Have you ever wondered why a parcel can travel hundreds of kilometers across provinces at a very low cost, yet the final stretch of just a few kilometers to the customer's doorstep turns out to be the most expensive? This is a classic puzzle in the logistics industry that eats away at the profits of online sellers every single day, often without them even realizing it.
If you sell on Shopee, Lazada, or TikTok Shop and feel like your profit per order is 'disappearing' into shipping fees, this article will explain it clearly.
What Is Last-Mile Delivery
Last-Mile Delivery is the final step of the shipping process, from the moment a parcel leaves the distribution center or local hub until it reaches the recipient at the destination, whether that's a house, a condo, or an office.
Simply put, it's the 'hub-to-doorstep' stretch. Even though it's the shortest distance in the entire process, it's actually the segment that is the most complex and carries the highest cost.
Let's look at the overall chain of delivering a single parcel, such as a phone case with SKU code PH-CASE-021:
- First Mile: Picking up goods from the seller/warehouse into the system
- Middle Mile: Long-haul transport between sorting centers across provinces
- Last Mile: Distributing from the local hub to the customer's front door
Why Is the Last Mile the Most Expensive
Many people mistakenly believe that cost is directly proportional to distance, but in reality the cost structure of the last mile comes more from 'dispersion' than from distance. Let's look at the 5 main reasons.
1. Dispersion of Delivery Points (Density Problem)
The Middle Mile carries thousands of parcels in a single truck running a straight route, so the cost per item is very low. But the Last Mile has to deliver house by house, to different sois, in different directions. One truck might only deliver a few hundred items per day, so the cost per item soars.
2. Driver Wages and Time
Every delivery point requires a person to park, walk, ring the bell, take a photo, and confirm. The time spent per point multiplied by the enormous number of parcels becomes a huge labor cost that is hard to reduce.
3. Failed Delivery
The customer isn't home, the address is wrong, the phone is unreachable. Every failed delivery means a second redelivery attempt, which is equivalent to paying the last-mile cost all over again without any additional revenue.
4. Fuel Costs and Traffic Conditions
Especially in big cities, traffic jams, hard-to-find parking, and high-rise buildings where you have to leave parcels with the management office all consume more time and fuel than expected.
5. Expectations Around Speed
In 2026, customers increasingly expect goods to arrive faster. Next-day or express delivery forces delivery cycles to become more frequent, so the cost per cycle rises accordingly.
Comparing the Cost Structure of Each Segment
| Delivery Segment | Nature of Work | Cost Proportion |
|---|---|---|
| First Mile | Collecting into the system | Low |
| Middle Mile | Bulk transport on straight routes | Medium |
| Last Mile | Distributing house by house | Highest |
Generally in the industry, the last-mile cost tends to be the largest proportion of total logistics costs. This is why managing this segment efficiently is so important to your profit.
How Can Online Sellers Reduce Last-Mile Costs
Even if you don't own the delivery trucks, you can control the upstream factors that affect the last mile:
- Collect complete addresses: Reduce the failed-delivery rate with clear phone numbers and precise location pins
- Distribute stock close to customers: Placing goods in multiple warehouses across different regions makes parcels start out closer to their destination
- Pack to standard: Appropriate size and weight help your parcels fit cost-effectively into delivery cycles
- Process orders quickly: The sooner goods leave the warehouse, the better you can catch delivery cycles and reduce express shipping fees
This is where a fulfillment system like Flash Fulfillment naturally comes in to help. When your goods are stored in warehouses that are distributed by region and connected directly to the delivery network, orders are picked, packed, and sent to the hub closest to the customer automatically, helping shorten the last mile and reduce the chance of failed delivery.
Especially during major campaigns or sale festivals when orders surge several times over, a system that pre-distributes stock helps prevent the last mile from becoming a bottleneck that delays deliveries and ruins reviews.
Key Takeaways
- Last-mile delivery is the segment from the local hub to the customer's hands — the shortest but the most expensive
- The cost is high because of delivery-point dispersion, labor, failed deliveries, and the speed customers expect
- Sellers can reduce costs by collecting complete addresses, distributing stock, and processing orders quickly
- A fulfillment system with distributed warehouses helps shorten the last mile and protect your profit
If you want to understand how regional distributed warehousing and fulfillment can reduce your store's last-mile costs, try consulting the Flash Fulfillment team to plan a stock distribution that suits your customer base.
Frequently Asked Questions (FAQ)
How is last-mile delivery different from general delivery
General delivery covers every segment, but the last mile specifically focuses on the final stretch from the local hub to the recipient's hands, which is the most dispersed segment with the highest cost per item.
Why is short-distance delivery more expensive than long-distance
Because long-distance transport carries a large number of parcels in a single trip, so the average cost per item is low. Short-distance delivery, on the other hand, has to deliver point by point, using far more people and time per item.
Can small sellers reduce last-mile costs
Yes, they can. Even without your own delivery vehicles, you can control upstream factors, such as collecting accurate addresses, packing to standard, processing orders quickly, and using warehouses distributed close to customers.
How does fulfillment help with the last mile
A fulfillment system with warehouses distributed by region makes parcels start out closer to their destination, reaching the nearest hub faster, reducing the last-mile distance and the chance of failed delivery.
