How crucial is the last mile delivery in e-commerce

Last mile delivery is the final leg of the delivery process in e-commerce where goods are transported from a fulfilment centre or warehouse to the customers designated location/ delivery address – essentially their doorstep. This is a crucial step that directly connects online retailers with their customers.
The increasing importance of last mile delivery in e-commerce can be attributed to several factors, let’s discuss:

Customer satisfactions and loyalty

From an article in Fareye, it’s found that almost 97% of customers consider fast and reliable delivery as an important decision while making an online purchase and around 84% of customers would ideally not repeat an online purchase from an e-commerce seller after one poor delivery experience ( based on information from an article from by Bringg)

Last mile delivery being the final touch points between an e-commerce business and its customers, it directly impacts customer satisfaction and loyalty. A smooth delivery experience enhances the overall customers satisfaction.

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Cost optimization

Fareye article also shared insights on the fact that last mile delivery constitutes close to 41% of the total logistics cost, making it a crucial part area for cost optimization. The FixLastMile website considers that implementation of a route optimization and efficient delivery scheduling can reduce fuel consumption plus overall operational expenses.

Reducing costs and improving profitability can come in picture with efficient route planning, effective fleet management and leveraging the key trends of emerging technology.

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Competitive differentiation

An article in the Across Logistics share that 55% of consumers are willing to pay extra for same-day delivery, making it a huge competitive advantage. Keeping this in mind, brands must consider keeping a variety of delivery options such as express or scheduled delivery to attract more customers.

Customers expect quick and easy delivery processes. The speed and convenience aspect in delivery offers customers instant gratification.

Reverse logistics and returns management

In the e-commerce sector, as per an article on Bringg, the average rate of return is as high as 30%. In this respect, efficient handling of returns is a crucial part of customer satisfaction process. Brands should work to streamline their reverse logistics process to minimize costs associated with returns and to offer their customers timely refunds or exchanges.

With a seamless and easy return process, customers gain trust in the brand which influences repeat purchase. The overall customer experience is highly depended on handling of returns, refunds, and exchanges.

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Impact on Brand reputation

Fareye in their article mentions that 85% consumers consider delivery experience as a factor when evaluating a brand. Their positive experiences lead them to build a favourable brand image and spread the word of mouth while their negative experiences with delivery are associated more with negative reviews, social media backlash that can lead to a damage on the brands image.

Last mile delivery is hence where the reliability and professionalism of an e-commerce brand gets judged. A positive work-of-mouth recommendation can lead to increased customer acquisition and brand growth.

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Urbanization challenges

Across Logistics says that the rapid growth of urban areas brings challenges like traffic congestion, limited parking spaces and restricted access for delivery vehicles. To address these challenges, it requires innovative solutions for efficient last mile delivery. Only the adoption and implementation of innovative solutions can help e-commerce to ensure timely and accurate deliveries.

Environmental impact and challenges

Consider the number of orders you have placed as a customer, and how many order are delivered to your address per week or per month – possibly multiple right? Last mile delivery is a major contributor to carbon emissions. E-commerce brands must optimize their delivery routes and explore sustainable delivery methods that help to reduce the environmental impact. This could mean for example: an investment in electric fleet for the delivery agents.

Growth in online shopping

E-commerce sales are projected to reach $6.38 trillion globally by 2024 (Source, FixLastMile), this indicates that the significance of online shopping is on a major rise. E-commerce brands must delve into the last mile delivery factors to meet the growing demand.

We can understand from these points how crucial last mile delivery is in the overall e-commerce operations and how it directly impacts customer satisfaction, brand reputation towards building a competitive differentiation in the market. For e-commerce brands to thrive and meet the growing demands of an increasingly developing urban landscape, they must plan their manpower, technology and resources use to optimize their channels of distribution and delivery.

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Author: Mankiran