Gartner for Supply Chain Leaders

3 Logistics Transformations
Needed for Better Last-Mile
Delivery
B2C Last-Mile Is Constantly
Evolving
Growth of Retail Customer Expectations Over the
Past Decade

Illustrative B2C Customers

Amazon Prime Walmart and Target

Pantry launches add “+” programs

More than
80% of retailers
offer BOPIS
Customer Expectations

Instacart
founded Online shopping
surges

Constant rate of retail last-mile innovations

2012 2014 2016 2018 2020 2022

Last-mile innovations designed for the retail customer are frequent and often make the
news — either in response to customer expectations or for competitive advantage.

BOPIS = buy online, pickup in store

Source: Gartner

2
Customer Expectations Are
Catching Up in B2B
Growth of Business Customer Expectations Over the
Past Decade

Illustrative B2C Customers

B2B Customers
Customer Expectations

Sudden acceleration of
business last-mile expectations

2012 2014 2016 2018 2020 2022

Customer expectations of B2B companies spiked during the pandemic. For some, this was
because of the critical nature of B2B products, but for others, it was because of the sudden
merging of their personal and business shopping habits due to many working at home.

Source: Gartner

3
 Last-Mile Expectations
Increased Most in B2B
Elevated Customer Expectations

Percentage of Respondents Selecting “Agree” or “Completely Agree”

B2B Customers B2C Customers

80%

66%
61%
58%

50%
48%
46%

40% 36% 36%

0%
Delivery Speed Real-Time Real-Time Delivery
and Options Notifications Modifications Sustainability

n = 1,606 respondents (900 B2C, 706 B2B)

Source: 2022 Gartner Supply Chain Customer Expectations Survey; Client interviews
Q: Please rate your level of agreement or disagreement with the following statement: “Expectations for ‘xxxx’ have increased over the past 12 months.”

4
B2B Last-Mile Not Delivering
on New Expectations
Indicators of Failing Performance

Declining Service

38% of organizations have seen their on-time delivery rate

worsen over the past two years.

Rising Costs

69% of organizations have seen their last-mile shipping cost per

mile worsen over the past two years.

Frustrated Customers

62% of organizations have seen their customer complaint rate

related to last-mile flatline or worsen over the past two years.*

Despite increasing expectations and promises, B2B organizations are struggling to maintain service
at higher prices — and customers are noticing.

n = 45 to 50 last-mile organizations; excludes “Do Not Track”

Source: 2023 Gartner Last-Mile Operations and Customer Expectations Survey
Q: Please indicate whether the following last-mile metrics at your organization have improved or worsened within the past 24 months.
* Includes “Stayed the Same” to reflect elevated complaints during pandemic supply chain disruptions

5
The Goal: Meet Customers’
Last-Mile Expectations With
Constraints
Current and Goal State for Last-Mile Organizations

Current State

B2B Logistics is struggling to meet growing customer

expectations for last-mile delivery.

Goal State

B2B Logistics consistently meets customers’ last-mile

expectations despite organizational constraints (costs,
technology limitations, etc.).

Source: Gartner

6
The Path Forward:
Embrace the Value Potential
of Last-Mile Delivery
Current and Recommended Approach to Last-Mile
Delivery

Current Approach

Thinking last-mile delivery is the end of a (long or short)

customer-business relationship, your goal is to simply get
people their stuff.

Recommended Approach

Understanding customers expect excellence across many

aspects of last mile (not just speed), you treat delivery as a
key driver of customer satisfaction, recommendation and
repurchase decisions.

Source: Gartner

7
Last-Mile Is More Important
Than You Might Think
Maximum Impact of B2B Last-Mile and Product
Factors on Customer and Business Outcomes

Product Last Mile

70% 68%

62% Customers are 21% more

likely to repurchase if they’re
satisfied with just the last mile.

39%

33%
35%
27%

21%

0%
Customer Satisfaction Likelihood to Recommend Repurchase Decision

n = 706 B2B purchasers

Source: 2022 Gartner Supply Chain Customer Expectations Survey
Note: Maximum impact shows the percent increase in the customer and business outcomes in association with moving
from the 25th to the 75th percentile performance in product and last-mile factors.

8
 Speed Isn’t the Only Last-Mile
Metric to Focus On
Percentage of High Satisfaction for Last-Mile Factors

Sustainability Packaging Flexibility Speed

100%

81% 81% 83%

76% 75% 75% 73%
73% 74% 74% 73% 73%

50%

0%
High Likelihood to High Likelihood to High Satisfaction
Repurchase Recommend (n = 425*)
(n = 256*) (n = 313*)

*Average number of B2B purchasers

Source: 2022 Gartner Supply Chain Customer Expectations Survey
Note: Represents respondents selecting “Agree” or “Strongly Agree” for outcomes and all last-mile factors

9
Logistics’ Last-Mile
Investments Are Misplaced
Last-Mile Investments Over the Past 24 Months

Percentage of Organization Placing

Each Activity in Their Top 3
Most organizations are
investing in more capacity or
efficiency around operations.

3PL Coordination 52%

Internal Coordination 46%

Additional Capacity (3PL or
44%
In-House)
Technology to Automate 42%
However, relatively
Metrics and KPIs 38% few organizations
are investing in
Customer Understanding 31%
understanding evolving
Refining Internal Process 15% customer needs (31%),
much less meeting
Technology to Innovate 10% those needs (8%).
Investing in Nontraditional
8%
Value
Other 8%

Rewards Program for 3PLs 4%

Rewards Program for Staff 2%

0% 30% 60%

n = 51 last-mile organizations
Source: 2023 Gartner Last-Mile Operations and Customer Expectations Survey
Q: Over the past 24 months, where has your logistics function invested the most effort to improve your last-mile operations?

10
3 Logistics Transformations
Needed for Better Last-Mile
Delivery

Reshape mindsets: Last mile is no longer an

afterthought — it is a critical step in maintaining
1 a good customer relationship and a driver of
future revenue.

Revise your last-mile investments: Organizations

2 must invest more in customer understanding

initiatives and potentially reorganize their operating
structure around those initiatives.

Retrain 3PLs: 3PLs are essential to last-mile

3 operations, but we must make sure our primary
focus (the customer) is their primary focus.

Source: Gartner

11
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