That’s quite a mouthful, isn’t it? Last-mile delivery route optimization is a string of buzzwords only a logistics nerd can appreciate. But since all of us here at ShipMonk are logistics nerds at heart, we think it’s the perfect title for an article about improving ecommerce deliveries. Because that’s what third-party logistics is all about, after all:  making sure your ecommerce customers get their orders accurately, affordably, and on time.

“But wait,” you say. “I have no control over the actual delivery. I’m not driving the truck or dropping off the package. That’s the shipping carrier’s job!”

You’re right, it is their job, but as the shipper, you have a vested interest in reducing costs, errors, and delays in this process. Your business suffers when shipping costs are too high, and you’re the one who has to handle customer complaints, reshipments, and refunds when things go wrong. As it turns out, there are plenty of ways you can help with last-mile delivery route optimization. Allow us to break it down for you.

What is Last-Mile Delivery?

You know that Christmas-morning twinge of excitement when you get the “order is out for delivery” text? This is the one that indicates your package is on the last leg of its trip — the “last mile” in logistics lingo. It means the order is on a truck, somewhere nearby, and will be delivered by EOD.

There are hundreds of last-mile delivery companies in the US. Depending on where the order is coming from, the carrier might be a huge global carrier like FedEx, UPS or DHL. It might be a self-service app like Uber or Instacart. It might be a small local courier. Or it might be the nation’s largest last-mile delivery service, the US Postal Service.

In the ecommerce world, everything boils down to getting last-mile delivery right. You can pick and pack the order correctly. You can ship it out on time and have it arrive undamaged at the customer’s door. But ultimately, if you fail here and the order is late, your brand’s reputation takes the hit (and your customer service team takes the call). This is especially painful because it may be the carrier, not the merchant’s fault, but it’s ALWAYS the merchant’s responsibility.

What is Route Optimization?

In ecommerce logistics lingo, route optimization is the process of planning the fastest, most cost-effective way for a package to get from point A to point B. In the case of an ecommerce order, point A is usually a warehouse. fulfillment center, or retail brick-and-mortar location that has small-parcel shipping capabilities; point B is the customer’s shipping address.

Route optimization involves shortening the distance the package has to travel, choosing the right carrier and shipping method for the job, and utilizing tracking and rerouting technology to ensure the package reaches its checkpoints at the expected times. The average ecommerce business is ill-equipped to manage this process on its own. It doesn’t have fleets of airplanes and trucks at its disposal, multiple warehouse locations, capital to invest in technology, or sufficient order volume to leverage discounts with third-party shipping carriers. Since the ecommerce shipper is ultimately responsible for the cost of the delivery and any issues that may arise from it, there’s nothing to lose and everything to gain from optimizing this process. But where to start?

How Ecommerce Businesses Optimize Last-Mile Delivery

As we mentioned above, route optimization involves shortening the distance the package has to travel, choosing the right carrier and shipping method, and tracking the package to make sure it arrives. Let’s look at these options one by one.

Shorten the Distance

Shipping fees are determined by three things: the size and weight of the package, the number of zones it is traveling through to get to its destination, and the speed at which this needs to happen. Whether a retailer or ecommerce business is fulfilling its own online orders or outsourcing fulfillment to a third-party logistics (3PL) company, the best way to shorten the distance a package travels is to store it closer to where the customers live. There are three ways to accomplish this:

1.) Open your own fulfillment centers, or lease space in fulfillment centers around the country, near major metropolitan areas. For a large retailer that already has warehouse space in huge distribution centers, it might make sense to convert unused space to fulfill orders. For the average ecommerce retailer, this would be prohibitively expensive.

2.) Partner with a 3PL that has multiple locations and can guarantee 2-day delivery to anywhere in the lower 48. You’re only paying for the space you use, no matter where that space is, so why not distribute inventory across the country and cut down on shipping distances? ShipMonk owns and operates eight fulfillment centers across the US, plus others in the UK, Europe, Mexico and Canada. No matter where the package is going, we can get it there faster.

