Common Last-Mile Delivery Problems in E-Commerce

When last mile drivers suffer, so does your bottom line. Out-of-stock issues don’t just inconvenience last mile drivers—they drain their earnings and push costs up across your entire logistics network. Here’s how these disruptions ripple through your operations—and what you can do to fix it. For Fortune 500 transportation leaders, these ripple effects are costly, but there’s a way forward. Here’s why stockouts can derail large-scale operations—and how the right solutions can turn the tide: Lost Driver Productivity = Higher Costs for Retailers: When retailers rely on third-party last-mile fleets, drivers earn per delivery or distance—not for time spent waiting on incomplete orders. Stockouts lead to wasted time and missed earnings for drivers, forcing last-mile providers to charge higher rates to make up for these inefficiencies. For retailers, this means paying more for each delivery, as these added costs quickly stack up across large-scale operations, eroding margins and profitability. Lower Ratings, Higher Turnover = Rising Labor Costs: Stockouts often unfairly lead to poor ratings for drivers. This results in higher turnover and last-mile companies needing to pay more to attract and retain talent. The result? Higher labor costs that get passed back to retailers, impacting your bottom line. Route Disruptions = Missed SLAs and Service Penalties: Stockouts can disrupt even the most optimized delivery routes, causing delays and missed service-level agreements (SLAs). Last-mile providers face rising costs from these disruptions, which are ultimately reflected in higher delivery rates for retailers. Driver Burnout = Labor Instability: Frequent stockouts frustrate drivers, leading to burnout and a less stable workforce. To keep deliveries flowing, last-mile companies raise wages—costs that inevitably get passed along to retailers. But there’s a solution: investing in flexible and transparent middle-mile transportation solutions that integrate directly with inventory management systems for accurate and timely store replenishments. By ensuring accurate, real-time data across the supply chain, you can minimize stockouts, streamline routes, and improve inventory visibility. This means fewer canceled orders, better driver efficiency, and lower costs—allowing you to maintain strong relationships with your last-mile partners and keep transportation rates in check. A smarter middle mile means a stronger last mile—and a competitive edge for retailers.

Last-mile costs aren’t your real problem. They’re just where your bad strategy shows up last. Everyone’s freaking out about last-mile shipping. It’s expensive. It’s complex. It’s messy. Yeah yeah yeah. You definitely have a leg to stand on. I remember when <1 shipping was in the low $3. Not anymore. Hate to break it to y’all. Last-mile costs are a symptom, not the root cause. The real issues start way upstream with inventory planning, network design, and SKU placement. If you're seeing sky-high last-mile spend, it's usually because of one (or more) of these: 1. Inventory's in the wrong place. You're shipping from the wrong coast to chase orders you could've fulfilled locally. A $8 zone 7 label that could’ve been $5 if the inventory was where demand actually lives. 2. You’re relying on express to cover up planning gaps. Late inventory inbound? Missed reorder windows? You’re paying to play catch-up. Last-minute air shipments are the tax you pay for not having buffer stock in place. 3. Split shipments are everywhere. Every time an order goes out in two boxes, you're doubling up on labor, packaging, and last-mile rates. And guess what? Most of the time it happens because of sloppy inventory allocation, not system failure. 4. You have one warehouse doing all the work. That “centralized model” might look efficient on paper, until you start shipping to both coasts during Q4. Distance = dollars. And you’re paying the premium for long-haul reach. 5. Your shipping policy was built to convert, not sustain. Free shipping on all orders? No minimums? Flat rates across the country? That’s great for conversion, until your ops team quietly eats the margin on every far-flung order. The result? Your P&L shows a “last-mile problem.” But what you actually have is a demand forecasting problem, a warehouse location problem, or a policy problem. And here’s the kicker!! Most brands look to cut carrier rates instead of fixing the system that’s driving those rates up in the first place. If you’re focused on trimming last-mile costs without addressing what’s causing them, you’re solving the wrong problem. Real savings come from precision, not panic. Get the strategy right up front, and your last mile takes care of itself.

A couple of key gaps have emerged in the Last Mile delivery space: Ultra-Light Parcels (Under 1 lb): - The removal of USPS Parcel Select DDU discounts and injection option is creating a ripple effect in the market.  - Shippers are seeing fewer economical choices for these ultra-light parcels. Heavyweight Parcels (Over 70 lbs): - National carriers are charging hefty fees to avoid handling heavier shipments. - A number of regional carriers cap weight limits at 50-70 lbs. While there are some solutions out there, it’s clear that these gaps in the market will continue well into 2025.