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Ultimate Guide to the Solution of Last-Mile Delivery Problem in Retail

By Vishal Thakur 11th March 2022

Today, businesses are trying to develop new technologies and experimental supply chain models to improve order fulfilment processes. 

With fast, same-day and timely delivery, taking care of damaged products, route optimisation, clubbing of orders, and end customer feedback, retailers are trying hard to delight customers. 

However, the last mile problem continues to be a massive pain point for the retail industry.

If we look at the data, the e-commerce industry has transformed the global marketplace. 

In 2020, consumers spent $861.02 billion on online shopping, a 44% increase over 2019.

We live in an era where consumer expectations and demands are changing as e-commerce continues to grow. Today, consumers want fast and cost-effective delivery options and some of them are willing to offer more prices.

In order to ensure customer loyalty in online stores, it becomes crucial to improve last-mile delivery – the part where a package reaches the customer’s doorstep.

Last mile operations in retail

On the other hand, last-mile delivery does come with its own set of challenges.

A study found that more than 61% of logistics companies said last-mile delivery is the most inefficient part of their entire supply chain. 

In order to improve customer satisfaction and brand loyalty, last-mile services need to focus on speed, timely delivery, and accuracy. 

If they’re not satisfied with the shipping service, almost 56% of customers will not buy from that brand again. 

Also, the last mile is among the most time-consuming and expensive elements of the entire e-commerce supply chain where 53% of shipping costs are associated with the last mile.

So In this blog, we will examine how to gain a competitive edge in the digital market by solving the most significant challenges facing last-mile delivery.

What is the Last Mile Problem?

The last mile is the final stage of the delivery process, which includes transporting goods to the end customer.

The last mile problem refers to the challenges faced by e-commerce companies in delivering goods to their customers. This is also known as the final stage of the delivery process and this includes transporting goods to the end customer.

A lot of times, the last mile problem is caused by inefficient delivery methods or logistics. This can be solved by using innovative transportation methods or optimizing routes.

The last mile problem can also be solved by figuring out how to get goods from distribution centres to their final destination as quickly and efficiently as possible.

  • In general, last-mile challenges depend on the type of product being delivered. 
  • Many pharmaceutical and grocery products need to be stored at specific temperatures. 
  • Most heavy, bulky items, such as furniture and appliances, require several people to carry. The installation of many electronics and appliances is done over the threshold. 
  • Amazon Logistics in the UK scored highest, but with just 2.75 stars overall
  • It is also true that Click and Collect are strong in entire Europe, as it is cost-saving, but there is a huge scarcity of drivers and automated fulfilment centres.  
Last mile: click and collect: Tookan

It can be time-consuming and costly to overcome these challenges.

Customer expectations for real-time tracking are another challenge that companies face beyond fast delivery. 

Many customers have become accustomed to tracking their deliveries up until they arrive at their front doors. 

In the survey, half of the consumers said they wanted real-time order status information. Even so, 73 per cent of supply chain professionals say that real-time tracking is not currently available. 

We can see that there is a gap between customer expectations and companies’ ability to deliver – and a chance for brands that can close that gap.

We will now discuss some of the most critical last mile problems in the retail industry:

  1. No visibility

In order to ensure customer loyalty, visibility into the delivery processes is crucial. The buyer wants to know where their package is and when it will arrive.

Businesses are now offering tracking codes to give customers visibility into delivery status. 

The emergence of technology has made tracking codes obsolete in an era where everything is automated. 

Customers require real-time tracking information. They expect to see the entire process from the beginning to the end.

You can also consider delivery management software that offers real-time status updates for increased transparency into last-mile delivery. 

By doing so, you can let your customers know where their packages are at every step.

  1. High Delivery Costs

Last-mile delivery is typically expensive for both the customer and the business. It can be expensive to set up an infrastructure that supports timely delivery for the latter. 

Additionally, shipping and logistics companies must budget for complex routes, failed deliveries, extra stops and salaries of drivers. 

When a first delivery attempt is unsuccessful and the order needs to be rescheduled, the cost is doubled.

Customers abandon carts more often when shipping costs are high. Customers abandon their shopping carts when faced with an extra shipping cost, according to research. 

More efficient routes and better planning can alleviate these expenses.

  1. No Timely Deliveries

Shipping and delivery companies have to deal with this challenge every day. Failure to meet deadlines is costly for businesses. 

