What is Last Mile Management? The New Standard for Modern Courier Companies

Over $4.4 billion in online retail sales were reported in 2023. By 2028, eCommerce is expected to generate $6.8 billion—nearly a quarter of all global retail sales.

But the last mile delivery system underpinning this explosive growth is cracking under pressure: couriers are expected to keep up with record demand while hitting a consistent 98%+ delivery success rate.

The last mile industry has been reshaped by two macro market trends: the Amazon effect and the Shopify effect.

1. The Amazon effect. Amazon's growth has shifted recipient fulfillment and delivery expectations. People expect fast, cheap, and high-quality deliveries right to their doors. And last mile couriers play a vital role in helping customers trust that an eCommerce business can fulfill their order(s).
2. The Shopify effect. Shopify has democratized ecommerce business, lowering entry barriers and providing a platform to help small and mid-sized businesses compete with larger corporations like Amazon. Shopify has given online retailers the ability to serve anyone, anywhere, and at any time. These promises are baked into the branding of Shopify-powered businesses.

According to Megan Murphy, VP of Product at Circuit for Teams, couriers today aren’t just delivering parcels—they’re juggling relationships between retailers, recipients, and their own driver workforce.

The challenge? Keeping their clients, recipients and drivers happy without breaking under the weight.

The last mile courier industry is at an inflection point, but courier services are limited by Frankenstein-style tech stacks that occurred out of necessity rather than a cohesive development roadmap, resulting in:

• A stitching together of various platforms to manage order fulfilment
• Spreadsheets and data management systems that lacked a singular cohesion and integration
• Manual segmentations of order management between the first mile, mid-mile, and last mile delivery

While some couriers integrate delivery management software, it’s not an ideal solution for last mile delivery management. The last mile is the most complicated and costly of the order management supply chain. It requires a dedicated solution that helps you optimize the last mile, control costs, and improve client satisfaction rates.

Enter last mile management, a category that our VP of Product Megan Murphy describes as the optimal way for couriers to take firm control over the last mile of order fulfilment.

“It's becoming more complex for couriers to satisfy the needs of all their stakeholders. Couriers are managing deliveries for their sellers and their buyers, all while trying to keep their drivers happy. Last mile management makes it easier for couriers to manage all these competing relationships. Otherwise, their day-to-day is completely bogged down trying to fulfill all these expectations.”

Last mile management gives couriers full control over the last mile of delivery. Ecommerce consumption is skyrocketing, creating more demand and, therefore, more expensive delivery costs. At the same time, customers have very high demands for expedient, quality delivery services. These challenges place tremendous pressure on the backs of couriers, which makes last mile management solutions such relevant and critical assets for modern courier deliveries.

An inevitable response to last mile industry pressures

The courier industry is being reshaped by what we call the Amazon effect and the Shopify effect. Both platforms have revolutionized how brands promote their products or services, and how customers place orders and receive deliveries.

1. The Amazon effect. Amazon has created very specific order fulfillment and delivery expectations. People expect fast, cheap, and high-quality deliveries right to their doors. As couriers, you play a vital role in helping customers trust that an ecommerce business can fulfill their order(s).
2. The Shopify effect. Shopify has democratized ecommerce business, lowering entry barriers and providing a platform to help small and mid-sized businesses compete with larger corporations like Amazon. Shopify has given online retailers the ability to serve anyone, anywhere, and at any time. These promises are baked into the branding of Shopify-powered businesses.

“These are the two simplest anecdotes to explain the growing need for last mile management. The first is the Amazon effect, which has set consumer expectations to be fast and cheap in terms of what they order and what they receive. The second is the Shopify effect, which has given retailers the ability to serve anyone, anywhere, anytime.

This means that couriers are not only contending with the most expensive step in the supply chain, but it's more complex to satisfy everybody involved. That’s why last mile management is so relevant and important for couriers today because it's not just about the delivery anymore.”

Due to the convenience provided by both platforms, couriers are caught in the middle of sky-high consumer demands and the logistics of fulfilling online orders. Couriers must satisfy all stakeholders—buyers, sellers, and delivery drivers—to fulfill their vital role in the supply chain. You also have to consider your business needs like improving profit & loss (P&L) statements, gross margins, operating efficiencies, and resource management.

What is last mile management?

There’s a fundamental shift occurring in the courier industry. Last mile management is an integral part of this collective response, reflecting the timely needs of couriers to better service all stakeholders.

Unlike traditional delivery management software, last mile management offers couriers complete operational control over how they conduct business. Last mile management software is highly adaptable, providing customizable levers to increase courier service margins and profitability.

