If you’re in ecommerce, you know about last mile carriers. And if you’re just getting into ecommerce, you’ll want to know everythere there is to know about last mile carriers.
In layman’s terms, a last mile carrier is the company that sends a person to deliver packages to your customer’s door. Or, in supply chain jargon, a last mile carrier is the company that transports inventory from a shipping hub to its final delivery destination.
Common examples of last mile carriers in Canada include FedEx, UPS, DHL, Canpar.
But why is a last mile carrier so important? For ecommerce businesses that deliver big items (think furniture!) the delivery process can make or break the experience for customers. And if you’re outsourcing it, you need to trust your fulfillment partner.
In this article, we’ll go over everything last mile, arming you to make the best last mile carrier decisions for your business!
Let’s dive in.
Why Are Last Mile Carriers Important?
Let’s walk a (last) mile in your customer’s shoes for a second.
Imagine you just bought a beautiful sectional sofa for your new apartment. But after a week, you still haven’t heard anything from the company, so you don’t know when to expect your delivery. When you finally do get a delivery date, your couch shows up three hours late, right in the middle of dinner, and to make matters worse, the couch is scuffed up and damaged.
The furniture company has left a horrible taste in your mouth and you vow to never buy from them again. But here’s the real kicker. The furniture company itself likely had very little control over your poor experience. It was the last mile carrier who left the final brand impression.
That’s why it’s essential to partner with a last mile carrier you can trust – your brand reputation depends on it.
Last mile delivery may be one of the most challenging aspects of supply chain management, but it demands our attention. Here are a couple more reasons why last mile carriers are of the utmost importance.
1. Companies like Amazon Have Raised the Bar for Fast Delivery
For smaller direct-to-consumer companies to compete with the industry Goliaths, it’s essential to prioritize fast—and ideally free—shipping. In today’s hyper-connected world, customers have the power to compare infinite options to find the best experience before making a purchase. Slow or expensive shipping is enough to compel a customer to abandon their cart and opt for your competitor instead.
2. Positive Delivery Experiences are Essential for Customer Loyalty
Ninety-eight percent of consumers said delivery is a key part of their brand loyalty, according to a study from Digital Commerce 360. But 44% of those same consumers said brands are falling short. Poor delivery experiences are leaving them dissatisfied, disgruntled, and unlikely to become repeat customers.
The brands who can manage to create seamless and pleasant last mile delivery experiences are poised to become industry leaders. You’ll create satisfied customers who’ll not only become repeat customers, they’ll also recommend you to family and friends. Eliciting that positive word-of-mouth praise can be the difference between a business that’s struggling to make ends meet and one that’s thriving.
What’s more, tracking can also be the difference between one-off customers and loyal customers – 47% will not order again from a brand with poor delivery visibility.
How Does Last Mile Delivery Work?
Last mile delivery is within the same city. For example, if you have a factory in China or a warehouse in B.C., you need to ship to Toronto, that’s freight or first mile. Then last mile is from your Toronto fulfillment center to your customer’s door.
Here’s how last mile delivery works from the merchant standpoint, assuming you’re partnering with a 3PL (or third-party logistics) company:
- Your customer makes an order through an ecommerce platform like Shopify.
- Through a technology integration, the order is sent to your 3PL.
- Your 3PL’s team or software will triage the order through a set of fulfillment criteria. (For example, if the item weighs under 100 lbs, send through a courier service. If above 100 lbs, send through a fleet designed to handle heavy items.)
- The fulfillment team pulls the order from the racks at the warehouse, based on its SKU number.
- The team packages the items, stages them, and puts them on trucks.
- Last mile carriers deliver the item. Depending on the type of delivery, items can be left at the curb or even installed in the home.
How Much Does Last Mile Delivery Cost?
On average, last mile delivery costs about $10.10 per package and tends to represent about 41% of your total shipping costs. However, the cost of last mile delivery can vary widely based on a few different factors. For example, it’s a lot cheaper to deliver a bottle of specialty hot sauce to someone’s door than it is to deliver a king-size mattress to someone’s upstairs bedroom.
