Last Mile Delivery Market

Market Overview

The global last-mile delivery market size was valued at USD 146.81 billion in 2023 and is projected to reach a value of USD 340.56 billion by 2032, registering a CAGR of 9.8% during the forecast period (2024-2032). The last-mile delivery market share increase during the forecast period is related to evolving consumer behavior toward online shopping, technological advancements, changing market dynamics, and the need to meet consumers' expectations for fast and reliable delivery services.

Last-mile delivery is the last connection in the e-commerce supply chain that physically links customers and brands through the purchase's delivery. Products are delivered to a customer's residence, place of business, or package locker from a warehouse or distribution center. The last-mile delivery is the most costly and complicated portion of the product's trip for the shipper. The final mile delivery is the sole point of contact between a consumer and a brand. The new storefront is the front door. While providing customers with what they desire is crucial, providing a seamless order-to-delivery experience has become the global retail industry's holy grail. It is essential to provide customers with a top-notch brand experience and maintain brand loyalty. 

The aim of outstanding last-mile delivery is to enable every delivery to reach its destination every time, on time, accurately, efficiently, and sustainably. Last-mile delivery entails route optimization, timely and efficient delivery, transparent communication with customers, convenient delivery options, professionalism, secure packaging, handling returns, correct address verification, and consideration of sustainability and environmental impact.Due to growing customer expectations for free and quick shipment, inefficiencies in the supply chain, and the requirement to strike a balance between cost-effectiveness and service quality, businesses frequently need help with last-mile delivery. Companies can use technological solutions, such as last-mile delivery platforms, to solve these issues by streamlining operations, increasing productivity, and enhancing customer satisfaction.

Top 4 Key Highlights

• By service type, B2C dominates the global market.
• Drones hold a significant share of the market by Technology,
• By Application, E-Commerce leads the market.
• Same-day delivery leads the market by delivery time segment.

Market Dynamics

Market Drivers

Increased Sales and Revenue for Businesses

Last-mile delivery services are essential for drawing in and keeping consumers, eventually boosting a company's earnings. Businesses can differentiate themselves in the competitive market and satisfy the increasing demand for quick and convenient delivery services by providing same-day or next-day delivery choices. In addition to meeting customer expectations, this improved customer experience fosters brand loyalty and trust, which promotes recurring business and long-term connections with the company. Effective last-mile delivery services, with same-day or next-day choices available, can be strategically implemented by organizations to improve customer happiness, increase sales, and increase revenue. In today's changing market environment, businesses can gain a competitive edge, foster client loyalty, and eventually achieve sustainable growth by concentrating on delivering extraordinary delivery experiences.

Growing Popularity of e-Commerce Platforms Enhancing Delivery Services

The last few years saw an impeccable growth of online shopping portals, as people were curious about how it works. Later, when consumers became habitual with the online shopping model through various online portals and e-commerce platforms, they needed to be more confident regarding the delivery of their purchased items. Earlier, the estimated time for delivering an online purchased product would take at least 7-8 working days. However, with time, the e-commerce platforms enhanced the online shopping model and took the estimated delivery time to as close as same-day delivery in some cases. Nowadays, an ideal delivery time for a random product purchased on an e-commerce platform is 3-4 working days, which has taken the online shopping consumer number to an all-time high. This led to a massive demand for fast delivery services, as the delivery time would impact the customer retention of an online selling platform. This is where the last mile delivery market comes into play, as the logistics and shipping department plays a vital role in the growth of such e-Commerce platforms.

Market Restraints

Risk of Failed Delivery

The challenge delivery staff may encounter when delivering packages is the hidden cost of last-mile delivery. Delivery drivers frequently drop packages at various places, such as apartments, P.O. boxes, and homes with lengthy driveways. This makes the process slower and leaves more space for error. About 75% of customers report experiencing delivery issues when shopping online, which negatively affects the whole shopping experience. Deliveries that are missed, made late, or lost may be pretty expensive for businesses, not simply in terms of reputation. Delivery delays, product exchanges, and consumer refunds may quickly mount up and eat away at e-commerce profit margins.

Elevated Carbon Emissions

One of the most carbon-intensive phases of e-commerce fulfillment is the last mile of delivery, caused by repeated stopping, idling, and traffic congestion that lowers fuel efficiency. Although switching to more environmentally friendly modes of transportation, like electric delivery trucks or smaller trucks, is becoming more popular, this directly impacts the cost of the final delivery leg.

