Outdated supply chain architecture and traditional delivery processes with poor interoperability are major reasons why logistics operations are poorly visible and time consuming.
It also results in a clear increase in last mile delivery cost, which makes it difficult to implement in e-commerce companies.
3 Strategies for Cutting Last Mile Delivery Costs
Companies are trying to overcome these difficulties that cause the high last mile delivery cost, through the use of modern technology.
Here are 3 effective strategies that can make a difference in last mile delivery cost, and reduce it by some percentage:
1. Reduce fuel consumption
Reducing fuel consumption can help reduce the cost associated with it, thus reducing the last mile delivery cost.
The best way you can reduce this consumption is to follow improved delivery methods, through the use of modern technology.
2. Prevent failed deliveries
One of the effective ways that will save a lot of expenses on retailers is through the use of modern technologies to track orders and communicate with customers.
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Proper management of customer expectations effectively reduces the incidence of failed deliveries, thus significantly lowering the cost of last mile delivery.
3. Explore new delivery models
Discovering new paradigms in the delivery process can help you reduce the cost of last-mile delivery by working with delivery service providers.
Who will help you provide last mile deliveries at lower prices and also promote the delivery process more effectively.