“Last mile management software gives couriers full control over the last mile, which is becoming more important as the scope of what couriers do widens beyond strictly managing deliveries. It's important to understand why this is the case and how to adapt to this new model. There are underlying reasons that explain how couriers do business these days, which are not revelations, but obvious truths.”

Last mile management supports courier business models

Couriers face more challenges and complexities than ever to satisfy the needs of all stakeholders in the supply chain. Between ecommerce sellers, a limitless number of buyers, and a whole fleet of delivery drivers, there are so many competing needs and priorities in every courier delivery.

“Last mile management goes beyond just the delivery. It supports the actual courier business model. Last mile management focuses on important business needs, like what are the levers impacting your P&L statements?

What are the highest margin opportunities to improve certain parts of the supply chain? What services can they offer to their clients and also to the recipients? How do you improve driver retention? How do you surface insights that support cost management and cash flow planning? Last mile management helps couriers manage all these competing priorities because, otherwise, their day-to-day tasks are completely bogged down with satisfying all parties.”

Last mile management gives you full control over the last mile of the supply chain— the depot to the customer’s door. Assuming full control of the last mile can drastically reduce total shipping costs. In 2023, the share of last mile delivery expenses was 53% of total shipping costs.

By investing in last mile management, you can make more effective and efficient uses of resources and reduce your operating expenses. You’ll also satisfy all stakeholders in the order fulfilment process and ultimately improve your customer satisfaction rates.

Solving limitations of traditional plug-and-play solutions

“The opportunity for last mile management exists because couriers recognize that every part of the supply chain must integrate, but, often, those integrations only work well with certain systems. A product built for today and tomorrow—rather than one stuck trying to fit into an integration from 20 years ago—helps further separate what last-mile management can be from the outdated software of the past.”

The Amazon and Shopify effects represent larger macro trends that are transforming the courier industry. Route optimizations, delivery notifications, proof-of-delivery—these are all points of data that couriers use to evaluate their operations and performance.

Historically, gathering useful data for each of these metrics required plug-and-play integrations into broader logistics software. These integrations were hardly reliable and rarely provided the necessary insights to help couriers improve their businesses.

The last mile management category overrides those technological limitations. Now, couriers have a new standard to efficiently manage deliveries from start to finish. Last mile management synchronizes touchpoints between dispatchers and drivers, automatically importing delivery data into a centralized platform. It effectively optimizes routes and tracks deliveries, all in real-time.

It makes it easier to manage the cost and complexity of the last mile

The last mile management category was created to fill a gap in the traditional logistics software industry. Historically, logistics software used a piecemeal approach to managing the full delivery lifecycle.

• First mile delivery. In the first mile, the focus is on collecting goods and transporting them to an order fulfillment warehouse. The key challenges in this stage relate to inventory intake, quality control, border crossings, customs agents, and compliance management.
• Mid-mile delivery. In the mid-mile stage of delivery, the goods are relocated between the distribution hubs. The primary goals at this stage are to balance inventory and control the cost of transferring large quantities of products between your distribution centers.
• Last mile delivery. In the last mile delivery stage, it’s basically an inverse of the first mile delivery process—shipping from a distribution hub to any number of individual recipients. The most important responsibility in this stage is that the parcels arrive safely, in good condition, and ideally, with a smile from the delivery driver.

“And so this is where the cost and complexity of the last mile really comes in. When we talk about building for the nuances of a courier business, there are many ways that couriers manage their costs.

Some couriers will pay their drivers by the hour, some by the delivery attempt, some by successful deliveries only, some by the kilometer or the mile, etc. Then, you have various employment agreements—ranging from full-time to independent contractors and even subcontracted drivers. All of these variables create a lot more complexity.

Being built for the last mile specifically is about being built for each of those nuances. If you don't support that cost structure or that employment relationship, it can completely break the business itself.”

The key components of last mile delivery work to speed up delivery times and support real-time order tracking. Last mile management also allows for specialized delivery considerations and makes it easy for recipients to monitor their order statuses within delivery driver tracking apps.

It simplifies how to manage courier nuances

Every courier prefers to manage their business in their own way. Traditional logistics software made it harder for couriers to maintain their preferred logistical choices. Last mile management is far more adaptable to the nuances of the courier industry.

Another nuance relates to insurance, because every driver must be covered by a reliable insurance program. Insurance protects your business, your drivers, and your customers in case something unexpected happens during the delivery process.

Tackling scale with last mile management

You understand your business better than anyone. That’s why you should have the flexibility to manage courier nuances without feeling limited by outdated technologies.

As you acquire new customers, your business must adapt to the growing number of ecommerce buyers and sellers that you service. Scalability brings new challenges and new opportunities. Last mile management allows you to amplify your courier services and achieve more impressive growth.

