In the high-demand, competitive ecommerce landscape, delivery speed can be a key deciding factor for customers choosing between retailers. As the industry continues to grow, customer expectations are evolving. Instead of 5-7 business day shipping, they now demand quicker delivery and a seamless, transparent process.
Statistics show that 25% of shoppers will switch to a competitor if their order doesn't arrive within three and a half days.
While things tend to be fairly streamlined during the first portion of the shipping process, it's the last-mile delivery stage where delays and miscommunication pose the biggest issues. With rising consumer expectations, the need for a robust last-mile delivery strategy is key to improving customer satisfaction. The following sections will walk through what last-mile delivery is and why many retail brands are beginning to invest heavily in the final stage of the delivery process.
Last-mile delivery refers to the final step in the delivery process, where an order moves from a transportation hub to its final destination – usually the customer's home. While this single act is only a small part of the overall supply chain operation, it tends to impact customer satisfaction significantly.
Since customers are intimately involved in the final step in the shipping process, a bad experience or delays could mean the loss of future business.
One of the biggest reasons organizations haven't focused too much on last-mile delivery until the past couple of years is due to its notoriously high costs. A blend of route complexity and labor-intensive tasks makes investing in the final part of the shipping journey costly. However, the benefits of improving customer experience far outweigh the additional expenses.
During the early to mid-2000s, it was normal for customers to wait 5-7 business days for an online order. Since everyone accepted the timeframe as standard, no one complained about waiting a week to receive their purchase. However, since Amazon launched two-day shipping in 2005, consumer behavior started shifting.
By the mid-2010s, consumers had become accustomed to waiting only a few days for their items to arrive. This change started forcing more retailers to broaden their capabilities to meet the quicker delivery expectations of the marketplace.
Fast forward to 2024, where we're seeing an even more drastic shift in consumer expectations. Today, customers want the ability to order and receive items online within 24 hours. Along with lightning-fast speed, there are also expectations for brands to constantly update where and when orders will arrive at the customer's home.
With the final stage of the shipping process becoming more personal and customer-centric, organizations are beginning to invest heavily in improving their last-mile delivery strategies. Quick delivery was a competitive advantage in the past — today, it's simple table stakes.
Below is a closer examination of the four main benefits of improving last-mile delivery strategies.
The biggest reason companies are looking to improve the last mile of their shipping process is to enhance delivery speed. Today's customers expect to receive their orders in record time, meaning that retailers need to find a way to optimize their current supply chain process.
Many last-mile delivery strategies focus on local distribution network optimization to help get products to the end user quicker. Delivering directly from local fulfillment centers to homes helps to reduce shipping times from facilities further away.
As mentioned before, consumer behavior has changed significantly over the past 10 years. What was considered normal in the past is laughable today. However, simply keeping up with competition isn't the only reason companies should look to improve their last-mile delivery strategy. Customers are searching for ways to get their products quicker and are willing to pay for them. According to research by Professor Cui, businesses saw profits increase by 2% when they included a faster shipping option during checkout.
By optimizing your company's ability to deliver products quicker, you'll open opportunities to increase profits while improving customer retention rates.
Along with improved delivery and increased customer satisfaction, advanced last-mile strategies can also help improve operational efficiency. Through automation and technology, businesses can reduce the need for manual labor.
For instance, route optimization tools are excellent at reducing driving time and fuel costs. Instead of drivers following an inefficient delivery path, the automation software handles the planning and changes of the route in real time. In addition, a Transportation Management System solution can give you real-time savings, helping you maximize your savings.
Companies without last-mile delivery strategies often struggle to serve rural and remote regions. Shipping to these locations can pose challenges as many areas lack reliable shipping options. Improving your company's capabilities and expanding the delivery footprint of your facilities opens up opportunities to better serve untapped markets.
There are several strategies ecommerce brands can use to optimize their last-mile delivery and improve customer satisfaction.
One key approach is utilizing smarter delivery routes. Using technology to analyze traffic patterns and weather conditions, companies can create more efficient routes for their drivers, reducing delays and ensuring packages arrive on time.
Distributed warehousing networks are another solution available to organizations. By storing inventory in multiple locations closer to major customer hubs, businesses can drastically reduce the time it takes to get products into customers’ hands. This capability is especially important for companies that promise same-day or next-day delivery.
Investing in last-mile delivery optimization is necessary for any organization looking to keep up with growing consumer demand. However, challenges in streamlining transportation and technology adoption can often stall teams looking to improve. Often, the best way to make significant improvements quickly is to work with a strategic partner.
Cart.com combines best-in-class fulfillment software with a team of experienced supply chain professionals to help organizations enhance their last-mile delivery. Contact our team today to learn how we can help drive customer satisfaction and retention through last-mile delivery optimization.