Last-Mile Delivery Most Inefficient Part of Retail Supply Chain in Canada: Experts

Date:

Share post:

Last-mile delivery is the most inefficient process for more than half of North American Transportation & Logistics companies, says a new global report commissioned by SOTI in partnership with Arlington Research.

STAKES HAVE NEVER BEEN HIGHER FOR TRANSPORTATION AND LOGISTICS COMPANIES AS CONSUMER HABITS SHIFT

In an era where e-commerce is exploding and consumers are expecting rapid, often same-day deliveries, the report titled The Last Mile Sprint: State of Mobility in Transportation and Logistics, said 78 percent of companies in Canada in Transportation & Logistics say last-mile delivery is the most inefficient process of the entire supply chain. In comparison, 59 percent of those companies in the U.S. felt that way.

“The stakes have never been higher for transportation and logistics companies in North America as consumers increasingly embrace a delivery culture,” said Shash Anand, Vice President of Product Strategy, SOTI, the world’s most trusted provider of mobile and IoT management solutions, with more than 17,000 enterprise customers and millions of devices managed worldwide.

“By implementing a robust mobile-first strategy, companies will not only be able to provide better customer experiences, but will increase speed, minimize costs, ensure transparency in the delivery channel for the customer and end consumer, and edge out the competition.

“Ensuring your technology is constantly updated and having an integrated mobility and IoT management platform in place is an effective operations strategy that helps minimize disruptions to your business and maintain high levels of customer satisfaction.”

Companies such as ShipperBee have launched in an Uber-like way, though ShipperBee is currently operating in the Greater Toronto Area only though it has plans to expand.

Gary Newbury, a retail supply chain strategist and serial transformation executive, said he agreed with the survey’s main point; the last-mile delivery is the most inefficient process in the retail supply chain. And Canadians tended to be much more aware of the gaps.

“The volume of online versus total retail in Canada has historically been below five percent (up to COVID-19). Much of the approach retailers have taken has been focused on the ‘marketing’ side of the digital business stream. As a result the assumption for many retailers has been ‘it’s just a small change and so we can bolt it onto our existing distribution network’,” he said. “And to a degree, they were able to think this is all they needed to do with relatively low/incidental volumes. Retailers brought in digital marketing experts, but not digital fulfillment experts. To cover for this knowledge gap they tended to either try and ‘skunk work’, a fulfillment process internally (bending process and systems to accommodate), or relied on a third party logistics service to do the heavy lifting, relying on their tech platform for ‘visibility’ of shipping through to the doorstep. Often, the retailer may have found their tech platform was more geared towards B2B tracking, rather than B2C.

“Approaching a key future line of revenue in this ad hoc way has exposed many retailers to an unprofitable business stream, and as they attempted to scale this, the losses just got worse, the customer service often suffered, through lack of transparency of where their order was in the fulfillment process. For many consumers, up to COVID-19, it has been a hit and miss process.

“The reason why I think they got this wrong is retailers’ distribution networks are designed to move mass merchandising from Point A (a supplier) to Point B (a store) via a distribution centre. Typically, the lowest unit that is shipped in this way is a case. Online is very different, it is all about individual pieces, and often a localized mixed, being ordered electronically, with an expectation of speed, to either the store (for pick up) or to a point of convenience (such as a residential address).”

COVID—19 HAS EXPOSED THE RETAILERS WHO WERE SLEEPING ON INITIATIVES SUCH AS CLICK AND COLLECT

Newbury said, “the eComm supply chain design, for many retailers, needs a deep rethink. COVID-19 has exposed many retailers — missing the boat by not having a click and collect or home delivery service, or having services which did not scale, and where they did, caused the retailer to lose more money than staying shut”.

“It is the most labour intensive and resource consumptive part of their proposition, but rather than just have small cube, high margin products online with a scheduled service for their delivery (and restricted geographical coverage), many retailers, being under-informed about the cost profile of fulfillment of online orders, unfortunately followed the trend of other retailers and felt it was something they had to do to keep their proposition competitive,” he said.

“The rethink is to look at the stores as potential inventory distribution points, consider automation, and, currently, look into using Micro Fulfillment Centre methodology. This is not the end game, but it’s a start to bring control and predictability to the outrageous costs of manual picking in the DC and the costs of shipping lots of small individually packed orders across Canada, of often low margin products.

“The rethink must return to a re-evaluation of the retailing proposition and what is required to be presented in store and that which is presented online. Often retailers, desperate for extra sales extend the online assortment which serves to compound complexity and drive high costs in serving customers.”

Newbury said there are five or six key areas for retailers to address before they can turn a profit on online orders:

  1. Financial record-keeping can hide the end to end costs of fulfilling online orders – when there is a spike in demand, extra costs are surfaced in fulfilling demand;

  2. SKU (Stock Keeping Unit) proliferation – retailers must look carefully at what their overall proposition is and how this is presented “in store” and online. Often online (extended aisles) can cause significant complexity and cost. Consumers are very savvy and, within a click, they can pick off all the low margin items and switch to other retailers (i.e. they will split their baskets to maximize their shopping dollars/value);

  3. High customer acquisition costs compared to life-time value (e.g. Wayfair);

  4. On demand fulfillment versus scheduled fulfillment – the choice of strategy can have a big impact on capacity, customer satisfaction and costs – retailers need to think carefully how best to structure their fulfillment processes to best optimize their proposition;

  5. Free delivery, porch piracy and “hassle free” returns – there’s not such a thing as a free lunch in business, nor is there in the virtual world; and

  6. “I mindfully add a sixth component in the sense that retailers know stores, what they know less of is digital. Approaching online as a bolt on is the worst of all worlds. Using a case/pallet distribution network for singles fulfillment will stop retailers growing online business, profitably. It looks good on paper, but the execution can be seriously profit draining.”

