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Last mile delivery: challenges and optimization options

How to set up last mile delivery service

Implement last mile delivery software to cut delivery costs and enhance customer experience

Covid19 has turned shopping habits upside down. Today, customers are more likely to choose an online store with fast shipping over low prices. Excellent service has become a priority for many buyers, and timely delivery is one of the main criteria.

Increased customer expectations and tough competition are forcing companies to look for ways to optimize their supply chains. Last mile tracking apps improve logistics and speed up delivery to the end-buyer. In this article, we'll look at what last mile delivery software is, and how it can streamline your business.

What is last mile delivery, and why is it challenging?

Last mile delivery is the final step in the supply chain, enabling transfer of products from the warehouse to the end customer. The last mile service plays a crucial role in the formation and maintenance of a brand’s reputation. The faster and better that delivery is made, the greater the customer's trust and desire to buy again.

Last mile delivery management
Last mile delivery management

According to research, last mile delivery management is the most expensive stage in the supply chain. You need to send many parcels to different addresses and ensure the timely delivery of each order. For comparison, when you receive a batch of goods from a manufacturer, you need to manage only one shipping direction - from the factory to your warehouse.

Multiple stops, couriers, and transportation methods are what retailers worldwide face. So, to set up an efficient delivery process, you need to lay routes with minimal time losses. Given that half of your customers probably want same day delivery, it is necessary to look for a solution to track orders in real time and modify routes on the go.

What customers expect from last mile delivery
What customers expect from last mile delivery

Why is last mile delivery service expensive?

Last mile logistics doesn't deal with long distances, yet, it takes up most of the company's resources. What makes last mile delivery so expensive? Below are the answers.

Fuel consumption

In the city, fuel consumption is higher than on the highway. This is because you cannot move evenly. You need to stop at traffic lights and traffic jams, change speed, and maneuver around other cars. Also, bad roads multiply final mile transportationcosts and complicate delivery to the destination.


Downtime occurs due to traffic delays, for example, the average American driver spent 26 hours in traffic jams in 2020 - and that was with fewer cars on the road. Additionally, delays occur when a courier receives products at the warehouse and when he/she waits for customers at pickup points. All this leads to unnecessary expenses as businesses pay for excessive fuel consumption and the drivers' time.

Failed deliveries

5% of all last mile deliveries fail due to the following reasons:

  • The customer was not informed about the delivery

  • The customer is not at home because the delivery is late

  • There is no possibility to choose the delivery time

  • Invalid buyer's address

Thus, businesses not only lose money but also spoil their reputation and risk even bigger losses in the future.

Wrongly built routes

A courier delivers up to 130 parcels during the working day. Incorrectly built routes lead to higher delivery costs and lower productivity. Imagine, for example, that a courier took an hour to get to point B and then return to point A. Changing the sequence of arrivals could cut the delivery costs twice.

Return and exchange

Customers who order the delivery of goods may refuse the product or want to exchange it. In this case, they expect the courier to return the goods free of charge.  Considering that the number of returns in e-commerce can be as high as 20%, companies should expect delivery costs to increase correspondingly. 

How last mile delivery software can minimize a company's costs

Today, companies want to automate business processes as much as possible. Accounting, finance, marketing, human resources, customer support - all have become automatic, and logistics is no exception. Transportation companies and manufacturers are increasingly using supply chain management software. At the same time, retailers utilize last mile tracking apps. Below are software features that contribute to last mile optimization:

Route planning

There are many variables to consider when planning a route: couriers' schedules, traffic jams, expected delivery times, vehicle types, etc. Last mile delivery solutions calculate all this automatically and build an optimal route within seconds.

Order tracking

With GPS navigation, users can track their orders in real-time. Thus, they know exactly when to expect deliveries and can arrange to be present to receive them. The feature is useful both for customers and companies as it reduces the number of unproductive runs for couriers.


Sometimes the buyer changes the address or delivery time just before the courier arrives. In this case, rescheduling routes manually can take hours. A last mile tracking app will do it in a few seconds. It will rebuild optimal paths based on the new input data, thus minimizing delivery costs.

Proof of delivery

When a courier delivers a parcel to the recipient, the latter confirms it by accessing a special code received via a messenger app. The courier then enters this code into the application and generates an electronic receipt. Thus, the company has electronic proof that the goods have been received in the event that the client claims otherwise.


Delivery speed is one of the most important criteria for buyers when ordering goods. Often customers want to receive an order within an hour, or even faster. It is impossible to plan for such delivery. But the auto-dispatch feature can match the available and most suitable drivers with the incoming order and enable fast delivery.

Customer feedback

Feedback analysis is important to gauge whether your last mile delivery services work as expected. Allowing users to rate delivery and write reviews will help you understand gaps in the logistics system, and take measures to eliminate them.

Third-party integrations

Many solutions for automating business tasks complicate a company's workflow. When creating a last mile delivery app, you need to develop a special API to integrate it into the current business software. Being aware of this possibility allows you to seamlessly connect the last mile service to TMS, ERP, or CRM.

Data collection and analytics

Last mile delivery service plays a crucial role for e-commerce as it allows for better understanding of customers through data collection and analytics. Companies identify the most active users, understand their preferences, analyze feedback and provide customized offers based on their needs and expectations.

Features of last mile delivery fapp
Features of last mile delivery fapp

Where to order last mile delivery development?

The global last mile delivery market is growing exponentially. Companies are increasingly adopting tracking apps because they help optimize logistics and provide better service for customers. Although the functionality of final mile solutions is similar, each company tries to adapt it to their unique needs. For example, a last mile app in the USA would differ from one in France. Also, the delivery software for grocery shops would not be the same as for clothes or furniture stores.

Given this, businesses are increasingly investing in last mile custom development. In order to quickly and efficiently implement the project, they partner with outsourcing IT firms with deep expertise in logistics development. 

At Erbis, we have long collaborated with manufacturers, carriers, and retailers to develop robust supply chain solutions. Our software is successfully used by large corporations and startups to optimize routes and set up timely delivery.

If you want to develop a last mile tracking app, drop us a line. During the discovery phase, our experts will analyze your business and provide a detailed project estimate. After that, you can decide whether you want to sign a contract with the outsourcing development team.

April 21, 2022