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.

LEAVE A REPLY

Please enter your comment!
Please enter your name here

RELATED ARTICLES

Subscribe to the Newsletter

Subscribe

* indicates required

RECENT articles

RioCan sees committed retail occupancy climb to 98.8% in Q2

Completed 1.0 million square feet of leasing in the Second Quarter, including 0.9 million square feet of renewals.

Retail Insider “Retail Logistics Report”: Optionality Replaces Lean Efficiency

Canadian retailers are redesigning supply chains for recurring disruption, trading some lean efficiency for diversified sourcing, stronger inventory visibility and more flexible fulfilment networks. Retail Insider’s Q2 2026 report examines the operating and competitive implications of this shift.

SportChek to open Destination Sport store at CF Chinook Centre as Calgary mall accelerates retail transformation

SportChek will consolidate its two CF Chinook Centre locations into a larger Destination Sport concept store in 2027 as the Calgary shopping centre adds new retailers including Shake Shack, Hollister, New Balance, and Wingstop while continuing its retail transformation.

Staples Canada launches annual school supply fundraising campaign supporting United Way, Kiwanis

The campaign, which runs until Sept. 27, allows customers to make donations at checkout in Staples stores across Canada.

New 50% U.S. tariffs add pressure on retailers as trade uncertainty disrupts pricing, inventory and growth: DOSS Report

A new DOSS report finds the latest 50% U.S. tariffs on Canadian goods are intensifying pressure on retailers, forcing companies to rethink pricing, inventory management and supply chains while delaying long-term growth plans.

Fairleigh Dickinson University Opening New Campus at Oakridge Park in Vancouver

Fairleigh Dickinson University will open a 70,000-square-foot Vancouver campus at Oakridge Park, bringing new weekday activity to the mixed-use development.

Fall Toronto Gift + Home Market Opens August 9: Everything Retail Buyers Need to Know

The Fall Toronto Gift + Home Market opens August 9 in Toronto, giving qualified retail buyers four days to discover suppliers, products and holiday merchandise.

Small businesses face mounting financial pressure: Merchant Growth

Ontario restaurants and small businesses are struggling with wildfire smoke, extreme heat, rising utility costs and new U.S. tariff threats. Merchant Growth's latest survey reveals growing financial strain, reduced U.S. trade and cautious consumer spending.

Leyad announces two senior appointments

Experienced leaders from First Capital REIT and Agellan join national real estate platform.

Air Canada and Hyatt Show Where Loyalty Partnerships Are Heading

Air Canada’s Aeroplan and World of Hyatt have announced a comprehensive loyalty partnership, offering members new ways to earn and redeem points. The partnership enables more integrated travel experiences across both platforms, enhancing customer loyalty.

Second Cup Appoints Joe Walker as CEO to Lead International Franchise Growth

Canadian-founded Second Cup has named Joe Walker CEO of its international franchise business as the company looks to expand its global footprint, with the Middle East serving as a strategic growth hub.

Daily Synopsis: Jul 31, 2026

Sleep Country completes Sleep Number acquisition, ranking Canada's grocery loyalty programs, Atlantic salmon prices jump in July, Giant Tiger shutting downtown Winnipeg store, Quebec gov't extends hours for 'erotic' stores, and other news.

What Couche-Tard Could Gain from Żabka Beyond 13,000 Stores

Couche-Tard’s Żabka acquisition adds more than 13,000 stores, while giving the Canadian retailer access to advanced convenience technology, compact formats and digital capabilities. Retail strategist Carl Boutet says the Polish convenience retailer’s compact stores, autonomous technology and digital capabilities could make the US$8.6-billion acquisition particularly significant for Couche-Tard’s global business.

Kate Spade New York names Tyla global brand ambassador as artist fronts fall campaign (Video)

The partnership will see Tyla featured in brand campaigns, social media content and in-store advertising, beginning with the fall campaign and continuing through additional promotional initiatives the company plans to unveil later this summer.

Casavogue Extends Summer Sale with Savings of Up to 50 Percent

Casavogue has extended its Summer Sale for a limited time, with savings of up to 50% across all categories and up to 60% on select liquidation pieces.

Couche-Tard reaches deal to acquire controlling stake in Poland’s Żabka Group in transaction valued at US$8.6 billion

If completed, the deal would be the largest acquisition in Couche-Tard's history.

Home Depot restructures leadership to streamline operations and accelerate growth strategy

At the end of the first quarter of fiscal 2026, the company operated 2,361 retail stores and more than 1,280 SRS locations across the United States, Puerto Rico, the U.S. Virgin Islands, Guam, all 10 Canadian provinces and Mexico.

Sobeys surpasses food waste reduction target five years ahead of UN goal

Empire said the food loss and waste reduction included 40.6 million pounds of food donated across Canada during fiscal 2026, while another 5.2 million pounds of food was diverted through the FoodHero program.

Employment in retail continues to increase: Statistics Canada

The monthly increase in May was concentrated in food and beverage retailers (+5,100; +1.0%), motor vehicle and parts dealers (+1,100; +0.5%) and general merchandise retailers (+1,000; +0.4%).

Loblaw Plans About 75 Store Openings in 2027 as Discount Expansion Continues

Loblaw expects to open about 75 stores in 2027 as it expands No Frills, Maxi and its pharmacy network amid sustained demand for discount grocery shopping.