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What is last mile delivery?

Like I mentioned in the post Last Mile Logistics And Customer Experience, last mile is a concept often misunderstood and overlooked. In truth, the final mile can be more than a quarter of the delivery’s total cost. 

Last mile and final mile are the last part of the supply chain before the recipient lays their hands on the product they have ordered. The actual distance travelled during “last mile” could be anything from a mile to 100 miles: what matters is that it’s the last moving part in the logistics process.

The primary purpose for the last mile is to have the package arrive in the hands of the recipient as quickly as possible. Since speed often requires sacrifices in other aspects, the last mile has seen tremendous jumps in quality thanks to technological development. 

Last mile is also the part of the supply chain the customer is most likely to see for themselves. Therefore, it’s a crucial element of customer satisfaction. If done right, the last mile can not only save the shipper money, but also establish a good level of trust among their customers.

For products vulnerable to temperature changes, humidity, dryness, or light, it’s also the part where the product is most likely to be spoiled. Business Insider estimates that the last mile comprises 53% of all shipping costs.

Last mile as a customer experience factor

I’m sure everyone has heard of delivered packages being left under the porch, by the front door, or behind a bush if the recipient is not home. It’s probably not a surprise that temperature sensitive products can easily be lost in such situations.

However, customer experience has become less of a competitive advantage and more of a competitive must. Carriers can’t ignore the elements even in the last mile, which means new solutions are necessary. From using data loggers to collect data for quality assurance to utilizing controlled storage lockers, carriers and shippers strive to establish a trusted position in their markets.

In the light of the COVID-19 outbreak, shipping and carrying companies have made adjustments to their last mile operations. Their observations reveal that the increase in remote work, both full and part time, also increases the need for efficient last mile operations. Especially delivery and e-commerce will need to be prepared to step up their customer experience.

Especially the food industry should be prepared to give their best: a CapGemini study reveals that 40% of customers order groceries online weekly, and the number could be 55% before the year ends. Of those, 20% are likely to switch retailers if they don’t provide delivery services while over half (53 percent) would even be willing to purchase a paid membership for a good delivery service.

Ecological values driving supply chains

The decline of brick-and-mortar shopping has only increased with the COVID-19 pandemic. Online shopping and ecommerce are not only a trend that goes hand-in-hand with social distancing and remoteness, but also a considerable question mark for ecological effects.

Direct delivery from store to the end-user allows us to eliminate one step in the supply chain, potentially lengthening the perceived “shelf life” of expirable products like groceries or pharmaceuticals. On the other hand, missing that last safe, controlled environment can cause the products to expire before being used. Companies need to consider how to ensure there is as little wastage due to the elements as possible, all the while managing larger quantities of deliveries.

Last mile, which is in many cases longer than even before, needs to be as efficient and controlled as possible to match these somewhat conflicting requirements. The most obvious answers are temperature controlled and monitored delivery methods and highly localized, as controlled pick-up spots that ensure product usability without compromising convenience.

Parcel lockers becoming the staple for convenience

In cases where the recipient has no control over the pickup point or delivery time, ensuring the experience quality can become difficult. Service providers like Smartmile offer a solution to address these challenges. From frozen goods to electronics such as mobile phones, customers of many companies can simply choose the delivery options and will receive a code via text message to collect their phone from their selected parcel machine. 

Smartmile’s CEO and co-founder Aku Happo highlights the logistics industry’s need to address customer needs.  "We constantly develop our services together with retailers and parcel companies to respond to our customers’ needs. Our goal is to offer customers an easy and sustainable way to receive, return and ship all of their parcels from one location. Parcel locker offers a contactless and convenient way to do it and it is preferred by customers."

According to a research on parcel lockers and last mile delivery by JLL, not only tech and grocery companies are eager to use parcel lockers, but clothing, fashion, and lifestyle brands as well. More than half of UK customers are expected to go online for their grocery shopping, which could make refrigerated lockers not only popular, but a must-have.

Director of Industrial and Logistics at JLL, Tessa English explains the rising popularity of parcel lockers with convenience: “Consumers have more control over when they pick up their shopping, rather than having to wait for deliveries or risk parcels being left in the wrong place. --  Retailers want to enable a more seamless, easy delivery. Parcel lockers are one part of the solution.” A locker in the right place allows customers to pick up their parcels without a detour.

While it is not the default in Finland yet, Smartmile’s existing locations have received a positive welcome among consumer-facing businesses delivering to the end-user. For instance the Finnish retail chain K-Group has already started to adopt the lockers. Compatibility with the major carriers like DB Schenker, DHL, Matkahuolto, and PostNord in the country is a clear advantage to the service, making cooperation between cogs of the logistics chain effortless.

“K-Group aims to develop innovative future solutions for service offerings in K-stores and Smartmile’s automated parcel machines are a great example of these new services. Our preliminary experiences of parcel machines that enable food delivery are very positive. The customer benefits from picking up all of their online purchases and pre-ordered groceries simultaneously from the same machine. The customer can also choose a pickup time that is suitable for them according to the store’s opening hours,” says Kesko’s service director Petri Toivonen.

Incorporating final mile logistics into your strategy changes everything for shippers who want to increase customer-side transparency during the final mile delivery of an order. It’s a process that requires you to combine the available systems with your existing network.

For the companies involved, the recipient isn’t just “my customer”, it’s ours. Since logistics processes now incorporate several operators across multiple steps, from producer to shipper to carrier to the recipient via last mile deliverer, successful cooperation with the right partners may be even more important than just your own processes perfectly fine-tuned. 

How about that quality assurance?

Like any logistics, last mile deliveries to parcel lockers and homes benefit from dedicated monitoring. While fixed lockers are already as dependable as your fridge back home, they can become damaged or malfunctioning. 

Having a logger in the delivered parcel allows you to track the conditions of your product, and you can let the locker company know about malfunctions. In a well-handled situation, the company should already know about damages and malfunctions by the time the consumer becomes aware of them. 

Consumers and their experience is becoming the driving force for logistics process development. Accommodating to the recipient’s needs and expectations may well be the one single factor for business success, especially in ecommerce. 

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