last mile delivery
October 2, 2023

Last Mile Delivery: A Shipper’s Guide to ROI

Jim Waters

Gone are the days when yesteryear's standards could define the benchmarks for the last mile. Today’s retailers and shippers must challenge themselves and embrace new approaches for last mile delivery services to realize the return on investment they need.

This guide outlines today’s last mile opportunities and challenges and the approaches that empower retailers and others to achieve the ROI their shareholders demand. If you need help taking advantage of last mile opportunities, overcoming challenges, and implementing modern best practices, FRAYT can be your strategic partner.

Continue reading to learn more about achieving higher ROI in the last mile, and contact us if you have questions or want to explore a partnership.

What is Last Mile Delivery?

Last mile delivery refers to the final stretch of the logistics and supply chain process. It’s when goods or products leave a distribution facility or warehouse and journey to the customer’s doorstep. Managing the last mile sounds straightforward, but retailers know the intricacies and skyrocketing expectations that make the current landscape challenging.

On a recent episode of The Logistics of Logistics podcast, FRAYT’s Jim Waters discussed how the definition of the last mile has evolved in recent years. What was once a simple dash to the finish line has transformed into a nuanced, multi-faceted operation. This expansion in definition takes into account distance and the increasing complexity of services, tailored customer expectations, and the ever-changing technological landscape.

Why the growing emphasis on last mile delivery? The answer is twofold: 

  1. Customer Expectations: With the surge in e-commerce and customers’ collective desire for quicker, more personalized deliveries, the last leg of the journey has become the most memorable and crucial part of the consumer experience. 
  2. Competition: As businesses scramble to meet these heightened expectations, the spotlight on efficient, effective last mile delivery services has intensified. Retailers that meet and exceed customer expectations will gain a competitive advantage.

As with any rapidly evolving domain, the last mile brings its own set of challenges — challenges that, when appropriately addressed , open doors to opportunities. As we dive deeper, we’ll uncover both the hurdles and the potential rewards that await retailers and shippers venturing into the last mile landscape.

The Challenges in Today’s Last Mile Delivery Landscape

The world of last mile delivery has dramatically changed in recent years — with the pandemic acting as a catalyst. COVID-19 accelerated shifts in consumer behavior and preferences and created an immediate and relentless demand for faster, more reliable delivery services. As businesses scrambled to adapt, a series of challenges emerged from last mile delivery.

One of the most pressing challenges is the need to balance reducing costs with achieving operational efficiency. Both objectives are vital, but maintaining quality drivers makes cost reduction and operational efficiency more difficult. Here’s why:

  • Low-quality drivers may cost less, but they are less efficient and struggle to create positive customer experiences that generate repeat business.
  • High-quality drivers may cost more, but they are better positioned to work efficiently while delighting customers.

The gig economy has significantly influenced the logistics industry — especially the last mile. As gig economy drivers flooded into the last mile space, retailers counted on flexibility, scalability, and lower operational costs. The reality is that while gig drivers can scale and adapt to fluctuating demands, they often lack the training and brand alignment essential to create outstanding customer experiences. 

Identifying workable solutions to these challenges takes time and effort. But, as we explore further, we'll highlight ways to turn these challenges into catalysts for innovation and growth.

The Opportunities in Today’s Last Mile Landscape

Retailers that master the last mile unlock opportunities to:

  1. Lower shipping costs
  2. Increase operational efficiencies
  3. Gain a competitive advantage

Seizing these opportunities is impossible without a forward-looking strategy that uses today’s best practices for last mile delivery services. The tried-and-true strategies from years ago will no longer suffice for ambitious retailers and other companies that want to use the last mile to boost operations and leap ahead of competitors.

For all of the last mile’s challenges, it is a space rife with opportunities. Those opportunities are accessible to visionary retailers ready to challenge themselves and rethink what last mile delivery looks like in the modern age. FRAYT works with many companies that have recognized the need to improve their last mile delivery services — and who have reaped the benefits of modernization.

A national tile store chain transformed its last mile delivery services specifically to gain a competitive advantage while delighting customers. A well-known auto service and supply shop chain addressed its last mile delivery program so that employees would spend less time transporting parts and more time serving customers. And a restaurant chain in the Pacific Northwest redesigned its last mile delivery services to create better customer experiences.

Best Practices for Unlocking ROI in the Last Mile

You don’t have to design your own last mile delivery program to start seizing opportunities. There are proven best practices companies are currently using to sidestep last mile-related challenges. Here’s a look at five of the most important best practices to follow when building and optimizing your last mile delivery program.

1. Create Flexibility for Fluctuating Demand

Retail ebbs and flows with the months and seasons. The keys to surviving are stocking the right products at the right time while ensuring  they reach customers efficiently and promptly. This is where the last mile takes center stage. As demand surges during peak seasons or promotional periods, the pressure on last mile delivery systems intensifies. On the flip side, an overly rigid system can drain resources during lulls.

The solution? Flexibility.