“What we hear in conversations with other courier companies is that the last mile industry is built on integrations to help manage relevant data. Couriers tell us “this is where we manage all of our drivers' information” to allow for independent contractors and the management of each contractor’s insurance policy. With scale comes more complexity, and having an easy ability to add and manage drivers at scale, without error, ensures only drivers with valid insurance are assigned to the proper routes.

These are the kinds of details that become essential as you scale. Having a ready-made solution for last mile delivery needs is much more efficient and effective than piecing together old systems, new systems, and everything in between.”

Last mile management software enables nuanced courier workflows

If you’ve been following along, the underlying theme in this guide is that there is no one-size-fits-all solution that broadly applies to all courier companies. Couriers are the best experts to understand their unique business models, and they shouldn’t be confined by rigid structures in the technologies they rely on. They deserve solutions that allow the freedom to conduct business however they choose.

Last mile management software by Circuit for Teams contains all the flexible features you need to optimize last mile deliveries and reduce delivery costs by 20%. The platform simplifies how to manage the supply chain so you can fulfill drivers with the safety, quality, integrity, and gracefulness that customers expect.

"In terms of giving couriers flexibility and control (I talked about how to calculate driver pay), that's one area where we’re making the product a lot more flexible. We've just introduced barcode scanning because we recognize that's one way that couriers will create their routes and load packages onto vehicles and mark them as delivered or failed. We're really trying to meet couriers where they are and not ask them to bend their backs just to mould to whatever rigid structures are in our software."

Last mile management software like Circuit for Teams empowers couriers to customize and optimize their deliveries in the best possible way. It helps you avoid disruptions to the delivery experience, overcome last mile delivery problems, and reduce operational expenses—all while optimizing last mile management for speed and precision.

Last mile management fills gaps in logistics management software

Last mile management software synchronizes communications between dispatchers and delivery drivers. Best of all is that platforms like Circuit for Teams have been custom-built to optimize existing systems and technologies that fill the gaps in traditional logistics management software.

Here’s a prime example of iterating on a system that courier drivers already love to use.

“The strength we have in this area, not just in last mile management but Circuit for Teams specifically, is that this product is built on the heels of Circuit Route Planner, an app that drivers love to use. It feels like many SaaS companies assume that the best user experience is going to win, but I don’t believe that.

I think you need the right combination of market-product fit, product-channel fit, channel-model fit and model-market fit market as Brian Balfour explains in his ‘Four Fits of $100m Growth.’ I see why all of those things need to fit together, and since Circuit for Teams is rooted in a product that drivers absolutely love to use, this then helps us to figure out how to continue improving our product so that it actually gives couriers what they need to scale.”

Traditional logistics management software would struggle to integrate with popular delivery apps. Instead of a seamless integration, product managers would have to export data from the delivery app and then upload it into their logistics system. From there, they’d have to manually sort, filter, and organize the data before they can come to logical conclusions about what’s working and what’s not.

Last mile management software like Circuit for Teams eliminates all this complexity. Not only does it allow you to easily view the performance and challenges faced by your fleet of delivery drivers, you can schedule the right drivers to manage multiple stops on delivery routes.

“If drivers love this model, then what do dispatchers need? What do depot managers need? What do all of these different parties involved need? How can we give a great recipient experience so they can visibly track their driver? How do we give a great experience to the retailer so they can upload their orders without a manual exchange of spreadsheets or text messages outlining multiple stops on the route?

As all of these nuances come together, it creates something that is more purpose-built for every stakeholder. It’s more effective than relying on a system of stitched together, legacy products that were not built to serve the whole value chain.”

What are the misconceptions about last mile management?

“I think the biggest misconception is that it's the last mile, not all the miles, so why not just buy this all in one TMS (transport management software) that can do everything? To that, I would say that it's the most complex and expensive part of the entire supply chain. It deserves a purpose-built solution to help all stakeholders get through the common headaches experienced in the last mile.”

The most important detail for couriers and ecommerce partners to understand is that last mile management is purpose-built to optimize for the last mile of delivery. It’s not an all-in-one platform built for every stage of the supply chain.

As previously mentioned, the last mile is the most complex and costly stage of the delivery process. It requires a solution tailor-made for optimizing the last mile, reducing last mile delivery costs, and satisfying the needs of every stakeholder in that final stage of the delivery process.

Using platforms like Circuit for Teams, you’ll enhance the last mile of delivery, become a more efficient courier business, and improve customer satisfaction rates across the entire supply chain. You’ll have the technology to build a strategic business plan, build clear communication channels, make effective use of analytics, and build more effective partnerships with other logistics experts.

