What is Last Mile Delivery?
Last Mile Delivery is a commonly used term and service in the supply chain industry. Taking advantage of last mile delivery is one of the ways companies are able to expand to new areas and to service customers outside of cities as well as one of the leading reasons as why the e-Commerce industry has grown as rapidly as it has. This begs the question:
As the name may suggest, last mile delivery is the final portion of the delivery process which means delivering the shipment to the final consumer in their city. Here’s how the process works: Companies with a location in city A take orders from a customer in city B. A long-haul shipping company will pick up the order from city A and deliver it to a hub in city B. Generally, the long-haul company will either not have a location in city B or will be specialized in long-haul trucking, so will not have the ability to deliver to final consumers. This is where last mile service comes into play. The provider of last mile delivery will usually have the hub in city B that the long-haul company will deliver to. From this point, the last mile delivery company will deliver parcels and freight to the final consumer in city B and the surrounding area.
Why use Last Mile Delivery?
The main benefit from using a last mile delivery service is being able to deliver to customers in cities and even countries outside of your primary location. This benefit creates other benefits in addition. For example, being able to deliver to customers in different cities removes the necessity for having a physical location in those cities. Thus, fixed costs are reduced. On top of cost savings, potential market is increased exponentially. Rather than being a dedicated retailer and only servicing one specific city, partnering with a last mile delivery companies creates selling opportunities to more people.
Further, using a last mile delivery service helps enhance customer service. The North American e-commerce industry is currently valued around $912 billion and is growing at a rate of 13% a year. E-commerce growth creates heightened customer expectations of delivery to their homes and as a result customer are far less interested in visiting retailers. This has been made evident by the widespread closing of malls and major department stores. Using last mile delivery allows companies to meet these demands of customers to satisfy them and keep up with market trends.
Who uses Last Mile Delivery?
Last Mile Delivery can be used by both manufacturers of goods, retail stores and other supply chain companies. For manufacturers of goods and retail stores, the process is similar to what was described earlier. Utilizing Last Mile Delivery is one of the reasons how Amazon was able to grow to be as massive as they are today. While they do have massive warehouses and some end-to-end delivery capabilities, they are unable to access more remote cities and areas. Amazon uses courier services in many different cities to deliver their products to final consumers.
For supply chain companies, partnering with companies who offer last mile delivery allows for providing full-service service to clients rather than having them go to a competitor to deliver to final consumers. This is a way to protect client lists and maintain ultimate contact with clients.
For example, a company like Frontier Supply Chain Solutions that offers last mile delivery throughout the Canadian provinces of Saskatchewan, Manitoba and Ontario helps both companies that have a full truckload of parcels and LTL freight as well as retailers that just need to deliver a couple parcels to final consumers. In these provinces, Frontier has warehouses that companies can deliver freight to as a hub, where Frontier will then sort the freight and deliver it with its courier services.