Solving the last mile comes down to meeting an always-on expectation, raising the stakes for carriers and retailers alike as they race to deliver speed at scale.
Nearly 65 percent of U.S. consumers say two-to-three-day delivery should be the standard for online orders, according to a November survey of 1,000 shoppers conducted by logistics technology firm Locus.
Coming off the holiday season, supply chains are expected to (literally) put their foot on the gas: 51 percent of these shoppers expected holiday shipping to be as fast or faster than normal, signaling a limited tolerance for seasonal delays.
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The top players in last-mile delivery brought their “A” game during the holiday, answering the call of the more demanding consumer.
According to the U.S. Postal Service (USPS), 16 billion mail items and packages were delivered within 2.5 days on average between Nov. 15 and Jan. 9, compared to 2.8 days during the same period last year.
On-time delivery scores were higher virtually across the board, “with the best scores being in its last-mile destination delivery units,” the government agency said. USPS operates more than 18,000 of these locations nationwide, which serve as the final stop before packages gets delivered to homes and businesses.
USPS, FedEx and UPS all saw improvements in on-time delivery for parcels shipped during December despite a shorter peak period than the year prior, alongside a 5 percent increase in total volumes delivered, according to data from shipping visibility software and consulting firm ShipMatrix. The parcel industry delivered about 2.3 billion packages in the period, the company says.
The USPS showed the biggest improvement, meeting on-time delivery standards 94.1 percent of the time during December compared to 90.4 percent during the 2024 holiday. For FedEx, these on-time rates increased 3.5 percentage points to 95.3 percent. Overall, UPS had the highest on-time rate at 97.2 percent, inching up from 96.5 percent a year earlier.
“All three carriers performed better than in they did in peak of 2024 resulting from capacity being in excess of demand with many new players in the market,” the Shipmatrix report concluded. According to the company, a plethora of new independent carriers has raised this overall market capacity beyond demand levels, which has ultimately eased some strain on the USPS, FedEx and UPS service networks.
As more capacity enters the fold, more retailers are bolstering their own last-mile capabilities to fulfill consumer desires for fast shipping. After all, 84 percent of consumers have used expedited shipping in the six months prior to September, according to last-mile carrier OnTrac’s recent State of Speed Report.
Walmart’s last-mile ambitions have been well documented in recent years, with the retailer saying in its November earnings call that deliveries made in three hours or less have grown 70 percent from the year prior.
“Our fastest growth channel is sub-one-hour,” said John Furner, Walmart’s new CEO, during the call. “That is holding up, and it is growing at a fast pace.”
As the company strives for faster delivery times, it is further pushing the envelope on drone delivery, which has been piloted throughout Dallas-Fort Worth and its home state of Arkansas.
The retail giant is scaling drone delivery to 150 more stores by 2027, in what is expected to expand the technology’s breadth from 2 million shoppers to 40 million across the U.S. The expansion is powered by Wing, with drone technology set to be deployed in stores across Los Angeles, Miami, Cincinnati and St. Louis, the company said.
Walmart drone deliveries promise a drop-off time of 30 minutes or less, further helping the company boost its sub-one-hour growth pace.
Retailers are becoming increasingly enamored with partnering with third-party technology providers to build out a last-mile delivery experience for customers, especially as they find other methods of reaching the end consumer to be costly.
In January, grocery behemoth Kroger unveiled it was teaming up with Uber to deliver on-demand from nearly 2,700 stores, leveraging the Uber, Uber Eats and Postmates apps.
Kroger’s move is part of a wider shift to improve e-commerce profitability by a whopping $400 million in 2026 by closing three automation fulfillment centers in Wisconsin, Maryland and Florida. As it pulls back on the dedicated e-commerce facilities, Kroger is instead focusing on in-store fulfillment, and as such will pilot “capital-light, store-based automation in high-volume geographies.”
That announcement followed multiple partnership announcements from Uber and new retail partners in recent months, including DSW, which now enables delivery of footwear and accessories from nearly 500 stores. Customers can browse and order top styles for either scheduled or on-demand delivery.
Shopify Plus recently partnered with Uber to enable its merchants to opt into its Uber Direct platform, which allows sellers like Gymshark, Skims and Fashion Nova to integrate the on-demand delivery service to their Shopify online store and point-of-sale system.
The ridesharing company touts delivery for its retail partners in as quick as a hour.
Similarly, Doordash has gone further beyond its food delivery origins with last-mile partnerships of its own since it launched on-demand retail delivery in early 2023, recently partnering with apparel retailers including Old Navy and Pacsun.
For Pacsun, the partnership offers on-demand apparel delivery from more than 300 of the specialty apparel retailer’s stores. Old Navy shoppers will be able to access same-day delivery via DoorDash from more than 1,000 locations across the U.S.
While tech partnerships have become more of the norm for retailers looking to improve las-mile delivery, a reliable distribution center model can still trump all options if the company has the capacity to scale. Case in point: The Home Depot has added nearly 200 facilities across its distribution network since 2017, when the company first set the goal to scale two-day parcel delivery nationwide.
Twenty of these sites are direct fulfillment centers, which are locations close to customers that house popular SKUs.
Currently, 55 percent of its deliveries for in-stock SKUs today are made either the same day or the next day, which more than triples its 2022 amount, according to a presentation showed at the retailer’s December investor day.
“One of the big unlocks here is something we call ‘ship from best location,’ which is a proprietary algorithm that looks across all of our distribution assets to optimize speed, determining when, where and how to most effectively ship products to our customers,” said Jordan Broggi, executive vice president of customer experience and president of online at The Home Depot, during the event. “Our delivered sales have increased significantly, and today, they represent approximately 30 percent of our overall sales.”
