The 7 Strategies to Reduce Last-Mile Delivery Costs

Efficient last-mile delivery has become a critical factor for the success of businesses across various industries.

Have your last-mile delivery costs significantly increased recently? This article is for you.

Whether you are running an e-commerce store, a logistics company, or a local service provider, optimizing last-mile delivery costs can significantly impact your bottom line.

In this article, we will explore seven strategies that can help you reduce last-mile delivery costs and improve your competitiveness in the market.

What are the Last-Mile Delivery Costs?

Last-mile delivery, a key component of e-commerce, is the most expensive part of the fulfillment chain for both e-commerce and local businesses such as meal-plan, flower stores and bakeries.

The average cost of delivering a package stands at $10.1 according to Statista, which is normally covered partially or entirely by the business.

On the other hand, the average cost per failing order is $17.2.

How can you reduce your Last-Mile Delivery Costs?

In order to avoid these costs, you might consider a Delivery Management platform such as Kosmo Delivery.

Thanks to our toolset for your fleet, you can take advantage of the Route Optimization and Proof of Delivery Tool:

1. Optimize your routes

• Determines efficient delivery paths.
• Adjusts to real-time obstacles like traffic.
• Prioritizes time-sensitive deliveries.
• Saves on fuel and vehicle wear.

Routes and distance is the main factor to impact your last-mile delivery cost: the longer the distance the higher the cost. That’s why optimizing your multi-stop routes is the most powerful way to reduce your costs/

By leveraging Kosmo’s optimization logic, businesses can create more optimized delivery routes.

This optimization can take into account factors such as traffic patterns, delivery windows, and the location of delivery points. 

Furthermore, implementing route optimization not only reduces fuel consumption but also shortens delivery times, leading to happier drivers and customers.

And that is how you master route optimization logistics. Looks simple? Yes, but only because Kosmo makes it look simple.

Cut your delivery costs by up to 20%.

2. Capture the Proof of Delivery:

‍

• Provides immediate delivery confirmation with signatures or photos.
• Enhances transparency and driver accountability.
• Eliminates physical paperwork.
• Boosts customer trust and satisfaction.
• No inter-communication between tools

One of the biggest and most expensive challenges for companies is customer support in case of missing parcels. Thanks to Kosmo’s integrated Proof of Delivery, drivers can easily capture a picture or signature upon delivery, which will be instantly available to the team and customer. 

This can decrease customer support tickets by up to 30% and avoid any unnecessary refund to the customers.

So what are you waiting for? Sign up to Kosmo to enjoy the most seamless system!

‍

‍

‍

3. Share Real-Time tracking with your customers

Customers today expect transparency and real-time information about their deliveries.

Make sure your customer knows where is his package at any time.

By integrating real-time tracking systems into your last-mile delivery process, you can keep customers informed about the status and location of their orders.

This not only enhances the overall customer experience but also reduces the number of calls to customer support, saving on operational costs.

‍

4. Automate your dispatching

Dispatching and assigning deliveries is one of the most time-consuming tasks in logistics teams. Relying on manual actions is also inefficient in finding the most suitable driver and can be a bottleneck in case spike in orders.

Using auto-dispatching technology to automatically assign new orders to the most suitable driver can save time and cut labor costs.

You can limit the number of of orders that can be assigned to the same drivers to avoid overloading and delays. 

Kosmo will also share accurate arrival times and real-time location of drivers to better plan routes.

5. Customer Delivery Preferences

Understanding your customers' delivery preferences is crucial in optimizing last-mile delivery costs.

Some customers may prioritize same-day delivery, while others may prefer a lower-cost option with a longer delivery window.

By offering multiple and convenient delivery time options, you can increase your conversion rate at check-out while also reducing the risk of delivering your product when the customer can’t receive it, which can lead to cancellation or waste of time for your driver

6. Demand Forecasting

Accurate demand forecasting is crucial for reducing last-mile delivery costs.

By analyzing historical data and market trends, you can optimize your fleet size and plan deliveries more effectively.

This minimizes the risk of overstaffing or understaffing your fleet and keep your costs as low as possible.

7. Hybrid delivery mode

Consider a hybrid delivery model to stay flexible and keep your costs low.

Managing delivery operations can be costly, especially for businesses dealing with fluctuating demands. Hybrid delivery orchestration optimizes costs by leveraging cost-effective resources for specific deliveries. 

This approach enables businesses to reduce operational expenses while maintaining service quality, resulting in a more sustainable and profitable delivery model.