Consumers today expect transparent, flexible, and fast delivery. However, in any B2C product journey, there’sone part that matters most: the last one.
Getting last mile delivery right can significantly improve customer satisfaction and cut expenses. But the process requires innovative last mile delivery technology, a reliable network, and robust software.
This article explores the technologies that can make deliveries more coordinated, less costly, and more customer-centric. We’ll also look at companies that have improved their business with innovative solutions. And finally, we’ll discuss how to overcome common integration challenges.
Why Is Last Mile Delivery So Crucial? Last mile delivery—getting goods from a distribution center to a customer’s doorstep—is the most complex part of the delivery process. Despite being the shortest part of the journey, the last mile accounts for 53% of total shipping costs (Statista).
Why such cost and complexity?
- Unlike bulk shipping, last mile delivery involves transporting individual packages on unique routes.
- The recipient may have last-minute requests that necessitate rescheduling or rerouting.
- Customers often forget about deliveries, making multiple trips necessary and adding to the expenses.
- Some delivery addresses are located in tough-to-find or gated communities.
Traditionally, the final steps of package delivery were planned manually, which often led to delays and mistakes. Today, last mile delivery innovations such as intelligent sensors, GPS tracking, machine learning algorithms, and unmanned vehicles have allowed for more sophisticated planning, forecasting, and execution.
Best of all, many technologies are easy to acquire, which means that even smaller businesses can improve their delivery service.
Key Technologies Powering Last Mile Delivery
While you probably don’t have the resources of Amazon or UPS, there are plenty of easily accessible technologies that can make deliveries more efficient, error-free, and customer-friendly.
Industry-standard last mile solutions
Let’s start with the most popular solutions and integrations.
- IoT sensors. Internet of Things (IoT) devices connect assets, devices, and vehicles in a logistics network. They can monitor delivery conditions and vehicle status, as well asand keep storage temperature and humidity within safe parameters.
- RFID tags. Radio Frequency Identification (RFID) tags on packages make it easy to identify and track packages with RFID readers. This tech streamlines your sorting process and reduces errors in package delivery.
- GPS tracking. Powered by IoT sensors, GPS lets you track vehicles, workers, or individual packages in real time. You can also integrate this data with a traffic management system to optimize routes and save time.
- AI-enabled automation. When combined with GPS, artificial intelligence (AI) helps adjust delivery routes based on real-time traffic data. 2024 research shows route optimization and real-time analytics are the most transformative last mile delivery technologies. Automated dispatch systems can also assign delivery tasks to drivers (based on proximity, prioritization, and other business rules) and streamline customer support.
- PUDO. Pick-Up & Drop-Off (PUDO) points are designated counters where customers can send or receive packages, often via a mobile app. They’re often located in retail stores, gas stations, and other high-traffic locations.
- Vehicle management tools. Last mile software keeps tabs on the performance of delivery vehicles and drones. It can also monitor vehicle usage and track metrics such as fuel efficiency, route adherence, and safety compliance.
- 3PL delivery services. You can reduce doorstep delivery expenses by partnering with third-party logistics partners or outsourcing delivery directly to drivers, as Amazon does with Amazon Flex.
- Bespoke delivery app. Dedicated software can streamline communications between dispatch centers, drivers, and customers.
If you have more resources and a bigger budget, there are other, more advanced last mile technology options.
The latest innovations in delivery technology
The logistics industry is constantly experimenting with ways to make delivery faster, less costly, and more convenient. These technologies are at the forefront:
- ML-enhanced analytics. Machine learning (ML) involves algorithms that improve over time. These algorithms analyze historical and real-time data such as travel routes and vehicle usage, then optimize delivery routes for speed and fuel consumption. ML can also predict vehicle and drone maintenance needs to increase service life.
- Smart lockers. These are similar to PUDO points, but fully automated. Customers scan a QR code with a mobile app or input a temporary digital code to ensure package security.
- Aerial and ground drones. Drones can bypass traditional road traffic, greatly reducing delivery costs. A 2022 academic study even found that air drones emit 31% less greenhouse gasses than electric vans and consume up to 94% less energy per package than a traditional delivery vehicle. On the downside, they have a limited carrying capacity (up to 45 pounds or 20 kg for multirotor drones) and range. Incorporating last mile delivery innovation creates a more agile delivery network that can better respond to consumer demand.
How Last Mile Technology Enhances Customer Experience
It’s no secret that customers want fast and flexible delivery, real-time tracking, and transparency. Let’s look at how last mile technology innovations meet these demands.
Technology allows for custom delivery times and locations
Delivery software should allow customers to adjust specifics such as delivery time, location, and method. The actual scope depends on your technical capabilities and budget, but some features are key to improving the customer experience:
- Calendar integration. Showing time slots for delivery in Google Calendar, for example, means delivery times don’t clash with a customer’s existing commitments.