Market Opportunity

Demand for Speedy Deliveries

The growing customer demand for prompt deliveries is significantly shaping the landscape of last mile delivery services. Today's Consumers anticipate quick and effective delivery choices that fit their hectic schedules and need immediate satisfaction. Companies are pressured to adapt and provide express delivery services to satisfy their customers' changing needs due to the increased expectation for prompt deliveries. Businesses that can effectively offer expedited delivery choices without sacrificing efficiency and cost-effectiveness will be in a solid position to satisfy modern consumers' needs and emerge victorious in the ever-changing e-commerce market.

Regional Analysis

North America Dominates the Global Market

North America last mile delivery market is expected to expand at a CAGR of 10% during the forecast period. It has a well-developed e-commerce ecosystem, which drives the demand for quick and effective last-mile delivery solutions. The relatively well-developed logistics infrastructure and established delivery networks allow for efficient last-mile operations. North American consumers want fast and convenient delivery alternatives, putting pressure on corporations to innovate in last-mile solutions. Key participants include Amazon, FedEx, UPS, and regional players. 

Asia-Pacific is the fastest-growing market with diverse solutions. The world's fastest-growing e-commerce business has created a significant need for last-mile delivery solutions. Dense urban surroundings create obstacles and opportunities for innovative solutions such as two-wheeler delivery and micro-fulfillment centers. High mobile penetration and digital payment methods result in a smooth last-mile delivery experience. Key participants include Alibaba, JD.com, and regional players with distinctive delivery models (for example, scooter deliveries in Southeast Asia). 

Europe strives to strike a balance between efficiency and sustainability. European consumers are becoming increasingly worried about the environmental impact of delivery, which is driving companies to develop sustainable last-mile solutions. Similar to North America, traffic congestion can be a challenge for last-mile deliveries in European cities. Stricter restrictions and labor laws for delivery professionals may impact European delivery prices and models. Key businesses include DHL, Deutsche Post, DPD, and regional players focused on environmental initiatives. 

Overall, the worldwide last-mile delivery business is dynamic, with regional differences in infrastructure, consumer expectations, and growth factors. As technology progresses and e-commerce grows, new last-mile solutions will be critical for businesses to win the fight for consumer loyalty. 

Segmental Analysis

The global last-mile delivery market is segmented based on Service type, technology, application, and delivery time. 

The market is further segmented by Service type into B2C (Business-to-Consumer), B2B (Business-to-Business), and C2C (Customer-to-Customer). The B2C segment is especially significant due to the growth of e-commerce and rising customer expectations for efficient and dependable delivery services. In B2C (Business-to-Consumer), products are delivered straight from companies to customers' residences or specified locations for pickup. The need for quick and easy delivery services drives this substantial portion of e-commerce. Transporting goods from one firm to another is the main emphasis of B2B last-mile delivery. Deliveries to offices, retail establishments, and other business entities may fall under this category. C2C (Customer-to-Customer) sector comprises services that make it easier for people to send items to one another; social media platforms or online marketplaces frequently back these services.

The B2B segment in the last mile delivery market is experiencing significant growth, driven by the surge in e-commerce and the increasing demand for efficient logistics solutions. A B2B delivery system refers to the logistics network and processes used by businesses to transport goods and services from one business to another. Key players are forming strategic partnerships to streamline supply chains and reduce costs. Overall, the B2B segment is poised for continued expansion as digital transformation and consumer expectations evolve.

The C2C segment, driven by peer-to-peer transactions and facilitated by digital platforms like OLX, Amazon, eBay is growing due to increasing consumer demand for fast, reliable delivery services. Market size for this segment has expanded, driven by e-commerce growth, urbanization, and consumer expectations for quick delivery. These technological and logistic solution innovations have been influencing the competitive landscape and have further aided growth.

The last mile delivery market is further segmented by Technology into Autonomous Vehicles, Non-Autonomous Vehicles, and drones. Autonomous Vehicles are self-driving cars that transport cargo without human involvement. They are anticipated to boost productivity and save delivery expenses. Conventional delivery vans that need human drivers are classified as non-autonomous vehicles. Even though they now control the market, more independent alternatives are becoming more popular. Drones are uncrewed aerial aircraft that are used to transport little parcels. They are a promising technology for last-mile delivery in the future since they can reach difficult-to-reach places and offer quick delivery timeframes. The desire to lower expenses, increase delivery speed, and satisfy the rising customer demand for on-time deliveries drives technological advancements. Particularly about drones, a substantial increase is anticipated in the upcoming years.

