Last-mile delivery—the final leg of a product’s journey from a distribution center to the customer’s doorstep—is often the most expensive and complex stage of the shipping process. For small businesses, managing last-mile logistics efficiently is critical to meeting customer expectations while keeping costs under control.
Here’s a closer look at the most common last-mile delivery challenges and the solutions small businesses can implement to stay competitive.
- The Cost of Convenience
Last-mile delivery accounts for over 50% of total shipping costs in many cases.. Factors like failed delivery attempts, urban congestion, and short delivery windows drive up expenses. For small businesses, absorbing these costs without passing them on to the customer is a delicate balancing act.
Solution: Offer multiple delivery options at checkout, including slower (and cheaper) shipping for non-urgent orders. Tools like ShipperHQ or ShipStation can help tailor rates and timeframes to control spend while still providing flexibility.
- Delivery Delays and Inconsistent Performance
Customers expect speed and transparency. Late deliveries or poor tracking can lead to negative reviews and decreased repeat purchases. Inconsistent performance also makes it difficult for small businesses to forecast delivery times accurately.
Solution: Use carriers with proven last-mile infrastructure, such as FedEx Ground Economy or USPS Priority Mail. These services combine national delivery reach with last-mile handoffs to local post offices for greater accuracy in residential deliveries.
- Limited Delivery Zones
Many carriers or regional services offer limited coverage for rural areas or certain zip codes, leading to higher fees or longer transit times.
Solution: Work with regional delivery partners like OnTrac or LaserShip for expanded reach. For hyperlocal delivery, platforms like Roadie can fill gaps in the carrier network.
- Lack of Real-Time Tracking
Modern consumers expect to track their order status from warehouse to doorstep. Small businesses without integrated tracking tools may face increased customer service inquiries and lower customer satisfaction.
Solution: Implement tracking solutions like AfterShip or Route that sync with your store and automatically notify customers with updates, reducing your support burden.
- Returns Management Complications
Last-mile challenges don’t end after delivery—returns can be just as costly and complex. Poor return experiences damage trust and drive up reverse logistics costs.
Solution: Use reusable or resealable packaging to simplify returns and offer prepaid labels when necessary. Services like Loop Returns and Happy Returns help streamline the return process while keeping costs predictable.
- Managing Shipping Costs
Even if last-mile services are efficient, shipping remains a major expense for small businesses. One overlooked solution is to earn cashback with a FedEx virtual card, get rewards with a UPS virtual card, or earn cashback with a USPS virtual card by purchasing digital gift cards through Fluz. For businesses paying carriers directly, this can provide steady savings without changing carriers or delivery methods.
- Scaling Last-Mile Operations as You Grow
As order volume increases, last-mile inefficiencies can scale just as quickly. Manual routing, inconsistent delivery promises, and poor handoffs can impact your brand experience.
Solution: Adopt shipping automation and multi-carrier shipping software that selects the most cost-effective delivery method per order. Platforms like EasyPost and ShipEngine offer APIs that help automate these decisions as you scale.
Conclusion
Last-mile delivery is one of the most important—and expensive—touchpoints in your customer’s journey. By partnering with the right delivery providers, automating shipping decisions, and using cashback tools like Fluz to offset recurring costs, small businesses can deliver reliably while staying profitable.