- Delivery window optimization. ML algorithms and geolocation data can suggest a delivery time for a customer to confirm.
- Geolocation technology integration. With GPS and AI analytics, you can anticipate potential issues based on historical traffic patterns or weather conditions.
- Sustainable delivery options. You may be surprised by how many environmentally-conscious customers will appreciate options such as bike or electric vehicle delivery.
- Real-time delivery status notifications. Automated updates via SMS, email, or a mobile app updates can support real-time order tracking. This can reduce parcel delivery anxiety and ensure your customers are present to accept their package.
- Customer availability confirmation. Automated systems can send messages to verify that a customer will be at the delivery address and offer options like redirection to another address or nearby PUDO or smart locker.
Efficient doorstep delivery technology makes your operations smoother and less costly. It also helps you build better relationships with your customers.
Real-time communications improve customer satisfaction
Efficient delivery builds trust with your buyers and encourages repeat orders—around 88% of customers are likely to purchase again after receiving good customer service (Salesforce). Here’s how last mile technology improves transparency and communication for a better CX.
- Customers can track the status and location of deliveries. Even if your organization lacks real-time GPS tracking, you can use regular SMS and email notifications to inform customers of delivery progress.
- Direct communication channels between customers and couriers solve most issues. For example, a driver can call the customer when a closed gate prevents drop-off. Or the customer can make last-minute adjustments to delivery location or time.
- Electronic proof of delivery (ePOD) tools let drivers capture proof of delivery with a digital signature, photo, or barcode scan. Some can even be delivered using a mobile app with digital IDs instead of physical documents.
- Integrating feedback mechanisms within the delivery app empowers customers to rate their delivery experience and add suggestions. This helps improve your service and pinpoint problems.
- Organizations provide accessible customer support. Post-delivery support makes it easier for customers to inquire about returns or report issues.
These features are all attractive, but implementing them in existing logistic networks can be a challenge.
Overcoming Challenges With Last Mile Technologies
Despite the promises of smart parcel delivery, integrating solutions and software well takes work. Here are some issues you can run into and how they can be overcome.
Compatibility and integration
Multiple data formats and communication protocols mean that organizations struggle to integrate last mile delivery software with existing systems such as CRM, ERP, and warehouse management systems.
An experienced software development company like Techstack can build custom APIs that allow data sharing between systems without completely overhauling your legacy stack. Alternatively, middleware can enable communications between distributed services.
Real-time data processing
More complex technologies need more processing power to analyze data on the fly. One way to accommodate this is to enhance your network infrastructure.
This is where edge computing can help. Rather than sending data to centralized servers, edge devices process data nearer the source to minimize latency and operational load.
Network connectivity and coordination
GPS tracking and real-time communication require reliable network connectivity. This is especially critical for remote-controlled and autonomous devices like aerial drones.
A solution is to set up backup connectivity solutions such as alternative cellular networks and satellite communications. Internet-based devices will need to be able to switch between different types of network connections (5G, LTE, and Wi-Fi) to maintain a constant connection.
Overcoming Challenges With Last Mile Technologies
Despite the promises of smart parcel delivery, integrating solutions and software well takes work. Here are some issues you can run into and how they can be overcome.
Compatibility and integration
Multiple data formats and communication protocols mean that organizations struggle to integrate last mile delivery software with existing systems such as CRM, ERP, and warehouse management systems.
An experienced software development company like Techstack can build custom APIs that allow data sharing between systems without completely overhauling your legacy stack. Alternatively, middleware can enable communications between distributed services.
Real-time data processing
More complex technologies need more processing power to analyze data on the fly. One way to accommodate this is to enhance your network infrastructure.
This is where edge computing can help. Rather than sending data to centralized servers, edge devices process data nearer the source to minimize latency and operational load.
Network connectivity and coordination
GPS tracking and real-time communication require reliable network connectivity. This is especially critical for remote-controlled and autonomous devices like aerial drones.
A solution is to set up backup connectivity solutions such as alternative cellular networks and satellite communications. Internet-based devices will need to be able to switch between different types of network connections (5G, LTE, and Wi-Fi) to maintain a constant connection.
Prediction accuracy
The accuracy of AI and ML models depends on their training dataset. Poor or insufficient data quality can lead to inaccuracies or bias in predictions.
Curation of training datasets and regular evaluation of AI predictions are two ways to beat bias. There are many ways to accomplish these—for example, cross-validation can help verify that an algorithm performs well across different use cases (not just in the testing environment).
Data security and privacy
Last mile delivery involves not just property, but also personal data, including the customer’s name, place of residence, and payment data.
In response, software has to employ robust encryption, firewalls, and authentication protocols to avoid data breaches. Anonymization is also often necessary to comply with privacy regulations like GDPR or CCPA.
Multi-factor authentication can work for both an app and secure smart locker delivery. For example, a customer may be required to input a one-time SMS code and scan a locker to access their parcel.
