About cost of last mile delivery business and how to optimize it

As time changes and the folks have shifted from traditional to e-Commerce Online shopping. We have observed a significant change in the behavior of the customer. Now, e customer wants his order to be delivered to his doorstep in the shortest possible time. For this purpose, we have come across a model named a last-mile delivery model. Last-mile delivery is the last leg of the entire delivery process. It aims at delivering the product to the customer’s doorstep from the central hub or warehouse on the same day within the shortest possible time. Nowadays customer choices and preferences have changed a lot. They are getting increasingly sophisticated in their demand for the Last Mile services. The customer would pay better for quick and convenient same-day delivery. But some of them think that the last mile is a bit expensive.

Why is last-mile delivery expensive?

Some internal and external costs account for the quite huge price of the last mile delivery operation. Some of them will be discussed below. Answering the question wandering in the mind of almost every person that relies on The E-Commerce model. Here are some reasons why the last Mile delivery is a bit pricey.

First and the utmost major reason due to which the price of the last mile delivery operation is quite high are the expectations of our savvy customer, who wants his order to be delivered at the shortest possible time, and demand extraordinary features. like on-time delivery, real-time tracking, route optimization, access to the dashboard, etc. For an E-Commerce business to establish all these features they need highly advanced infrastructure that will obviously lead to higher prices.

In the third place, there are some issues related to technical stack and route optimization. That also leads to failure or error deliveries. When the additional expenses apply like order replacement, order cancellation, and failure of delivery then obviously the expenses rise and have a huge impact on the prices. And it will incur the last Mile delivery prices.

Keep reading the article to know why last-mile delivery is a bit expensive.

Labor cost

Riders for delivery agents are the most important part of the Last Mile service. Their cost accounts for the most significant expenditure. Truck drivers or delivery agents are the most expensive ones as they are an important and crucial part of the logistic network.

Fuel cost

When the time span of your delivery network increases. And you have to cover more area, then it’s very obvious that you need extra fuel. Fuel costs are a major expenditure in your last Mile delivery expenditures. If we talk about Amazon, Amazon’s e-commerce giant model has recently increased the last delivery service charges due to an increase in the fuel cost.

Delivery Equipment cost

In the third place equipment accounts for 10 to 20% of the last Mile delivery expenditures. Some delivery products need extra care like some glassware, some sort of machine, etc. In addition to these, there are some products that need special arrangements like you need a specific temperature range to deliver medicine or a vaccine that cannot withhold the temperature change. so these types of couriers or equipment can increase the cost of last Mile delivery services.

Delivery Management Tool

Delivery management software accounts for 10 to 15% of the total cost for the last mile delivery making it a bit pricey. Everyone needs advanced delivery management software. So to avoid the hassles and go for smooth delivery. Moreover, the addition of the new features in the delivery management software adds huge costs to the model. And as a result the cost of the last mile delivery operation increases.

Miscellaneous costs

Apart from the above-discussed reason, some unexpected causes account for the increase in the price of last-mile operations. these may include rescheduling costs, order cancellation, replacement, storage costs, and many more. these also account for increased prices of the last mile operation. For example, in the case of order cancellation, an E-Commerce online store has to return it along with packaging to the warehouse. this entire process will cause trouble to the third-party logistics.

Join the conversation

What are your thoughts on these new delivery technologies? Could you please suggest a solution to the last mile problem? We would appreciate your feedback on MileNow