Last-Mile Delivery 101: How a 3PL Works With Shipping Carriers for Best-in-Class Fulfillment

Last-mile logistics is a hot topic in the world of fulfillment. Today’s customers expect fast and accurate shipping wherever they shop online. Same-day delivery and last-mile logistics are estimated to be valued at more than $1.35 billion this year, with 25% of customers willing to pay extra for same-day delivery.

And from delivery time to customer communication and ecommerce order tracking, expectations are only getting higher.

In 2017, 26.7% of online shoppers believed greater order visibility influences a repeat purchase, a jump from 20.8% in 2016. As technology advances and even more customers’ preferences shift in this direction, the last leg of delivery is one of the most challenging and important parts of the supply chain.

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What is last mile delivery?

Last-mile delivery is a logistics term used to describe the transportation of a package from a hub to the package’s final destination with the goal of delivering the item as quickly and cost-effectively as possible.

What are last mile carriers?

Last-mile carriers are the shipping companies who transport a package from the nearest shipping hub to its final destination. Last mile-carriers fulfill the last-mile delivery logistical needs.

How are carriers solving for last-mile delivery?

Carriers like FedEx and UPS face challenges with inefficient routes and missed deliveries. Oftentimes, these carriers overcome these difficulties by using USPS to complete the last leg of delivery.

UPS and FedEx will transport orders hundreds or even thousands of miles before passing the package on to USPS to complete the final mile of delivery. USPS runs local routes every day, meaning they already deliver to the end customer and don’t have to go out of their way to do so.

However, UPS and FedEx are working to catch up to USPS by exploring cheaper and more efficient delivery processes and methods.

For example, carriers are improving the efficiency of last-mile delivery by offering pick-up options as an alternative to deliveries. Rather than needing to be home to receive a delivery, customers can pick up their packages from designated locations that offer flexible hours.

One example is UPS My Choice®, a delivery management tool that lets customers decide how, where, and when they receive their packages. According to UPS, My Choice members are 38% less likely to ever call customer service. They are also less likely to have a package returned to sender, as they have several options to enable successful delivery attempts.

How last-mile delivery helps with 2-day shipping

With the rise of fast, free delivery and expectation of 2-day shipping, the last-mile plays a major role in getting orders to customers on time. Another piece that directly impacts the ability to deliver quickly and affordably is fulfillment location, because in order to use ground shipping to reduce shipping costs and transit times (as opposed to more expensive air shipping), you need to be shipping to close by destinations.

As ecommerce businesses grow and their order volume picks up, they will typically ship from additional fulfillment centers across multiple regions to more efficiently reach customers, while depending on last-mile delivery to get them there on time. Get “The Guide to Offering Affordable 2-Day Shipping” below to learn more.

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ShipBob and last-mile delivery

Working with ShipBob lets you leverage both the inherent last-mile strengths of USPS and innovations from UPS. Before shipping every order, we get quotes from all of the major carriers. Then we use the best value carrier and pass the savings on to you. This way, you and your customers benefit from fast and affordable delivery.

We can also analyze customer data to optimize where your orders ship from. With the distributed inventory model, inventory is strategically split across different fulfillment centers and then sent from the warehouse that is located closest to the customer. When your orders travel less distance, you save both money and time in transit.

With last-mile logistics, fast ecommerce shipping is key. The less distance between the warehousing and storage facility and the customer, the better. ShipBob has five fulfillment center locations across the US in major metro areas, with more to come. You can split your inventory across any of ShipBob’s fulfillment centers to enable faster, less expensive delivery. Win-win.

Finally, when it comes to last-mile delivery, communication is vital. A ProShip study found that 97% of customers expect the ability to monitor their orders throughout every step of the shipping process. ShipBob offers real-time order tracking from the dashboard (see below). This also keeps them up-to-date if unpreventable delivery exceptions occur. 

Receive a set ship date based on estimated arrival, and access shipment tracking information in real-time. You can even easily pass these details along to your customers.

last-mile-delivery-order-tracking

Last-Mile Delivery FAQs

Last-mile delivery can be confusing at times. Here are some of the most common questions regarding last-mile delivery.

How much does the last-mile cost?

The last-mile of your package’s journey can cost up to around 25% of your shipping costs. This is a very lopsided amount if your package has gone 500 miles, only to have less than 1% of the journey be 25% of the cost.

What is the ‘last-mile challenge’?

Cutting costs and improving efficiency on last-mile delivery is what is commonly referred to as the ‘last-mile challenge’.

What is first-mile delivery?

The first-mile is the step in the logistics and shipping process where packages are handed from a retailer/wholesaler/supplier to a shipping courier.

How can I improve my last-mile delivery?

You can improve your last-mile delivery speed and lower costs by having more warehouses, being closer to customers, and offer tracking for you and your customer. This can all be done by partnering with a 3PL, like ShipBob.

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