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What is Last Mile Delivery? Top Challenges Faced & Solutions

Prince Goel

Senior Software Engineer @ Shiprocket

January 3, 2023

10 min read

Amid the pandemic, people were locked at home, and we saw extreme growth in the eCommerce industry. Along with the development, we also saw severe disruptions in the global supply chain. Everyone is aware of the shipping issues, as, with changing times, the world has become more dependent on same/next-day delivery. 

Delivery prices across the globe also increased, and businesses hoped the situation was temporary. However, with the increased demand for affordable delivery and ever-growing competition, companies were looking to solve the biggest challenges of last-mile delivery. 

Last Mile Delivery

What is Last Mile Delivery?

Last-mile delivery is the final step in the long process of the delivery cycle. The whole product journey moves from the warehouse to the truck, and lastly to the customer’s doorstep. Last-mile delivery is the most expensive and time-consuming part of the shipping process and customer satisfaction majorly depends upon it.

What is the Last Mile Problem?

Have you ever tracked your package in real-time online and noticed that it was ‘out for delivery’ for almost forever? We already know that the last mile problem is largely inefficient, and that’s majorly because the last mile delivery process is long and the final mile of delivery involves multiple stops at various points of small sizes.

Competition & Customer Expectations

Although eCommerce businesses have been growing and many companies are trying to match and walk in the footsteps of giants like Amazon, trying to enhance their online offerings with a comparatively broader product catalogue and prime subscription delivery options. 

Customer expectations are increasing with each passing day, and every customer expects timely product delivery and a stellar post-purchase experience. To keep up with changing expectations, finding ways to optimize last-mile deliveries and fulfill orders faster is integral. 

You will find big and small competition in every industry you open your business in and the best way to stay ahead of your competition is to invest more time in good tech and provide customers with an extraordinary post-purchase experience.

5 Key Steps in the Last Mile Delivery Process

1. Order Processing and Fulfillment

The last mile delivery process begins with order processing and fulfillment. In this step, the received order needs to be verified, packed, and prepared for shipment. The critical feature of this process is ensuring the accuracy of the order.  

2. Dispatch and Routing

After the order is processed, it is dispatched to the delivery personnel or assigned to a logistics partner for transportation. This step involves optimizing routes based on factors such as distance, traffic conditions, and delivery priorities. Efficient routing helps minimize delivery time and maximize the number of deliveries that can be made in a single trip.

3. Tracking and Visibility

Tracking and visibility are crucial in the last-mile delivery process. This feature is the highlight of a logistics service provider since it allows the customers real-time status of their order. GPS and mobile applications provide tracking and visibility of the order.  

4. Delivery Execution

This process is the actual movement of an order to its destination. It involves the transportation stages-  from the distribution center to the customer. The primary role in this process is that of the delivery personnel and advanced technologies like drones for delivery. 

5. Customer Experience and Feedback

The last step in the last mile delivery process is the customer experience and feedback. Providing a positive delivery experience is essential for customer satisfaction. This includes factors such as timely delivery, courteous behavior of delivery personnel, and hassle-free returns or exchanges if needed. Gathering feedback from customers helps identify areas for improvement and enhances the overall last mile delivery process.

7 Challenges in Last-Mile Delivery

Rising Costs

Last-mile is the final step of the delivery process. However, it is the most expensive for both the end consumer and the business. Not only this but integrating new infrastructure to manage the overload of demand also adds to the cost. Also, many hidden expenses arise during delivery, such as delays and order cancellations, adding to the last mile delivery cost. 

Unfortunately, you cannot pass on these costs to the consumer. Customers can abandon carts when they see any added expenses they didn’t expect. Therefore, the best option is to absorb and minimise these costs elsewhere. 


Late deliveries and failure to meet delivery deadlines can be extremely expensive for a business. In global shipping, delays are simpler to foresee. However, it is costly to cancel orders. So, the best is to plan the delivery routes carefully and avoid delivery delays and keep your customers satisfied.

In some cases, late deliveries can lead to cancelled orders, and if you can anticipate order cancellations beforehand, then it is best to cancel orders on the go. This can save your time and energy from undergoing a complicated returns process. However, you will have to deal with the high expectations of the customer and late delivery penalties. 

Unpredicted Issues

Always keep a buffer for things to go wrong and have an unexpected tolerance for things that go wrong. Depending on the industry, we should set aside a financial reserve of around 5% to 15% of the total amount in case of any unforeseen expenditure. 

It is also paramount to have a contingency fund in place. You should have the funds to deal with any unforeseen complications. The amount can depend on the difficulties you have previously dealt with.

Last Mile Challenges

Real-Time Visibility

Lack of visibility is one of the biggest challenges in last-mile delivery. Fortunately, it is also one of the easiest issues to solve.

You can implement visibility tools that allow real-time communication with the delivery executives. Customers will also appreciate the ability to track their shipments in real-time instead of relying on tracking codes that don’t update timely.

Inefficient Routes

Optimizing delivery routes is one of the best ways to reduce your operating costs for last-mile delivery. This has a higher chance of increasing customer satisfaction and making on-time deliveries. 

