We are living in times when super-fast delivery has become the new normal. Thanks to new technology, customers now expect things to arrive at their doorsteps in hours—not days. This shift in expectations has changed the way businesses, especially in eCommerce and logistics, operate.
In fact, over the past two years, the fast growth of online shopping has increased the demand for last mile delivery in B2B businesses by about 35%. The increase is even bigger in B2C—roughly 70%. While this is great news for customers, it puts a lot of pressure on logistics and supply chain businesses to deliver quickly and efficiently without losing money.
Let’s be honest: managing this increase in delivery volumes isn’t easy. That’s why 28% of companies say their biggest challenge in last mile delivery is improving efficiency.
But that’s not the only issue. Last mile delivery is also very expensive. It makes up around 43% of total logistics costs and about 55% of total shipping expenses. On average, one last mile delivery in 2025 costs about $11.20. And if you don’t improve your last mile operations, these costs can seriously eat into your profits. In fact, businesses that don’t optimise last mile delivery could lose up to 28% of profits over just three years.
What’s Driving These High Costs?
1. Higher Customer Expectations
Today’s customers want faster, cheaper, and more flexible delivery. A recent survey of 350+ logistics firms showed that 60% of them are under pressure to offer same-day delivery. But delivering faster often means spending more on drivers, vehicles, and fuel.
Also, most shoppers now expect free shipping. Around 65% of customers say they will cancel an order if free shipping isn’t available. Nearly 95% will even buy more items just to get free shipping. So businesses often end up covering the shipping costs themselves—hurting their profit margins.
2. Complex and Inefficient Delivery Routes
The last mile is usually the trickiest part of the delivery journey. For rural deliveries, addresses are far apart, which increases fuel and time costs. In cities, even though addresses are close together, traffic and parking problems can slow things down.
Also, as more people shop online, delivery routes become more complicated. More packages mean more stops, and managing it all efficiently is not easy without the right tools.
3. Failed Deliveries
One of the most frustrating and expensive issues is failed deliveries. This happens when the customer isn’t home, the address is wrong, or the delivery window is missed. Drivers waste time and fuel on these trips, and many times, a second delivery attempt is needed. That costs more money and also makes customers unhappy.
Stop losing time and money—fix your last mile with smart route optimization software.
How to Reduce Last Mile Delivery Costs
We’ve seen what causes high last mile expenses. Now let’s look at the best ways to reduce them. One of the most effective solutions is using last mile delivery software.
This type of software comes with features that help you manage your deliveries better. It saves time, reduces mistakes, and helps you spend less on every delivery.
Here’s how it works:
Auto-Dispatching Orders
Think of how Uber works. When you book a ride, the app finds the nearest driver and sends them your request automatically. Last mile delivery software works in a similar way. It assigns delivery jobs to the best available drivers based on their location, load, and availability. This saves time and ensures orders are handled by the right person.
Smarter Delivery Routes
The more time your drivers spend on the road, the more fuel and money you spend. Route optimization helps you fix this.
The software plans the shortest and smartest routes for your drivers. It looks at many things like:
- Distance between stops
- Traffic conditions
- Road closures
- Delivery time windows
- Vehicle capacity
It even updates routes in real time when new orders come in. Some tools also let drivers and dispatchers chat directly to solve problems faster.
Proof of Delivery
Another great feature of last mile delivery software is proof of delivery. Drivers can collect signatures, take photos, scan barcodes, or add notes using their mobile devices.
This proves that the order was delivered safely and on time. It helps avoid confusion, reduce customer complaints, and improve trust.
Real-Time Customer Updates
Customers love to stay in the loop. With last mile delivery software, you can send real-time updates to customers about their order status. These updates can include:
- Order packed
- Out for delivery
- Estimated arrival time
- Live tracking of the delivery vehicle
This reduces the chances of missed deliveries, improves customer satisfaction, and saves you money in the long run.
More Flexible Delivery Options
Sometimes, offering same-day delivery isn’t the smartest choice. Not every customer is available right away. That’s why giving them flexible delivery slots is a better option.
In fact, more than 75% of shoppers say they prefer convenient time windows over speed. This lowers the risk of failed deliveries and saves you from making repeat attempts.
Analytics and Reports
Good last mile delivery software gives you access to smart reports and real-time data. You can track:
- Delivery time
- Distance covered
- Number of successful vs. failed deliveries
- Idle time
- Driver performance
- Fuel usage
This analytics and reporting feature helps you find problems quickly and make better decisions to cut costs and improve delivery speed.
Why You Must Invest in last mile Delivery Software in 2025
last mile delivery is the most expensive, most complex, and most customer-facing part of the supply chain. It’s also where your reputation is built or broken.
In 2025, there’s no excuse for not using technology to handle this part of your business. With the right software, you can:
- Cut delivery costs by up to 30%
- Improve customer experience with live updates and flexible delivery slots
- Lower failed deliveries with verified proof of delivery
- Handle more deliveries without hiring more staff
- Get real-time data to fix problems faster
All these benefits help you stay ahead of the competition and grow your business faster.
Final Thoughts
The last mile will always be a challenge—but it doesn’t have to be a costly one. Businesses that take last mile delivery seriously and invest in smart solutions will have the upper hand.
If you want to reduce costs, boost efficiency, and give your customers a better delivery experience, now is the time to switch to advanced last mile delivery software.
Whether you run a logistics company, an eCommerce store, or a delivery startup, making this move in 2025 will set you up for long-term success.
Looking for the right last mile delivery solution? Try Fixlastmile, designed to simplify operations and slash costs.
Let tech handle the chaos—so you can focus on growing your business.
FAQs: Reducing Last Mile Delivery Costs with Smart Software
It’s a tool that manages delivery operations, optimises routes, tracks drivers, and improves delivery speed and accuracy.
It finds the fastest, shortest routes to save time, fuel, and increase deliveries per driver.
Yes, it reduces errors, lowers costs, and scales delivery operations without needing extra staff.
A failed delivery can cost $8–$20 due to wasted time, fuel, rescheduling, and unhappy customers.
Yes, it automates dispatching and routing to support fast, on-time same-day or 60-minute deliveries.