The growth in Non-Autonomous Vehicles is driven by the increase in demand in e-commerce and the increasing demand for efficient and cost-effective delivery solutions. Non-autonomous delivery vehicles in particular, electric bikes, scooters, and traditional vans are providing flexibility at an affordable cost in urban areas with high delivery density. However, challenges such as regulatory hurdles and infrastructure limitations still need to be addressed to fully realize the potential of non-autonomous vehicles in last-mile delivery.

The last-mile delivery drone market has the biggest growth area of the whole global drone market, impelled by improved drone technology and accelerated growth in e-commerce. Leading companies like Amazon, UPS, and Wing charge into these last miles drone delivery by running pilot programs to expand their delivery networks. The integration of drones into last-mile delivery represents a transformative shift in logistics and supply chain management.

The last mile delivery market is further segmented by Application into E-commerce, FMCG (Fast-Moving Consumer Goods), and others. The e-commerce segment of the last mile delivery market has experienced rapid growth due to increased online shopping. It is all about the final delivery stage of goods right up to the customer's doorstep, which is critical to customer satisfaction. Key players such as Amazon, UPS, and FedEx dominate the industry with effective logistics and technology integration. Innovations like drones and autonomous vehicles can thus be expected to shape future solutions by giving sped-up efficiency. Technological change and consumer demand characterize the ongoing development of the e-commerce last mile delivery market.

The Last Mile Delivery market is further segmented by Delivery time into Regular and Same-Day Delivery. Companies in the Regular Delivery segment focus on improvement in customer satisfaction through timely and accurate deliveries. In this part, technological improvements and route optimization drive major factors toward efficiency and cost reduction. The demand for sustainable and eco-friendly delivery options also impacts this market segment. Delivery services include grocery deliveries, meal kits, subscription boxes, and other recurring shipment needs. 

Same-day delivery is a quicker alternative where clients receive their things the same day they place their orders. In contrast, Regular Delivery usually refers to the primary delivery option without expedited service. Businesses can provide their clients with flexible solutions that satisfy both immediacy and cost-effectiveness because of this segmentation. Same-day delivery will lead the Last Mile Delivery market during the forecast year. Due to its many advantages—such as higher customer satisfaction, reduced shipping costs, fewer transportation expenses, increased efficiency, and the growth of devoted clientele—this market is becoming increasingly well-known. Same-day delivery is getting increasingly popular among customers as their need for speedier delivery alternatives has changed.

Impact of covid-19

Since the outbreak of the Covid-19 pandemic, the logistics companies have been on the front line with fully-stocked warehouses and ongoing trade. However, the global supply chain disruption due to the lockdown imposed in the majority of the world further narrowed down the merchandise trade growth in the said logistics segment. But one thing which was notably remarkable in this Covid outbreak was the immense growth of the e-Commerce sector which introduced the consumers to digital business models and smart and safe logistics parameters. There has been a significant rise in the instant or same-day delivery patterns in online purchases with the increase in Covid-19 cases worldwide. Consumers feel safe ordering things online and getting them delivered to their doorstep without visiting a crowded place. In the meantime, follow the Covid guidelines given by the governing authorities.

Some reports say that the e-Commerce sales have grown by 30% in the first and second quadrant of 2020, during which the Covid outbreak was humongous. The said period saw a significant rise in daily parcels globally which reached 9 million parcels a day from 5.3 million parcels a day in the pre-pandemic times. The only positive thing the covid-19 pandemic did was to the e-Commerce industry. They generated a lot of revenue through the online selling portals and gained the consumers' trust by delivering their goods safely to their doorstep.

The global market of last mile delivery has seen a noteworthy increase in revenue with a sudden rise in delivery services during the pandemic. Many key players in the industry are planning to improvise and connect to more customers through safe and efficient delivery services. Even after the Covid-19 outbreak, the online sales and e-Commerce platforms are expected to keep their rising momentum in the global last mile delivery market growth with the increase in the online shopping trends and safe and sound fast delivery options.

Recent Developments

• March 2024 – Last-mile delivery was used to increase vaccine uptake in Sierra Leone, an intervention that combines community mobilization with the last-mile delivery of medical experts and medication to the most remote locations.
• November 2023- Shipyaari and India Post announced a strategic collaboration to transform Last-Mile Delivery in India. Shipyaari, a leading SaaS-based logistics solutions enabler, has engaged into a ground-breaking agreement with India Post, the country's top postal service provider, in a strategic move that is expected to drastically alter the last-mile operational landscape in India. With this game-changing partnership, Shipyaari's reach has significantly increased, reaching even the most remote regions of the nation.