A nimble, adaptive last mile delivery infrastructure enables retailers to scale their capacity up or down with precision. This elasticity ensures the retailer is always poised to meet customer expectations without hemorrhaging costs or compromising delivery times.

Consumers today expect swift and reliable deliveries. Having the ability to adjust to fluctuating demand is a necessity. Creating this flexibility in the last mile allows retailers to satisfy immediate customer needs while also paving the way for increased profitability and higher ROI in the long run.

2. Emphasize Quality Drivers

While infrastructure, technology, and logistics play key roles in last mile delivery, there’s one human element that holds transformative potential: the driver. As previously touched upon, quality drivers are akin to brand ambassadors. They transport goods but also carry the essence and reputation of the brand they represent.

A driver’s professionalism, punctuality, and demeanor can influence a customer’s perception significantly. A positive experience marked by prompt delivery, courteous interaction, and an evident commitment to service can leave a lasting impression. Such moments lay the groundwork for future interactions and potential repeat purchases.

3. Diversify Your Fleet

A one-size-fits-all approach is fast becoming outdated in last mile delivery. As delivery demands grow in complexity and specificity, the vehicles that fulfill them must evolve in tandem. Creating a diversified fleet of vehicles allows for enhanced efficiency and optimized costs.

Delivery needs vary in size, urgency, and specificity. A diversified fleet (including box trucks, sprinter vans, and even sedans) recognizes the intricacies of last mile delivery and ensures each delivery is matched with the most suitable vehicle.

4. Leverage Technology

Efficiency is the heartbeat of any well-oiled logistics system. With technology, retailers can redefine what’s possible in their last mile delivery operations. 

For example, route optimization software can analyze traffic conditions, delivery windows, and other factors to ensure drivers take the most efficient paths. This reduces delivery times and minimizes fuel consumption, leading to cost savings. Similarly, delivery management systems can streamline processes, from package dispatch to proof of delivery, minimizing manual interventions and errors.

5. Build a Presence in Key Markets

Proactive planning demands that retailers identify and establish themselves in markets crucial to their businesses. But a mere presence isn’t enough. Retailers must also be agile in those markets.

As highlighted in our discussion on flexibility, the demand within any given market can ebb and flow. This forces retailers to create a scalable and flexible presence to ensure they can adapt to these fluctuations, maintaining service quality while optimizing costs.

FRAYT is a testament to the power of strategic market presence. With operations spanning markets across the nation, including every market that boasts an NFL football team, we offer our customers all the advantages of broad-yet-targeted coverage. 

Self-Managed Last Mile Delivery vs. Choosing a Partner

Shippers have a last mile delivery choice to make. Is it best to self-manage a last mile program? Or is it better to align with a strategic partner for last mile delivery services? There’s also a middle ground where shippers can blend both approaches. Each choice has its merits, but making an informed decision requires understanding the nuances of each.

Self-Managed Last Mile Delivery

Opting for a self-managed system gives shippers  complete control. Every decision, from driver hiring to route optimization, falls under their purview. This approach ensures a tailored delivery experience that aligns perfectly with a brand’s vision and values. 

That said, the self-managed path isn’t without challenges. Building and maintaining a fleet, investing in modern technologies, training drivers, and managing operations demand significant capital, time, and resources.

Choosing a Partner for Last Mile Delivery

Entrusting the last mile to a specialized partner opens the door to several advantages. Without the need for hefty capital investments, shippers can leverage a partner’s established infrastructure, technology, and fleet. This ensures flexibility, with capacity that effortlessly scales based on demand. 

Also, modern technologies come as part of the package, ensuring efficient deliveries and enhanced customer experiences. Partnering with experts also means access to a pool of trained, quality drivers who become the face of the brand during those crucial delivery moments.

Blended Approach

For those seeking the best of both worlds, a blend allows shippers to retain some in-house operations while tapping into a partner's expertise. This approach is especially advantageous for 3PLs looking to amplify their fleets or services without the exhaustive processes of building from scratch.

How to Choose the Right Approach for Your Organization

While each approach has its merits, the balance sheet often favors  partnering. The immediate and long-term benefits often make it the more prudent, efficient, and profitable choice, including benefits like:

  • Reduced capital outlay
  • Flexible capacity
  • State-of-the-art technology
  • Access to high-quality drivers

By choosing a partner, shippers unburden themselves of operational intricacies while also aligning with experts dedicated to enhancing the last mile journey. This ensures a win-win for both businesses and their customers.

Unlocking Success in the Last Mile

Navigating the realm of last mile delivery demands a multi-faceted approach for maximum ROI. Emphasizing adaptability, championing driver excellence, diversifying your fleet, leveraging technological advancements, and strategically anchoring in key markets are the five pillars that define this journey. 

With FRAYT as your partner, these pillars become the foundation of your success. We align with your ambitions, empowering you to streamline operations while meeting challenges head-on. Together, we’ll craft a last mile program emphasizing  efficiency and excellence. 

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