5-year outlook for last mile management solutions

When we think about the SaaS industry, most product managers and end users all say the same thing: they want everything under one roof. They want an all-encompassing solution, a single source of truth where they can manage every aspect of their business.

In some categories, this approach makes perfect sense for a business. But the last mile of the supply chain is such a complicated and convoluted category. Many couriers are operating on razor-thin margins, and an all-encompassing piece of technology is an expensive tool that’s outside the budget for these business owners.

Courier software is helping businesses pivot today and adapt to the coming future of order fulfillment. As last mile management technology evolves, it will not only help couriers reduce delivery costs, but it will also expand profit margins.

"What are the ways that we can help couriers monetize their services in a way that creates more margin than is currently available? I think that's where innovation should lead because that means there's a little breathing room. My husband is an owner of a small business with extremely thin margins that look nothing like SaaS, and I can tell you that every single purchase we make for that business matters so, so much. I can see from with within my home, just how important it is to not have any extra cost, no extra waste.”

Failed deliveries are a giant driver of unnecessary courier costs. Up to 20% of ecommerce packages aren’t delivered on the first attempt, according to Harvard Business Review. These failed orders cost couriers more money to correct the first failed attempt.

But there are even larger and more long-term implications for those initial costs. The ecommerce sellers who partner with couriers to deliver customer orders are at risk of losing money. It also impacts their reputation and risks costing them repeat business from the recipient buyers. There are all kinds of questions that emerge from these situations:

• Who foots the bill for those second delivery attempts?
• Where does the money come from to finance those reorders?
• What is the impact on your reputation as a courier business?
• How do you repair those damaged stakeholder partnerships?

If customers don’t get their orders, they lose trust in the business and are unlikely to order from them again. That trickles down into fewer orders for your dispatchers and drivers to deliver, limiting your plans to scale your courier business. That’s why last mile management will be so important to the future of order fulfillment—it’s designed to help couriers minimize the risk for failed deliveries.

“I think there’s a recognition that couriers are not in a position to have less than like a 98% delivery success rate. Last mile management needs to help boost that number even higher. And so how can platforms like Circuit for Teams make sure of this? Because that's the most costly thing, right? When you have a failed delivery attempt, it has to be redone.

Who foots that bill? Where does that come from? You have every stakeholder angry, the retailer, the recipient, the driver, and the courier. It's expensive and annoying for everybody. So I think the whole category will need to move in the direction of solving that problem and creating some wiggle room for these margins, so couriers aren’t stuck managing manual problems that come from stitching all these tools together, having breaks in communication, etc. That's where the innovation needs to go.”

Circuit for Teams is leading the last mile management revolution

What makes the last mile management category so important for the courier industry is that it helps optimize the complete value chain. No matter how much explosive growth there’s been in ecommerce shopping and online orders, the end recipient experience hasn’t really changed that much.

Fundamentally, people just want to know that they can trust that a package will arrive as scheduled. When a date and time are supplied at an online checkout, customers want confidence that those terms will be fulfilled. When they see the quality of a product online, they want to trust that the quality and condition of the delivery matches the advertisement seen online.

Platforms like Circuit for Teams can do a lot to build trust across the entire spectrum of the value chain by helping couriers optimize the last mile of delivery. You’ll have more transparent communications throughout the entire delivery process, which benefits everyone involved. This ensures a great recipient experience, and it will also help satisfy the needs of your drivers, dispatchers, and depot managers in one interconnected sequence.

“We can narrow the gap between the retailers and the couriers so that they're working together less manually, making the relationship less error-prone. The other thing that we can do is create new opportunities for the couriers to monetize what they have to offer. For example, I’m the end customer who buys something, there's an opportunity to say ‘my plans have changed and, tomorrow, I'm only going to be home during these hours…’ If we give couriers the tools to adapt to those requests, and allow the consumer to pay a small fee, then the courier doesn't have to completely scramble to make that delivery happen as they're planning out their routes for the next day. I think that there are many opportunities to help this whole value chain, but it means creating the mechanisms for everything to work together.”

Circuit for Teams gives you the technology to build a last mile management strategy that optimizes your entire courier business. You’ll integrate customer service with data analytics, streamlining technologies, and other innovative solutions to keep up with the growing demand for fast, efficient, and effective delivery services.

Couriers have more opportunities to monetize their services by narrowing the time and complexities between sellers and buyers. Last mile management adds more value to your client relationships—ecommerce sellers and buyers—as well as maintain delivery driver satisfaction rates. This way, you’ll build a whole fleet of reliable delivery services that help your courier business scale for the future.

Circuit for Teams will help couriers create mechanisms to improve the supply chain and provide more rewarding order fulfillment experiences. Sign up for a Circuit for Teams trial today and optimize last mile management for the future of your business.