While the cost of last mile delivery may seem high, you cannot put a price tag on customer satisfaction. Business owners are often tempted to pass on shipping costs to their customers, but it tends to deter customers from making purchases.
You can’t underestimate the value of a positive customer experience. Repeat purchases increase your customer lifetime value (CLTV) and new business generated by word-of-mouth goes a long way to repay shipping costs.
But what impacts these prices? Here are the variables that will drive the cost of last mile delivery up or down.
1. Size of Items
Unsurprisingly, heavy and large items cost more. Most conventional couriers like FedEx and UPS will only accept packages up to a certain weight limit. And with costs rising proportional to weight, it stops being economical to ship heavy packages by courier even before you hit the limit. According to David Cheung, Director of Logistics at GoBolt, once your package exceeds 150-200 lbs, you should think about a 3PL with its own fleet.
2. Delivery Location
If you’re delivering within large cities like Toronto, Vancouver, or Montreal, you’ll likely get the best rates. But if you need to deliver to remote locations like Whitehorse where there’s fewer service options, you’ll be charged a premium.
3. Speed and Level of Service
If you want your customers to be able to book an appointment and get their items delivered next day, it will cost more than if you offer a more flexible delivery window. The level of service pertains to what’s expected of the delivery person, whether it’s sufficient to leave items at the door, or whether they’re expected to haul heavy appliances up a flight of stairs.
There are three main levels of service:
- Threshold Delivery: Package is delivered just inside the doorway
- Room of Choice Delivery (White Glove): Package is delivered to whichever room the recipient prefers in their home or office
- Curbside Delivery: Package is dropped outside at the curb of the property
How Fast Are Last Mile Carriers?
The last mile is often the quickest leg of the journey, from a warehouse to another address within the same city. Last mile carriers deliver all the packages they put on their truck within the day.
Who Are the Major Last Mile Carriers in Canada?
The major players in Canada include:
- CDS Logistics
How Do I Pick the Best Last Mile Carrier for my Business?
Here are the “need-to-have” features you want from your last mile carrier:
- Has operations optimized to be quick and cost-effective.
- Offers last mile tracking to both customers and business owners.
- Provides data to help you optimize your routes and cut costs.
- Allows customers to review their delivery experience and follows up with low NPS customers to address concerns and improve experience.
- Has experience handling large and heavy objects (if you sell bulky items.)
- Negotiates the best shipping rates for you with external partners.
Bonus “nice-to-have” features:
- Minimizes its environmental impact.
- Integrations with your storefront and/or ERP (enterprise resource planning) software.
Glossary of Terms
Confused by all the supply chain jargon? You’ve come to the right place. We’re demystifying some of the most common terms you’ll hear.
What is Last Mile Delivery?
Last mile delivery is transporting packages from their fulfillment center to their final destination in a customer’s hands.
What is Last Mile Carrier Tracking?
This term can refer to tracking on the side of the individual customers (e.g. UberEats bicycle map) and tracking on the side of the company on an aggregate level (e.g. What percentage of packages were delivered on time? )
Real-time insights (whether via email, web page, or SMS) on where their shipment is.
Ideally, they can see driver ETA, interact with their driver, and rate their experience.
Gives them a birds-eye view of logistics, giving you the opportunity to optimize (e.g. optimize truck space or delivery routes.)
What is the Last Mile Challenge?
The last mile challenge refers to the gargantuan task of optimizing costs, speed, and efficiency on the last mile.
What Does “Accepted by Last Mile Carrier” Mean?
It means your shipment has been received by the carrier who is tasked with the final delivery.
What is First Mile Delivery?
First mile delivery refers to the first leg of the shipping journey where product is often transported from its factory to a fulfillment center. Also commonly referred to as “freight delivery.”
Final Notes on Last Mile Carriers
The last mile is the first thing customers are going to remember about their experience with your brand, so ensure it’s a positive one. By familiarizing yourself with the steps and working with a committed partner, you’re one step closer to a great customer experience in the last mile every time.