Some other key findings from the SOTI research include:

  • 82 percent of respondents in the U.S. and 88 percent in Canada agreed that it is critical for T&L companies to ensure a mobile-first strategy around last-mile delivery. A mobile-first strategy is defined as viewing smartphones, tablets and task-specific apps as the primary tools for getting work done;

  • Companies know that a mobile-first strategy for last-mile delivery can transform their business operations. 74 percent in the U.S. and 80 percent in Canada agree that their organization would benefit, or have already benefited, from an effective mobile-first strategy for last-mile delivery. 49 percent of respondents in North America with a mobile-first strategy in place for last-mile delivery said that it has effectively reduced their operational costs;

  • In North America, more than half (58 percent) of T&L professionals said a mobile-first strategy has enabled them to gain visibility into critical aspects of their supply chain; and

  • 49 percent of T&L companies globally said their technology is outdated. In Canada, nearly 68 percent of T&L companies indicated their technology is outdated, and 41 percent in the U.S.

RELATED ARTICLES

Subscribe to the Newsletter

Subscribe

* indicates required

RECENT articles

Canadian Retailers Push Sustainability Deeper Into Operations as Business Case Evolves

Canadian retailers are integrating sustainability into stores, logistics, packaging, resale and supply chains as regulation and business economics evolve.

Daily Synopsis: August 24, 2026

Canadians still head to malls, Ilia Beauty grows out of Vancouver roots, Reformation opening at CF Toronto Eaton Centre Sept. 1, Toronto camera store closing after 25 years, and other news.

Casavogue Highlights Made-in-Italy Design from Calligaris

Casavogue showcases Calligaris, the Italian furniture brand known for refined extendable dining tables, elegant chairs and Made-in-Italy craftsmanship.

Westcliff acquires Kingsway Mall in Edmonton

On a 41.8-acre site, the 880,049-square-foot shopping centre features more than 160 stores and services.

Walmart+ Takes Bigger Role as Walmart Expands Canadian Digital Strategy

Walmart is expanding its Canadian digital strategy as Walmart+ membership, e-commerce, Marketplace and fulfillment investments gain importance.

Ottawa’s Tariff Retaliation Risks Raising Grocery Prices for Canadians

Sylvain Charlebois warns that Canadian counter-tariffs on U.S. food, ingredients and agricultural inputs could raise grocery prices and increase costs across the food supply chain.

AI’s Growth Reveals a Hidden $381.3 Million Problem for Retail Brands: Outdated and Unmanaged Enterprise Content

88% of retail executives say high-quality, well-maintained digital content will be more important to their business success over the next two years than it has been in the past

AI Is Shaping Back-to-School Shopping for Canadian Consumers: Accenture

AI is influencing how Canadians plan back-to-school purchases, with parents using AI tools to compare prices, build shopping lists and find products.

Canadian, U.S. and Mexican franchise groups sign trilateral agreement

The agreement is intended to help franchise businesses better understand and enter each other's markets, including through greater information sharing on regulations, intellectual property, costs, supply chains, consumers and market-entry strategies.

From The Desk: Strategic Adaptation and Growth Define Canadian Retail in August 2026

Canadian retail shows resilience and strategic growth with expansions, AI-driven transformations, and evolving consumer behaviours amid economic challenges.

Daily Synopsis: August 21, 2026

FreschCo opens 1st Atlantic stores, Apple stores prepare for product expansion, Lordco expands in Western Canada, thrift stores deal with excess donations, Columbia House Records shuting down, and other news.

Canada/U.S. trade talk collapse to lead to immediate and significant impact on small business: CFIB

"A full 40% of small Canadian exporters will be directly hit by these tariffs and nearly one-third expect their revenues will drop by 50% or more as a result."

Joe Mimran Outlines Product and Global Growth Plans for Roots

Joe Mimran discusses plans for Roots product, stores and U.S. growth as Marquee Brands and Roots CEO Meghan Roach point to significant international expansion.

Shoppa.ca launches online marketplace for Canadian-owned businesses

The marketplace includes businesses from across the country and products in categories including beauty and skincare, apparel, home and living, pets, kids and baby, food and wellness.

Canadian retail sales surpass $74 billion in June: Statistics Canada

Core retail sales rose 1.2% in June, posting their second consecutive monthly gain.

Good Earth Coffeehouse opens new location at Indigo Metrotown in Burnaby

The opening adds another location to Good Earth's network of more than 50 coffeehouses across Canada.

TJX Says Winners, Marshalls and HomeSense Are Gaining Major Market Share in Canada

TJX says Winners, Marshalls and HomeSense are gaining major market share in Canada as customer transactions rise and the retailer expands in prominent malls and downtown locations.

Home Depot Canada Sales Accelerate Despite Challenging Housing Market

Home Depot Canada outperformed the broader company in Q2 as comparable sales, transactions and unit growth improved despite a subdued housing market.

AutoCanada Sees Canadian Auto Market Remaining Challenging

AutoCanada says affordability pressures continue to weigh on Canadian vehicle buyers as it improves dealerships, used sales and collision operations.

Canadian sponsorship spending reaches $4.7B as industry study marks 20 years

Professional sport continues to account for the largest and most significant sponsorships, but the study found that brands are spreading spending across a broader range of categories.