The Best Ways to Minimize Last Mile Delivery CostsBy Steve Syverson Read Time: 5 min.
The last mile may be one of the most important parts of the supply chain, but it can also be the most costly and inefficient. We're helping to change the face of last mile delivery to become more cost effective and efficient — here's how.
For customers, last mile delivery is often the only part of the logistics process they see. It's the final step in the journey of a package that may have begun thousands of miles away that's completed when the product is delivered into the customer's hands.
For B2C sellers, the last mile is usually completed by a parcel carrier or the United States Postal Service. For larger B2B shipments, last mile delivery options also include LTL and truckload carriers.
While the last mile is perhaps the most important leg of the journey, it's also the most inefficient. Experts say last mile delivery costs represent up to 53% of the total shipment cost. Carriers must deliver individual packages on an irregular basis to locations that may not be conveniently located to major highways. Unpredictability in transit times from traffic, package theft and other complications raise costs. Deliveries in low-density rural areas raise costs, as do urban areas where congestion slows traffic.
Changing Face of Last Mile Delivery
The face of the last mile is changing as companies shift to support e-commerce and increasing customer expectations for low-cost shipping. It wasn't long ago that shipping and handling costs were an accepted part of home delivery services, whether you ordered from a catalog or a toll-free number. The early days of online shipping were no different. Consumers regularly paid for shipping. Then five-day free shipping became the standard, with faster service available for a fee. Of course, Amazon has changed all that. Today, consumers expect fast shipping without paying extra for it. Of course, the Amazon Prime program entices consumers to pay for fast shipping in a lump sum rather than for each shipment. Customers will abandon shopping carts when the shipping estimates don't match their desires. Those expectations raise the stakes for any shipper that's not Amazon.
Today's digital consumer has expectations fast delivery and visibility throughout the process. And the same expectations are moving into the B2B sector. After all, if Amazon can tell you when purchases shipped from three different warehouses will arrive at your home, why can't an industrial supply company give you the same information order?
Within the environment created by Amazon, other shippers are finding it difficult to improve their existing supply chain enough to absorb shipping costs. Legacy warehouse infrastructure and technology just can't keep up with customer expectation for free high-speed shipping. The traditional hub-and-spoke model of large regional fulfillment centers can't keep up with the fast pace of e-commerce. The large warehouses were built for pallet-level shipping rather than pick-and-pack for individual shipments. Cross-dock operations added time and complexity as products were sorted for store deliveries rather than individual fulfillment.
If your company is searching for a way to cost-effectively compete in last-mile logistics, Warehouse Anywhere offers proven strategies to help alleviate your pain points.
Extensive Network of Mini Warehouses: Warehouse Anywhere has an extensive real estate footprint with over 10,000 mini-warehouses nationwide. You can now place inventory closer to the customers, which means you can less expensive shipping options while still meeting customer expectations for free two-day shipping. Depending on the situation, a decentralized warehouse approach can support same-day deliveries. Decentralized warehouses can also support pop-up logistics for seasonal surges.
Inventory Management Software: Warehouse Anywhere's proprietary software allows you to track inventory in real-time for increased accuracy. You can help meet customer expectations for visibility as well as improve your warehouse efficiency. Our advanced analytics provide a clear picture of your inventory and the ability to respond to a rapid market shift. The predictive software will help analyze demand against inventory to support lean inventory and manufacturing principles.
LTL: Warehouse Anywhere provides organizations longer lead times for businesses to be able to capitalize on LTL rather than overnight shipping. LTL often fulfills the middle mile of the logistics process, moving products along the way to the last mile. Typical LTL rates are lower than parcel shipping, especially overnight delivery rates. Some carriers offer guaranteed delivery times or other customized parameters for extra fees. LTL carriers can also support homes delivery for large products such as bedding and appliances that may require their own supply chain.
Auto-Replenishment: Retailers can deliver fast shipping at a lower cost by encouraging customers to sign up for auto-replenishment. The predictability helps reduce costs by allowing shippers to use lower cost services. Prices for products shipped via auto settings will cost less than products ordered on an irregular basis. Fast shipping for on-demand orders costs more. With auto-replenishment, shipping costs are lower because lower-cost services can be used while meeting customer deadlines. Live inventory tracking makes 2-3 day ground shipping possible with full transparency for customers.
Find a Last Mile Partner
An experienced 3PL like Warehouse Anywhere can help enterprises of all sizes enhance their last mile delivery strategies to compete in the marketplace of customer expectations for low-cost shipping.
Warehouse Anywhere offers a range of plans for e-commerce shippers to reduce their last-mile delivery costs. Our Lightspeed plan includes last-mile same-day delivery to support e-commerce shippers in any major market. We can help implement a decentralized warehouse strategy that puts your products closer to customers, allowing for less expensive service while meeting customer expectations.
Take control of your last mile delivery strategy. Contact our experts today!