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E-Commerce and Last-Mile Logistics: An Insurmountable Challenge?

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As the demand for e-commerce grows, it has continually presented logistics managers with a range of challenges. Last-mile logistics remains one of the most pressing tasks for logistics experts, and it doesn’t yet have a clear-cut solution. Discover some of the biggest challenges related to last-mile logistics and find out how some major e-commerce companies are handling them.

Last-Mile Logistics Encompass More Than One Mile

For most e-commerce companies, “last-mile logistics” is a misnomer. One of the most substantial takeaways from a recent CBRE study is that in practice, these logistics typically encompass 6 to 9 miles, and some include an even larger range. The main reason for this is that most of the small distribution facilities that handle last-mile logistics are located an average of 6 to 9 miles outside of population centers, with facilities in major cities on the shorter end of the spectrum.

Many of these distribution centers are newly built for the purpose of handling last-mile logistics. Though they currently set the standard for e-commerce deliveries, supply chain experts will determine whether they’re simply a stepping stone toward smaller, more convenient distribution facilities.

Expensive Last-Mile Logistics Can Mean Lost Revenues

Given the complexities involved with last-mile logistics, it may come as no surprise that this component can be incredibly expensive for e-commerce companies. As a general rule, last-mile logistics account for over a quarter of the total delivery cost.

Many e-commerce companies pass this cost along to customers via shipping fees or altered pricing structures, but some have taken a more innovative approach. For instance, Amazon has taken steps to limit outsourcing, preferring instead to own the whole supply chain from beginning to end. By doing so, Amazon can lower its overall shipping costs to an extent that smaller e-commerce companies can’t.

Last-Mile Logistics Could Allow for Customized Deliveries

As the number of customers turning to online shopping rapidly increases so does their need for transparent shipping processes and efficient deliveries. Since standard delivery methods are prone to failure, especially in hard-to-locate residential areas or when a package requires a signature, some last-mile logistics providers are considering customized products.

For example, to increase the rate of delivery success, some providers have begun to explore the potential for on-demand delivery. When customers can choose the date and time they want to receive their packages, the success rate of last-mile logistics is likely to increase. Using pickup stations in transit hubs or other central locations can even allow customers to retrieve their own packages at their convenience, streamlining last-minute logistics even further.

As the demand for same-day delivery grows, e-commerce companies may consider adopting pickup stations at a faster rate, partnering with established logistics companies to find cost-effective solutions, or pioneering drone and other high-tech deliveries.

Though many potential solutions exist for last-mile logistics, a combination of constantly evolving consumer demands and cutting-edge technology debuts suggests that most companies will continue to explore their options for months and years to come. As e-commerce businesses strive to please customers while increasing revenues, last-mile innovations will drive this industry forward.

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