Customer churn can be increased and brand reputation damaged by delivery delays. In order to make timely deliveries, you need a robust last-mile delivery plan. 

Transparency and seamless communication at every level will help create a route-planning method.

  1. Old-Fashioned Technology

In nearly half of the world’s transportation and logistics companies, last-mile delivery relies on outdated technology. 

Consequently, it extends little help in combating delays and high shipping costs. 

However, by installing a GPS tracking system in delivery vehicles, you can monitor the entire last-mile journey, address potential challenges, and plan aggressive strategies for overcoming them.

  1. Low-efficiency levels

Last-mile delivery efficiency is driven by the need to ensure customer satisfaction. Efficiency also plays a key role in boosting fulfilment capacities. 

You may experience delays in delivery and frustrated customers if your process isn’t efficient, especially if you handle large orders.

Consider deploying last-mile delivery software that streamlines the process from the warehouse to the customer’s doorstep. Even if your plans change at the last minute, you can redirect your workforce.

Last mile problem in retail: warehouse: Tookan

  1. Insufficient Route Planning 

Route planning for beginners can be confusing and challenging, as there are multiple variables to consider. 

Delaying deliveries, increasing customer frustration, and increasing costs are the results of inefficient route planning. Effective route optimization will solve these problems. 

Additionally, it reduces the costs associated with late deliveries, as well as estimates delivery times more accurately.

  1. Unpredictable Events

Occasionally, unpredictable situations can prevent the last-mile delivery of packaged goods. 

Among the events that are beyond your control are traffic, bad weather, or vehicle issues. 

To deal with them, you need to develop contingency plans and make sure that communication among your team members and with your clients is seamless. 

If you face an adverse situation, you must be prepared to dispatch the appropriate solution as soon as possible.

How to Master the Last-Mile Delivery Problem?

master the Last mile problem in retail: Tookan

Consumers today expect retailers to deliver their products on time within their budget range. 

Depending on whether a company has a large or a small number of stores, it may be possible to take specific actions to improve the bottom line. 

It may also be harder for small retailers to create and build in-house delivery platforms and invest in the technology needed to improve last-mile delivery compared to their larger counterparts.

On the other hand, they risk losing their customers by not offering a comprehensive last-mile delivery service.

Both categories – small retail stores and larger retail stores have different requirements. 

The following takeaways will help streamline the last mile problem for both of them: 

Last mile problem in retail: Small retail vs large retail; Tookan
Small Retail Store vs Large Retail Stores

Lower delivery costs by optimising fulfilment locations

  • Make click-and-collect and delivery possible in stores
  • Increase delivery using dark stores
  • Encourage use of last-mile storage and collection points

Figure out multiple ways to fulfilment resources

  • Engage consumers in crowdsourced delivery platforms
  • Incentivize employees to deliver parcels
  • During peak seasons, use the gig economy for delivery

Focus on consumer-centric fulfilment offerings 

  • Promote store returns by encouraging customers to visit
  • Ensure brand values align with consumer expectations
  • Make customer-centric initiatives a priority

How Can Retailers Take Advantage of New Opportunities?

Today, consumers are more likely to expect quicker and more frequent deliveries. Companies that get this right stand to benefit greatly from this trend. 

Presently, it is not feasible to meet that growing demand from a margin standpoint. Retailers cannot meet this need due to the high costs incurred, and consumers are unwilling to pick up the tab. 

In order to take advantage of the significant top-line opportunity, companies need a comprehensive strategy that manages margin risk. 

A consumer-focused strategy requires the right smart technologies, the right model for delivering service, and innovative approaches to workforce management. 

Companies can solve the last mile delivery profitability problem if they keep these key takeaways in mind. 

characteristics of customers who order groceries online: infographic: Tookan

How does Tookan take care of challenges in the last mile?

Last mile problem in retail: how can Tookan help?

Tookan is a one-stop SaaS-based delivery management platform for delivery tracking, route optimization, dispatching, payments, and much more. With Tookan, you can plan and automate your mile delivery operation, therefore, solving last mile problems for retailers. 

Tookan’s last-mile software empowers retailers with the following benefits: 

  • Automated Route Optimization
  • Real-Time Tracking
  • Geofencing
  • EPOF (Proof Of Delivery)
  • Easy Integration
  • In-app chat
  • Delivery analytics 
  • Agent wallet 

Ready to automate your last-mile delivery and save cost by providing a great customer experience with Tookan? Get in touch with our sales team or start your 14-day free trial today.

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