Scalability of operations
Your delivery network needs to be able to handle an increase in IoT devices and collected data without loss of performance. As a result, most organizations opt for cloud-based last mile software that dynamically allocates resources based on demand.
A modular or microservices architecture can also help eliminate downtime. Such architectures let you add or upgrade software features without affecting the entire system.
Operational range and obstructions
Autonomous robots and drones have limited battery life and operational range. What’s more, their effectiveness varies in wind, rain, and snow.
Advanced forecasting technologies can help plan drone operations strategically and avoid weather-related disruptions. In addition, regular predictive maintenance ensures delivery drones are less likely to fail.
Now i’ve seen the challenges and ways you can beat them, we can shift to success stories.
Case Studies of Last Mile Delivery Technology Implementation
Modern delivery businesses are actively pushing the boundaries of possibility in the delivery industry. Big companies are leading innovation; here’s a look at the most prominent success stories and developments:
- Amazon’s smart locker network is expanding worldwide. Amazon sees smart lockers as a convenient and secure alternative to home delivery, particularly in urban areas. Between 2020 and 2023, the retail giant doubled its network of smart lockers in the UK to 5000.
- Walmart’s parcel stations add faster, cheaper delivery. The US grocery retailer distributes packages from fulfillment centers to store-based parcel stations and hands them to third-party carriers for home delivery. Walmart reports that this strategy has helped them cut last mile delivery costs by 15%.
- Amazon continues to push air drone delivery. Amazon’s air drone delivery service— — Amazon Prime Air— — is gradually moving on from the limited testing phase. The service will use the new MK30 drone, equipped with advanced navigation technology, to deliver items weighing up to five pounds within 30 minutes. Drone delivery is expected to extend to Italy and the UK by the end of 2024.
- Autonomous robots continue to deliver. European innovator Starship Technologies builds 99% autonomous wheeled delivery robots that adapt to obstacles, including snow and blockages. These machines have completed over 6 million deliveries across 80 countries and traveled over 11 million miles.
- UPS is using AI and ML to optimize its network capacity. AI and ML for planning and automation are helping UPS find new ways to lower package sort costs and adapt to sudden changes in shipment volumes. AI-powered automation also allowed the company to decrease headcount by 7% year over year, saving $889 million in Q2 of 2023.
- RFID tags on parcels are replacing manual scans and inefficiencies. Tags on parcels and wearable devices are automating scanning for UPS delivery vehicles. The logistics giant reports that technology may eliminate over 20 million daily manual scans and reduce the rate of delivery errors. About 50% of the company’s US facilities were already using RFID in 2023.
Even businesses that have yet to modernize their processes are actively pursuing innovation. Last mile tech adoption has become an easy way to stay competitive in logistics and transportation.
The Future of Last Mile Delivery Technology
The market for last mile delivery software is projected to increase from $2.34 billion in 2023 to $3.51 billion by 2030. The growing number of e-commerce services and their complexity are one of its main drivers.
Yet, it seems unlikely that the next few years will see major developments in new tech. Instead, the industry will focus on refining and popularizing existing technologies, as these market predictions show.
- Smart locker networks will expand. Delivery companies are embracing smart lockers as a cheap, convenient, and environmentally friendly delivery method. Recent initiatives include GoLocker, a Department of Transportation-backed pilot program to install 15 smart locker sites in New York.
- Sustainability practices will increase. Organizations prioritize sustainable practices and renewable energy tech solutions to meet environmental, social, and governance (ESG) standards. This will include route optimization for fuel efficiency, automated delivery drones, and a transition to electric vehicles.
- Aerial drones will be commonplace. The expansion of Amazon's Prime Air shows that companies aren’t giving up on autonomous drones. What’s more, public interest seems to be high, with nearly 60% of McKinsey survey responders supporting the idea. Air drone deliveries will become commonplace once algorithms improve and companies are more adept at dealing with government regulations.
- Autonomous vehicles will continue to develop. While drone delivery develops, Big Tech is also working on driverless cars and long-range delivery robots. Plans to deploy autonomous vehicles for mail delivery go back to 2017, and there’s still a long way to go, but current advances in AI, ML, and robotics make prospects look promising.
The future isn’t far off, but there’s no reason you should wait for it. Logistics software development services are an easy way to enhance your delivery processes starting today.
Upgrade Your Last Mile Delivery With Techstack
Customers want fast, customizable, and transparent delivery that can change the destination at the last minute. Last mile delivery technology is key to meeting the demand.
Techstack’s experience with startups, SMBs, and enterprises in the logistics sector makes us a great choice if you’re looking to invest in last mile delivery innovation to stay ahead in the market. Our experts can integrate IoT solutions, handle complex supply chain processes, and streamline doorstep delivery.
Contact us to learn more about the full range of our logistics software development services.
