Post by account_disabled on Jan 22, 2024 6:52:04 GMT 2
A client of an online store always wants to receive his order as quickly as possible, preferably without leaving home. Solving this problem has become a common “pain” of the entire e-commerce industry. “Last mile delivery” is coming to the fore - the last link in the entire supply chain: from the warehouse to the customer’s door. Making such delivery convenient and profitable is one of the most difficult “puzzles” of modern logistics. What's the problem with last mile delivery? What's the problem with last mile delivery? It’s a paradox, but the final part of the delivery process is the most expensive. Why is that? The thing is that the supplier has many small orders with different addresses. And instead of sending out one truck that will simply move all the goods from one warehouse to another, he has to drive many couriers with small loads. How much does last mile delivery cost? How much does last mile delivery cost? The cost of last mile delivery is on average 300 hryvnia per parcel. If we talk about large cargo (household appliances, furniture), then the cost of delivery can exceed a thousand hryvnia.
In the fight for customers, online stores often charge users only part of the cost, covering the difference with their own profits. Or they even try to offer free shipping. And if the profit from an average company order is less than the cost of its delivery, it is difficult to cover these losses with anything. Why is last mile delivery so expensive? W B2B Email List hy is last mile delivery so expensive? And yet, last mile logistics does not deal with huge distances and long-distance transportation. Then why is it so expensive? There are several answers: 1. Fuel consumption Delivery within the city differs from intercity cargo transportation. The speed of movement is limited by the road situation, the need to constantly change speed and maneuver. Add to this the problems with the quality of roads, and everything becomes clear - fuel consumption in the last mile is very high. 2. Stops and downtime It is the last mile that often becomes the bottleneck of the entire delivery process. In cities, drivers and vehicles are often at risk, stuck in traffic jams and running idle.
Businesses have to pay not only for excess fuel consumption, but also for drivers’ time. 3. Failed deliveries When working with large contractors, this problem usually does not arise (their warehouses will not go anywhere, and their working hours are well known). But when a product needs to be delivered to an individual, there are too many variables. The order may not reach the buyer for a number of reasons: The customer was not notified about the delivery and he cannot accept it; The customer is not at home due to late delivery; It is not possible to choose the delivery time; Buyer's address is incorrect. Up to 5% of last-mile deliveries fail, and each of them damages the supplier's budget and reputation. 4. Difficult routes Due to the huge number of stops, drivers sometimes get confused and lose their way; without a proper route planning, transport has to wind up extra kilometers. Such non-functional mileage can account for up to 10% of the total mileage of a company's fleet. 5. Returns and exchanges In e-commerce, the share of returned goods can reach 20%. The product may not suit the client, may not be satisfied with its quality, or may simply become no longer needed. Companies have to dedicate significant resources to handling returns and exchanges, so last-mile complexity increases.
In the fight for customers, online stores often charge users only part of the cost, covering the difference with their own profits. Or they even try to offer free shipping. And if the profit from an average company order is less than the cost of its delivery, it is difficult to cover these losses with anything. Why is last mile delivery so expensive? W B2B Email List hy is last mile delivery so expensive? And yet, last mile logistics does not deal with huge distances and long-distance transportation. Then why is it so expensive? There are several answers: 1. Fuel consumption Delivery within the city differs from intercity cargo transportation. The speed of movement is limited by the road situation, the need to constantly change speed and maneuver. Add to this the problems with the quality of roads, and everything becomes clear - fuel consumption in the last mile is very high. 2. Stops and downtime It is the last mile that often becomes the bottleneck of the entire delivery process. In cities, drivers and vehicles are often at risk, stuck in traffic jams and running idle.
Businesses have to pay not only for excess fuel consumption, but also for drivers’ time. 3. Failed deliveries When working with large contractors, this problem usually does not arise (their warehouses will not go anywhere, and their working hours are well known). But when a product needs to be delivered to an individual, there are too many variables. The order may not reach the buyer for a number of reasons: The customer was not notified about the delivery and he cannot accept it; The customer is not at home due to late delivery; It is not possible to choose the delivery time; Buyer's address is incorrect. Up to 5% of last-mile deliveries fail, and each of them damages the supplier's budget and reputation. 4. Difficult routes Due to the huge number of stops, drivers sometimes get confused and lose their way; without a proper route planning, transport has to wind up extra kilometers. Such non-functional mileage can account for up to 10% of the total mileage of a company's fleet. 5. Returns and exchanges In e-commerce, the share of returned goods can reach 20%. The product may not suit the client, may not be satisfied with its quality, or may simply become no longer needed. Companies have to dedicate significant resources to handling returns and exchanges, so last-mile complexity increases.