25-03-2025
Why E-Commerce Companies Should Focus On Improving Their Last-Mile Delivery Experiences
Ram Nikhil Dodda is Head of Product Management for Amazon Key.
From clothing to electronics, millions of packages are shipped each day globally. In its 'Global Parcel Shipping Index,' which examined 2022 data from 13 countries, Pitney Bowes, a company that offers mailing and shipping solutions, found that in that year, 'global parcel volume reached 161 billion.' That's 'equivalent to 5,102 parcels shipped every second.' Additionally, Pitney Bowes predicted that by 2028, 'parcel volume will most likely reach 225 billion.'
That projection is not surprising, given the extremely high rates of online shopping. Consider data from the U.S. Census Bureau, which revealed that 'the estimate of U.S. retail e-commerce sales for the fourth quarter of 2024, adjusted for seasonal variation, but not for price changes, was $308.9 billion.' And that's just in the United States. As people shop online, they have expectations about deliveries. For instance, according to a 2024 report by global consulting firm AlixPartners, U.S. consumers 'want home delivery within 3.5 days.' If a retailer doesn't provide that, 'around 25% will shop elsewhere.'
Consumers have more choices than ever when it comes to online shopping. Providing seamless last-mile delivery experiences to consumers is no longer an option. For their e-commerce companies to stand out and win consumers' business, leaders must focus on improving their last-mile delivery experiences.
To start improving their last-mile delivery experiences, e-commerce teams should prioritize several key metrics. There are two broad groups of key metrics—customer-facing and operational.
On the customer-facing front, there are three crucial metrics. First, there's the on-time delivery rate, which is linked to delivery promise (the commitment a company makes to a customer) and delivery window (the expected timeframe for a package to arrive). Essentially, e-commerce companies need to deliver orders within the timeframes they've promised. The tighter the delivery window, the more challenging it is to meet that expectation. Some e-commerce companies have more precise delivery windows than others, sometimes narrowing them down to the hour. To improve on-time delivery rates, e-commerce leaders should set realistic delivery promises and delivery windows. Then there is the order accuracy rate, which refers to getting the right items to customers. Order accuracy is a big driver of customer satisfaction. Getting the wrong item can derail a customer's plans. Finally, there's the first-attempt delivery rate, which is whether or not the delivery is made on the first try. This is another important driver of customer satisfaction, as it's a hassle for people to reschedule or arrange to retrieve missed deliveries.
As for operational metrics, there are three main ones. First, there's the delivery defect rate, which refers to the percentage of orders that don't reach customers as planned due to late deliveries, incorrect or defective items or issues such as theft. For a good e-commerce experience, customers should receive a correct, undamaged product on the first delivery attempt. Moreover, delivery defects can have serious financial repercussions for e-commerce companies. Next, there's the cost per delivery rate. On a basic level, e-commerce companies should strive to minimize costs relative to their package volume. The last key operational metric e-commerce leaders should focus on is driver productivity, which includes measuring average deliveries per route, total distance traveled, time spent on each delivery and the rates of successful first-time deliveries.
To be able to deliver on key metrics, e-commerce companies should focus on building several customer-facing and internal features.
Arguably, the most important customer-facing feature is real-time order tracking. Consumers expect to know where their packages are at any given moment. Supply chain platform Verte's 2022 survey revealed that 91% of U.S. consumers ''actively track their packages.'' Related to real-time order tracking? Automated delivery updates. Overwhelmingly, customers want to know where their packages are at any given point in time. In the Verte survey, 82% of U.S. consumers expressed 'high or very high expectations for accurate delivery information when tracking their packages through an app.' Flexible delivery options are another important feature that e-commerce companies should offer. Many people want control over when they receive their packages—according to McKinsey research published in 2025, 'more than 50 percent of survey respondents place importance on being able to schedule deliveries.' Finally, many consumers seek convenient pickup locations, and e-commerce companies should secure strategic partnerships that give customers more choices. A 2024 study by Retail Economics and InPost, a parcel locker delivery service, found that 52.8% of consumers in the United Kingdom 'have used a delivery locker at least once.'
Internal features are the foundation of e-commerce companies' ability to power better last-mile delivery. For one, e-commerce companies should improve drivers' access to buildings, namely, gated communities and apartment buildings, in order to reduce the chances of late or missed deliveries. Address validation is another crucial feature drivers need for accurate deliveries. Finally, features that enable secure, seamless delivery options, such as drivers being able to quickly leave packages in a preferred area (such as the mailbox versus the front porch for smaller items or delivering more expensive items inside the garage instead of on the front porch) can help reduce damage and theft. Some e-commerce companies, of course, rely on delivery partners, such as national postal carriers. When choosing partners, they should screen for capabilities and look for opportunities to collaborate in these areas.
Implementing the metrics and features mentioned above is only one part of the equation. E-commerce leaders need strategic, data-driven approaches to their last-mile delivery operations to truly optimize performance and customer satisfaction.
A key mistake e-commerce leaders should avoid is failing to weave in last-mile delivery planning into their businesses from day one. The longer they wait to do so, the more challenging it becomes to seamlessly integrate new features into their existing infrastructures.
Leaders should also avoid adopting a one-size-fits-all approach to last-mile delivery. Last-mile delivery strategies should be tailored to local conditions, such as building types and population density. Whether rolling out a strategy as a whole or a new feature, e-commerce companies should prioritize testing it in one area and then iterate so the feature can work in other areas.
Finally, e-commerce leaders should invest in the data infrastructure to regularly track key metrics and customer feedback—and take action as needed. Ultimately, it's through iterating that e-commerce leaders can continuously improve last-mile delivery experiences for their customers.
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