Last Mile: What It Means in Reaching Customers

What Is the Last Mile?

The last mile describes the short geographical segment of delivery of communication and media services or the delivery of products to customers located in dense areas. Last mile logistics tend to be complex and costly to providers of goods and services who deliver to these areas.

Key Takeaways

  • The last mile refers to the short geographical distance that must be spanned to provide services to end-user customers.
  • Last mile logistics tend to be complex and costly to providers of goods and services who deliver to these areas.
  • In communications, the last mile is the relatively expensive and complex delivery of cables or wiring from the provider's trunk to one's home.
  • Last mile logistics have become a big business and a central focus for both providers of services and consumers.
  • Last mile logistics for product delivery have become a central focus for retailers in the e-commerce era.

Understanding the Last Mile

Delivery of telecommunications and media content is instantaneous and very fast for physical products to the perimeter of a densely-populated area. Imagine a trunk line leading to the edge of a city or metropolitan area. The branches and leaves must then spread out across the tightly-packed buildings and streets to serve customers working and living there. The edge of the city to the customer inside the city is the last mile.

Communications and media providers—inclusive of broadband cable, satellite, and wireless—spend heavily to upgrade old delivery systems and build out new networks to ensure adequate bandwidth for consumers hungry for data and streaming capabilities on their televisions, desktop computers, and mobile devices.

It takes time for these service providers to implement technology solutions for the "last mile problem." Due to the rapidly changing nature of technology, these solutions are at risk of being obsolete, or not state-of-the-art, upon completion.

Last Mile Logistics

Last mile logistics for product delivery have become a central focus for retailers in the e-commerce era. Our instant-gratification society demands fast delivery of products ordered online. Retailers that can achieve this at low or no cost to the customer have competitive advantages.

Amazon utilizes third-party services to deliver packages to its customers over the last mile and is also in the process of building its own fleet to cover burgeoning demand. To compete, other retailers are investing more in setting up distribution centers as close as possible to metropolitan zones, and then contracting with UPS, USPS, FedEx, and local courier services to perform last mile delivery services.

In urban areas, deliveries to retail stores, restaurants, and other merchants in a central business district often contribute to congestion and safety problems, making the last mile even more challenging to execute.

The Last Mile Problem and Cryptocurrencies

The last mile problem has reemerged in the past few years in the context of cryptocurrencies, In particular, the last mile, in this case, refers to when a cryptocurrency such as bitcoin is used in a cross-border payment such as a remittance.

The recipient of the bitcoin must find a way to exchange it for local currency in order to use it. Thus, while crypto transactions can provide a quick, efficient, and cost-effective way of sending remittances, the last mile problem still stands in the way in many less-developed countries.

Last Mile FAQs

What Does Last Mile Mean?

Last mile refers to the last stage in a process, especially of a customer buying goods. When it is used in the context of transportation, supply chain, manufacturing, and retailing, the last mile is used to describe the delivery of products the last leg of transportation.

Why Is There a Last Mile Problem?

In supply chain management, the last mile describes the difficult last part in the transportation of people and packages from hubs to their final destinations. Some of the problems of last-mile delivery include minimizing cost, ensuring transparency, increasing efficiency, and improving infrastructure.

The very last part of the delivery process of a product—from the last distribution center to the end customer—tends to be the most difficult because it can be the most complicated and expensive.

What Is the Last Mile in Terms of Internet Service?

In internet industries, the last mile refers to the final leg of the telecommunications networks that deliver telecommunication services to customers. It is the portion of the telecommunications network chain that physically reaches the customer's premises.

What Percentage of Delivery Costs Are Last Mile?

The operations of the last mile can be a huge percentage of the total delivery costs. As a share of the total cost of shipping, last mile delivery costs are substantial, often reaching or even exceeding 50%.

Are the First Mile and the Last Mile Problems the Same?

The first mile problem is generally used in the context of public transit systems. The first/last mile is the distance between a traveler’s origin or destination and a transit station. Reducing this distance is considered to be the solution to both the first mile and the last mile problem.

Article Sources
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  1. CNBC. "Amazon Is Spending Big to Take On UPS and FedEx." Accessed May 10, 2021.

  2. McKinsey. "Parcel delivery: the future of last mile," Page 6. Accessed August 4, 2021.

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