Outdated Technology

Many modern-day businesses still use obsolete delivery and supply chain technologies. Even when businesses implement modernisation, for some reason, last-mile delivery is often overlooked. The changes that are done are mostly for warehouse upgradation or global transportation.

However, even small last-mile delivery changes can present excellent results. Optimising your deliveries is an art, and there are many tools that’ll help you manage that. On a broader scale, using GPS devices and tracking softwares can help you manage and increase the visibility of real-time deliveries. 

Reverse Logistics

In case you have no clue what we are talking about, reverse logistics refers to when a customer returns your goods, and you bring them back to your warehouse or manufacturing facility. Your brand will also need a return shipping system for efficient product returns. 

Reverse logistics doesn’t only benefit the customer but also builds trust with the consumer and increases the chances of repeat purchases. 

Shiprocket will help you overcome the above-mentioned challenges seamlessly. Shiprocket is India’s largest eCommerce enablement platform providing digital retailers with an end-to-end customer experience solution. The platform offers shipping, fulfillment, customer communication and marketing tools for SMEs, D2C retailers and social commerce retailers in India. 

Shiprocket was launched in 2017 and is on a mission to create seamless logistics data platforms that automate the shipping processes for retailers and connect them to carriers and consumers across national and international locations. Shiprocket has over 25+ courier partners and over 12+ channel integrations for all its sellers. Its shipping solutions enable brands to deliver to 24,000+ pin codes across India and 220+ countries and union territories worldwide.

Solutions to Improve Last-Mile Delivery Logistics

There are many ways in which we can improve and speed up last-mile logistics for our businesses via technology and other improvements. Here are 3 ways how you can upgrade your last-mile delivery-

Improve Customer Warehouse Proximity 

Warehouses should be located near the consumers. This will save a lot of money in the long run and will also help to minimize delivery costs and fuel usage. It is best to have a fufillment center near locations where bulk orders arise on a regular basis. This will, in return, also increase the ROI of warehouse operations by making inventory management easier and less time-consuming. 

Invest in Technology for Delivery Optimization 

New technologies enable process improvements to analyse real-time information, leading to saving time and better decision-making. Newer technologies have the capability to integrate machine learning, artificial intelligence and much more to upgrade last-mile logistics solutions.

This will help us in better route navigation and driver allotment and will enable businesses to boost their potential ROI. Not only this, but it also helps us save on total operational costs and reduce the time spent on the supply cycle. 

Implement an Effective Real-Time Delivery Tracking System 

Real-time delivery tracking helps companies and consumers to keep track of the status of the package until it reaches its final destination. It keeps the customers informed and keeps giving real-time updates to them.


All businesses want to compete with their competitors and maintain customer satisfaction simultaneously. The customer’s expectations and supply chain logistics are constantly changing, and it is best to monitor the biggest challenges of last-mile delivery and keep upgrading your approach to logistics.

Increased Demand for Same-Day and Time-Slot Deliveries

The success of the eCommerce business model hinges on ensuring customers receive their orders at a convenient time-slot and few days turnover. This factor will continue to be an important factor in last-mile delivery in 2023. Flexible delivery options will be the new trend in 2023.  

Expansion of Delivery Networks

Delivery networks will expand to include a diverse range of partners, including local couriers, crowd-sourced delivery platforms, and autonomous vehicles. This expansion will help optimize delivery routes, increase delivery speed, and improve last mile efficiency.

Emphasis on Sustainability

Sustainability will remain a key trend in last mile delivery. Hence, the industry will lower its carbon output, invest in eco-friendly vehicles, optimize routes, and opt for innovative packaging solutions.  

Integration of Technology

Technology will continue to play a crucial role in shaping last mile delivery. Integration of artificial intelligence (AI), machine learning, and automation will enhance route optimization, improve delivery forecasting, and enable efficient tracking and communication. Delivery apps and platforms will become more sophisticated, providing customers with real-time tracking, delivery notifications, and personalized delivery preferences.

Delivery Personalization

Personalization will be a significant trend in last mile delivery. Companies will leverage customer data and analytics to offer personalized delivery experiences, such as preferred delivery time slots, delivery to alternate locations, or specific delivery instructions. This customization enhances customer satisfaction and loyalty.

Contactless Delivery

The COVID-19 pandemic has accelerated the adoption of contactless delivery methods. This trend is expected to continue in 2023, with customers preferring contactless options to minimize physical interactions. Delivery personnel will utilize methods such as leave-at-door deliveries, digital signatures, and photo proofs to ensure a safe and seamless delivery experience.

Integration of Retail Stores and Delivery Hubs

To cater to the growing demand for fast deliveries, retailers will increasingly transform their physical stores into delivery hubs. This integration allows for faster order processing and facilitates easier returns or pickups for customers. It also enables retailers to leverage their existing store network to offer more efficient last mile delivery services.

In conclusion, the last mile delivery process consists of several key steps, including order processing, dispatch and routing, tracking, delivery execution, and customer experience. Additionally, several trends will shape the last mile delivery landscape in 2023, including increased demand for faster deliveries, expansion of delivery networks, sustainability focus, technology integration, delivery personalization, contactless delivery, and integration of retail stores and delivery hubs. Adapting to these trends will be crucial for businesses to stay competitive and meet evolving customer expectations.

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