Is Last Mile Delivery Profitable?

by | Sep 6, 2022 | Blog, Routing & Dispatch

Is Last Mile Delivery Profitable?

Think about the changes the logistics world has experienced over time. During the frontier days, a farmer who needed a new plow would order it from the catalog at the local mercantile and wait for months while it traveled on wagon trains. The inception of the railroad significantly reduced that farmer’s waiting time. As the nation industrialized and started settling into cities, delivery times were cut to weeks. Baby Boomers and Gen X-ers can remember well having to wait six to eight weeks for shipping and handling on that record or cassette tape collection. But with the growth in eCommerce, that kind of wait is no longer acceptable to the consumer. The industry of last mile delivery is seeing significant growth with trends indicating that it will eclipse $123 billion by 2030. That type of growth answers the question— is last mile delivery profitable?

eCommerce Growth

The growth of last mile delivery mirrors the growth of eCommerce. In 2020, parcel delivery reached an historic high of almost 25 billion items worldwide which is more than a 17% increase. The recent pandemic only fanned the flames of that fire.  In the latter half of that year, eCommerce soared an astounding 27.6% accounting for 18% of the global retail market. That growth of sales puts stress on the retailers to get the goods to the consumer. The fact that consumers want their purchases quickly only intensifies that stress. In fact, studies show that consumers value speed of delivery over discounts by a margin of 52% to 38%. Providing a needed service to a booming market makes last mile delivery a fertile field.

Potential in Last Mile Delivery

This booming market breaks into three major categories:

  1. Business to consumer (B2C) sales and delivery
  2. Business to business (B2B) sales and delivery
  3. Consumer to consumer (C2C) sales and delivery

The first two categories make the lion’s share of the market with business to consumer comprising the largest share overall. The enterprising entrepreneur will easily divest these arenas into areas of specialty. Take taxi cabs as an example.  Transportation went from taxi cabs to crowdsourcing of personal vehicles. Then that niche further specialized into home food delivery. The market will undoubtedly see similar refinement and growth in last mile delivery. Medical deliveries will require a different logistical approach than hardware. Restaurant supply has unique factors that stand apart from automotive parts.  As the last mile delivery field grows, the areas of specialty will grow, and profit potential will grow right along with them.

Solutions for Streamlining

Elite EXTRA leads in the advancements of last mile delivery automation. They are fueling the growth of the field and helping the business owners find their share of the market and the profit so you no longer have to wonder if last mile delivery is profitable. They broke new ground applying the nation’s top rideshare app to the delivery driver shortage. Their software helps businesses tap into this amazing resource to streamline deliveries with their delivery network software. In fact, anyone wanting to dabble in this growing arena would do well to look into rideshare companies as a great way to learn the industry.

There is no question— revolution in last mile delivery is on the rise. As eCommerce continues to increase, the need for a variety of options in last mile delivery rises as well.  There is a niche to fulfill and great profit to be made. The days of thumbing through the catalog at the mercantile are a relic of the past, and the opportunities that lie ahead are astounding.

Sources

https://straitsresearch.com/report/last-mile-delivery-market

https://www.globenewswire.com/

https://www.weforum.org/agenda/2021/12/last-mile-delivery-autonomous-vehicles/

https://straitsresearch.com/report/last-mile-delivery-market

Mallorie Barabas

Mallorie Barabas

Author

Mallorie is the Marketing Strategist at Elite EXTRA; if you ask her about her job, she will immediately tell you to follow @EliteEXTRA on LinkedIn (that is your cue;) When she isn't at the office, you can catch her teaching aerial yoga, swimming, or just generally enjoying the outdoors.

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