What is last-mile delivery in ecommerce?

When ordering products online, you likely don’t spend too much time thinking about how the package gets to the doorstep, you just want to make sure what you bought arrives quickly (and in one piece!)  

You may know that the product started in a warehouse, where it was picked and packaged by an employee before being shipped to your front door by a small parcel carrier (think Amazon, USPS, FedEx). Already, your order has gone through a number of steps to ensure the right items are picked, the right packaging is used, and the right label is printed.  

What you may not know is: what happens after your order leaves the warehouse? It turns out that the final leg of the order’s journey is one of the most crucial parts of the entire process: the last mile. 

The last mile can make or break a repeat purchase, posing one of the most challenging and costly steps in ecommerce fulfillment. The good news is that when executed properly, brands benefit from increased profits, greater customer retention, and faster delivery times. 

But, what exactly is last-mile delivery in ecommerce, and how can it be mastered? We’re breaking it down in this complete guide. 

Last-mile delivery: defined 

Last-mile delivery, also known as final-mile fulfillment, refers to the last segment of the fulfillment process, where a packed order is delivered from the fulfillment center to its destination, which is usually the customer’s front door. 

Before an ecommerce order reaches the final mile, it’s prepared by processing through an Order Management System (OMS), picking and packing the items, handing off the order to the carrier, and finally, delivering it in the last mile.  

Once the order is picked up by a carrier, the carrier will follow an optimized route, sometimes securing a delivery photo or requesting a signature based on the retailer’s standards. 

Not all last-mile deliveries are the same. Depending on the customers’ available options at checkout, there may be an expedited shipping request, or a service that includes moving products over the threshold and into the home.  

Types of last-mile delivery 

• Standard delivery: Generally considered the most cost-effective option, standard last-mile delivery balances cost and speed, where shipments arrive between two and seven business days.  

• Expedited delivery (same-day, next-day delivery): Expedited shipping prioritizes faster delivery and usually comes with a higher cost. However, it may be worth the investment: 80% of consumers expect retailers to offer same-day delivery, and among them, 30% expect it to be free. 

• Crowdsourced or hyperlocal delivery: Capitalizing on America’s booming gig economy, crowdsourced delivery deploys local networks of carriers and independent drivers to quickly deliver packages to consumers in their communities.  

• White glove fulfillment: For bulky, fragile, or high-value products, white glove delivery is a premium service specializing in transporting these items with exceptional care. This service enhances the final-mile experience by delivering the product directly into the customer’s home for a room-of-choice drop-off or immediate installation. 

Why seamless last-mile delivery matters in ecommerce 

With instant gratification as the new norm, it’s no surprise that ecommerce customers expect a hassle-free experience from checkout to delivery. Last-mile delivery directly impacts the order journey, and how satisfied a customer is with it. Quick and damage-free deliveries can delight shoppers, improve their overall experience with the brand, and encourage repeat purchases.  

While speedy delivery remains a baseline expectation for ecommerce brands, customers have additional priorities. From 2022 to 2025, McKinsey reports that consumers increasingly value the cost of shipping, tracking capabilities, ease of returns, and choice of delivery location over the speed of delivery–all of which are influenced in the final mile of fulfillment. This shift means brands must be as fast, accurate, and flexible as possible to ensure their customers keep coming back for more.  

The last-mile problem  

To achieve speed, transparency, and flexibility while passing minimal (or zero) costs onto consumers, shippers have seen last-mile delivery fees rise to astronomical levels.  

Final-mile expenses now account for more than half of a brand’s total supply chain spend, largely due to the steep incline in the popularity of online shopping in the last decade. In 2023, more than 21 billion parcels were shipped within the United States.

Although parcel volume has slowed from its double-digit, year-over-year increases during the pandemic, it’s safe to assume we’ll be shipping a significant number of packages in 2025. It’s a good problem for retailers to have, but nevertheless, it’s still a problem if they aren’t optimizing their final-mile fulfillment 

So, where do the costs come from? Here’s a quick breakdown of the major categories that contribute to last-mile shipping costs: 

• Fuel and vehicle maintenance: Beyond the expected costs of gasoline and vehicle maintenance, traffic congestion, complex deliveries, and elaborate routes can worsen fuel efficiency and add unnecessary wear and tear. 

• Labor: People play the most critical role in last-mile delivery. Wages, insurance, and benefits are non-negotiable expenses. 

• Packaging: To keep products safe during transit, packages require fillers like kraft paper, bubble wrap, and air pillows. Branding these items to enhance the unboxing experience will be an additional cost. 

• Returns: If the customer chooses to return a product, getting it back to the distribution center can considerably increase spend. Plus, if a brand chooses to offer free returns or a free pickup service, they’ll have to absorb the costs. 

How to optimize your last-mile delivery strategy 

Offer omnichannel options like BOPIS 

The last mile doesn’t always mean a delivery by carrier. Brands can offer a free Buy Online, Pick Up in Store (BOPIS) option to skip home delivery entirely. By allowing customers to pick up their orders at a physical location, retailers can cut final-mile delivery costs and boost in-store traffic. Plus, consumers will appreciate the option to choose exactly how they want to secure their new purchase.   

Leverage real-time order tracking technology 

Customers expect to receive updates and track their order status in real time. Tracking software during the last mile can help brands grant their customers visibility into the delivery process and quickly communicate any unexpected delays. 

Distribute your inventory to get closer to your customers 

Distributing inventory between multiple fulfillment centers can reduce shipping costs by positioning products nearer to their destinations. Depending on where your customers are located, splitting inventory between two locations can slash delivery costs by reducing the distance and boost customer satisfaction by getting orders into their hands faster. 

Diversify your carrier mix 

If you’re only partnered with a single parcel carrier, you could miss out on lower prices for the same shipment with another company. Consider diversifying your carrier mix and implementing a rate-shopping tool to help you minimize last-mile delivery expenses.   

Partnering with a 3PL for last-mile success 

Any brand shipping directly to consumers needs to make significant investments in their last-mile delivery strategy, but keeping track of so many moving parts while optimizing spend can get overwhelming quickly. By partnering with a third-party logistics (3PL) provider, ecommerce brands can benefit from: 

• Established networks of vetted carriers 

• Multi-node fulfillment and distributed warehousing 

• Omnichannel fulfillment expertise 

• Cost savings through economies of scale 

With over 13 million square feet of space, WSI leverages a nationwide network of fulfillment centers and WMS technology to take our operations Beyond Fulfillment™ for brands looking to scale. Connect with a WSI last-mile fulfillment expert today.