First and Last Mile Delivery
In the fast-moving world of last mile delivery operations, first and last mile delivery has emerged as a defining factor for operational success. Fulfillment managers across industries are rethinking how they approach this challenge, driven by rising costs, evolving customer expectations, and the growing availability of purpose-built technology.
Across every sector, from retail and healthcare to food and courier services, the ability to manage last mile delivery operations effectively separates market leaders from those struggling to keep up. Businesses looking to address this challenge are increasingly turning to last mile delivery software to streamline operations and reduce costs.
In this article, we break down the key aspects of first and last mile delivery, explore what the latest industry data reveals, and provide actionable strategies that e-commerce businesses can implement immediately. Whether you are scaling an existing operation or building from the ground up, the insights here are designed to guide practical decision-making in 2026 and beyond.
The Current Landscape
The conversation around first and last mile delivery has evolved substantially as businesses confront the realities of operating in 2026. Rising fuel costs, labor shortages, and increasingly demanding customers mean that the approaches that were considered adequate just a few years ago are no longer sufficient. Retailers are under pressure to find scalable, data-driven solutions that deliver measurable results.
The global last mile delivery market is projected to reach $288 billion by 2028 (Allied Market Research, 2025).
At the operational level, this translates to fewer rising customer expectations incidents, more consistent service quality, and a clearer picture of where resources are being used most effectively. The data collected through these systems also feeds into continuous improvement cycles that compound over time.
For retailers and their teams, this translates into a clear imperative: the businesses that invest in understanding and optimizing first and last mile delivery today will be better equipped to handle the operational pressures that lie ahead. The cost of maintaining the status quo, in terms of both direct expenses and missed opportunities, increases with each passing quarter.
Key Factors Driving Change
The importance of getting first and last mile delivery right cannot be overstated. For retailers, it directly affects the bottom line through improved cost per delivery and reduced operational waste. But the impact goes beyond cost savings. It influences customer retention, team morale, and the ability to scale without proportionally increasing headcount.
- Reduced costs -- By optimizing last mile delivery operations processes, businesses typically see meaningful reductions in fuel, labor, and redelivery costs within the first quarter.
- Improved reliability -- Consistent processes and automated workflows reduce the variability that leads to rising customer expectations and other common operational issues.
- Faster response times -- When disruptions occur, real-time visibility and real-time ETA updates enable faster adjustments that minimize impact on service levels.
- Better team coordination -- Centralized platforms keep e-commerce businesses, drivers, and customer-facing teams aligned on priorities and status throughout the day.
- Competitive differentiation -- In a market where service quality often determines customer loyalty, operational capability becomes a genuine competitive advantage.
Digging deeper into the mechanics, the most successful implementations share several common characteristics. They start with clean, reliable data. They involve frontline teams in the design process. They measure what matters and iterate based on real performance, not assumptions. And they use technology as an enabler rather than a replacement for good operational thinking.
McKinsey reports that last mile delivery costs have increased by 30% since 2020, driven by e-commerce growth and customer expectations.
For a deeper look at related strategies, see our guide on csiro exclusive investment in legged robot deliveries is growing, which covers complementary approaches to the concepts discussed here.
Practical Approaches and Solutions
One of the most underestimated challenges is the gap between strategy and execution. Many businesses have a clear vision for how they want their last mile delivery operations to work, but struggle with the practical steps needed to get there. This is where technology plays a crucial role -- not by replacing human judgment, but by removing the friction that prevents good decisions from being executed consistently.
According to a 2025 Gartner report, 65% of failed deliveries are caused by incorrect addresses or missed delivery windows.
Tools like retail delivery solutions complement these strategies by providing the operational visibility and control needed to execute consistently at scale.
Modern last mile delivery operations platforms address these challenges by providing a unified view of operations, automating routine decisions, and surfacing the insights that matter most. Rather than adding complexity, well-implemented technology simplifies day-to-day operations while improving consistency and accountability.
It is worth noting that the challenges associated with first and last mile delivery are not static. As customer expectations continue to rise and competitive pressures intensify, the bar for what constitutes adequate performance keeps moving upward. Organizations that treat operational improvement as an ongoing discipline, rather than a one-time project, are the ones that sustain their gains over time.
Related reading: Mastering Route Optimization Strategies for Efficient Travel Planning explores how these principles apply across different areas of logistics operations.
Implementation Strategies
When implementing changes to your last mile delivery operations operations, the sequence matters as much as the individual steps. Starting with data capture and visibility creates the foundation for everything that follows. From there, automation of routine decisions frees up your team to focus on exceptions and customer relationships.
- Build your data foundation -- Ensure your customer, address, and order data is clean and standardized. Poor data quality is the number one reason last mile delivery operations technology implementations underperform.
- Engage your frontline team -- Involve drivers, dispatchers, and e-commerce businesses in the planning process. Their practical knowledge is invaluable for designing workflows that work in the real world.
- Configure and customize -- Set up the platform to match your specific operational rules, service areas, and business constraints. The best tools are flexible enough to adapt to your processes, not the other way around.
- Train thoroughly -- Invest in comprehensive training for all users. Understanding not just the how, but the why behind each feature drives adoption and ensures consistent use.
- Monitor and optimize -- Use dashboards and reports to track cost per delivery and other key indicators from day one. Early visibility into performance allows you to make adjustments before small issues become big problems.
Real-world results confirm this approach. Organizations that follow structured implementation frameworks typically see meaningful improvements in average delivery time within the first 90 days, with compounding benefits over the following quarters as processes mature and data quality improves.
You may also find value in our article on how to setup local delivery for your ecommerce store, which provides additional context for implementing these strategies effectively.
Building for Scale
The transition from managing dozens of operations per day to hundreds or thousands requires a fundamentally different approach to first and last mile delivery. Manual processes that were manageable at smaller scale become bottlenecks. Informal communication channels break down. And the margin for error shrinks as customer expectations and competitive pressures increase. Purpose-built last mile delivery operations technology is designed to handle this transition smoothly.
Measurement is the foundation of sustained improvement. Without clear metrics and regular reporting, it is impossible to know whether changes are working, where the remaining gaps are, or how your performance compares to industry benchmarks. Key metrics for last mile delivery operations include cost per delivery, delivery success rate, and customer satisfaction. Tracking these consistently provides the insight needed to prioritize improvement efforts and demonstrate ROI to stakeholders.
For additional perspectives, our article on what does last mile carrier mean covers related operational strategies that many businesses find valuable.
See also: Delivery Management Software Guide for a broader view of how these themes connect across logistics functions.
Preparing for the Future
The landscape of first and last mile delivery will continue to evolve, but the fundamentals remain constant: efficiency, visibility, and customer focus. Organizations that build these capabilities into their operations today will be well-positioned for whatever challenges and opportunities the future brings.
Whether you are managing ten deliveries per day or ten thousand, the principles covered in this article apply. Start where you are, use data to guide your decisions, leverage technology to scale what works, and never stop looking for ways to improve. The businesses that thrive in the years ahead will be those that turn operational excellence into a genuine competitive advantage.
The operational landscape will continue to change, but the organizations that build strong foundations in last mile delivery operations today are the ones best positioned to adapt. By combining clear processes, the right technology, and a commitment to data-driven improvement, you can turn first and last mile delivery from a challenge into a genuine competitive advantage.
Ready to see how these strategies can work for your business? Start your free trial or book a demo to see Locate2u in action.