3.) Use local brick-and-mortar stores for fulfillment (assuming the business has retail locations). If the stores aren’t set up for packing and shipping orders, the retailer can offer in-store shopping services, such as Shipt or Instacart, to ship and deliver online orders locally. And offering Buy Online, Pickup In-Store (BOPIS) services to customers eliminates the delivery process altogether.

Choose the Right Carrier & Shipping Method

Once a customer’s order leaves the fulfillment center, it’s in the shipping company’s hands. Choosing the best carrier for the job means finding the right balance of affordability and reliability. If you’ve already moved your inventory closer to your customers, you have the advantage of being able to use a local courier or the USPS to make the last-mile delivery. These carriers are usually more affordable than large national carriers, particularly in rural or sparsely populated areas. On the other hand, if the customer requested an expedited delivery method, a national carrier might be the only option to get it there in time.

An ecommerce business with large order volume may qualify for discounted rates with major carriers. Low-volume businesses often promise all of their shipments to a single carrier in order to get a discount, or they simply pay higher shipping fees. As these businesses grow, keeping up with fulfillment and high shipping fees becomes a drain on the company’s resources. That’s when it makes sense to switch to a 3PL that has the infrastructure in place to help the business scale.

A large 3PL such as ShipMonk has multiple shippers at its beck and call, and can choose the right one for each package based on the shipping speed, package size, destination, shipping fees, capacity, and recent carrier performance. It’s all automated, based on the options the business wants to offer its customers. By choosing the right carrier, ecommerce businesses not only reduce shipping fees but also reduce customer service complaints.

ShipMonk goes the extra mile with a Virtual Carrier Network. This no-cost affordable shipping network gives ecommerce businesses the flexibility to offer their customers three shipping methods at discounted rates: 2-day, standard or economy. The system effortlessly maps the best route and the best carrier at the best price.

Track the Order

The third way to optimize last-mile delivery is to offer customers complete visibility into the package’s status and location as it leaves the warehouse and makes its way to their address. ShipMonk’s state-of-the-art software platform includes branded tracking capabilities where you can add your logo, select a main color, set navigation tabs, and activate a display banner and/or call to action.

The alternative option is to redirect customers to the carrier’s generic tracking page. Since the average customer checks their order status 7 times before it’s delivered, why not take advantage of those extra impressions and send them to a tracking page where you control the message? It’s an easy way to promote repeat purchases, seasonal specials, brand graphics, loyalty programs and more!

Tracking services not only increase customer satisfaction and reduce customer service contacts, they also notify ecommerce shippers of any delays or problems with an order so they can rectify the problem promptly. Carriers are held accountable for delays, and the customer has a clearer idea of who to blame. As package theft has become more of a problem, shipping carriers have added their own tracking features, including the option to change the delivery address in mid-stream to a neighbor’s house or nearby location. The shipper and/or carrier may also require proof of delivery with a photo or signature.

ShipMonk offers ecommerce businesses an additional advantage with the MonkProtect™ post-purchase suite. This fully-integrated solution keeps lost, stolen, or damaged packages from negatively impacting the ecommerce business’ reputation and profitability. Customers can track their orders on a branded tracking page, and easily self-report issues through an automated claims portal. The ecommerce business benefits from an added revenue stream and additional marketing opportunities available on the branded tracking page.

Benefits of Last-Mile Route Optimization

Last-mile delivery optimization benefits everyone, from the ecommerce business to the shipping company to the end customer.

• Shippers can offer customers faster deliveries at lower costs.
• Shorter distances reduce carbon emissions.
• Affordable and reliable carriers are rewarded with more business.
• Tracking services hold carriers accountable for mishaps, reduce customer service inquiries, and increase customer satisfaction.

Your ecommerce business will benefit even more by partnering with a 3PL that is focused on helping your business grow. ShipMonk’s enterprise-level fulfillment services stand out above other 3PLs thanks to our seamless integrations, superior shipping rates and services, and powerful order, inventory, and warehouse management technology.

Contact ShipMonk today and learn the benefits of optimizing your entire supply chain.