The last mile of distribution has become the Achilles’ heel of global commerce. It’s the most expensive and critical step of the supply chain, standing between brands and consumers. Yet, across both developed and emerging markets, last-mile logistics is a fragmented and inefficient mess. From poor infrastructure to predatory e-commerce practices, the methods we rely on to deliver goods are driving up costs, stifling competition, and preventing countless small businesses from thriving.
Global FMCG brands, distributors, and retailers are left grappling with escalating costs and a lack of visibility into the final leg of their operations. It’s a broken system, and traditional methods can’t fix it. But here’s the bold truth – the solution lies in leveraging local partnerships paired with game-changing technologies like Open Commerce. Together, they present a way to dismantle the inefficiencies plaguing last-mile logistics and create a more connected, equitable supply chain.
The Challenges of Last-Mile Logistics
Globally, last-mile delivery accounts for approximately 41% of total logistics costs. For context, the last-mile delivery market was valued at $132 billion in 2022 and is expected to grow by 8–9% annually in the coming years. Yet, this growth comes with severe bottlenecks and challenges:
- Poor Infrastructure across emerging markets
Poor road networks, inefficient addressing systems, and vast rural geographies in sub-Saharan Africa and Latin America make last-mile delivery incredibly costly. Logistics in Africa can cost 3–4 times the global average, with transportation alone adding up to 75% of product costs. For instance, it costs $2,000 to ship a container from China to an African port – but $5,000 to truck it just the last 500 km inland.
- Stockouts causing loss of brand loyalty
Stockouts are a serious challenge for retailers and FMCG brands globally. If a product arrives late to the store, it might as well not exist in the eyes of the consumer. The FMCG market is highly competitive, with studies showing that 43% of retailers stop purchasing a product after two stockouts. What’s more, shopkeepers in emerging markets are often forced to close their stores entirely to restock, further intensifying inefficiencies.
- Unfair domination by large e-commerce companies
In developed markets like the United States, the challenge isn’t infrastructure but competition. Large, trillion-dollar e-commerce companies like Amazon have weaponized delivery speed, achieving an average click-to-doorstep time of 1.5 days, compared to over 5 days for competitors. Small merchants, unable to match this pace, are squeezed out. Their only choice to compete is to join such platform and become third-party sellers – however, these same platforms charge exorbitant fees that cripple their businesses. For example, third-party SMB sellers on Amazon are responsible for 60% of sales but lose up to 50% of all revenue to fees. These fees make it almost impossible to compete or sustain growth.
The bottom line? Across markets, inefficient last-mile operations inflate costs, delay deliveries, and erode both competitiveness and customer loyalty.
Why Local Partnerships are Key for Retailers and FMCG Brands
The future of last-mile logistics isn’t about doing it alone, it’s about collaboration. Local partnerships between brands, distributors, retailers, and delivery providers can fix the pain points of the last mile – especially when backed by modern technologies.
Here’s how local partnerships can help fix last-mile distribution:
- Extend market reach to new markets
Countries like Nigeria and Brazil showcase why partnerships matter. Beverage companies in Nigeria can gain market share not necessarily because of superior products but through their ability to reach to rural areas. Similarly, in Latin America, emerging collaborations with local delivery agents have proven more flexible and reliable compared to going solo.
- Reduce stockouts and increase supply chain visibility
Advanced technologies like Artificial Intelligence and Open Commerce platforms enable retailers and distributors to connect directly in real-time. These systems eliminate inefficiencies such as stockouts and delays and provide end-to-end visibility across the supply chain.
For example, RedCloud’s Open Commerce platform enables local retailers to order stock via a mobile app, a model that’s been shown to reduce stockouts by 50%, doubling availability at informal retail shops. This also provides visibility to brands and distributors, allowing them to aggregate orders from multiple retailers all in one place so they can better manage deliveries.
- Provide flexibility and resilience for brands in competitive markets
Even major players in developed markets are pivoting to localized solutions. Crowd-sourced delivery drivers and retail pickup alliances have allowed companies to enhance delivery speed without investing billions in fleet expansion. Small businesses, leveraging these partnerships, now have an opportunity to compete in an era defined by ultra-fast fulfillment.
How Technology is Transforming Last-Mile Distribution
True transformation occurs when local partnerships are seamlessly integrated with advanced technology. Open Commerce systems, AI, and predictive analytics are no longer optional – they’re non-negotiable tools for survival.
Here are some of the technologies transforming last-mile distribution:
- AI route optimization
AI-enabled route planning capabilities can reduce driving distances by 10–30%, with annual cost savings reaching up to $400 million globally. These efficiencies are even more critical in emerging markets, where fuel and vehicle costs are high relative to margins, and can make or break the bottom line.
- Predictive demand forecasting
AI-powered tools can analyze historical data and predict inventory needs with up to 50% greater accuracy. This ensures consistent product availability at retail locations while slashing inefficiencies from overstocking or emergency logistics.
- Open Commerce technology
By connecting brands, distributors, and retailers in one unified platform, Open Commerce eliminates the silos that delay decision-making. When inventory, orders, and delivery fleets are fully visible, businesses can act preemptively.
For example, a distributor can instantly route stock to a retailer at risk of running out, ensuring shelves remain stocked and customers are never disappointed. Open Commerce also reduces overall costs for small businesses by empowering them to bypass middlemen and negotiate directly with suppliers.
The Business Case for Brands and Investors
For global FMCG brands aiming to secure market share or logistics managers trying to curb waste, the benefits of combining local partnerships with advanced technology can’t be overstated:
- Improved Margins: Reducing inefficiencies lowers costs for everyone – from the manufacturer to the end-consumer. This means better margins for wholesalers and more affordable products for shoppers.
- Enhanced Visibility: With data flowing seamlessly between all supply chain partners, brands can forecast demand, optimize inventory, and boost sell-through rates.
- Stronger Brand Loyalty: Reliable delivery doesn’t just sell products – it creates loyalty. Consistently stocked products keep consumers coming back, ensuring your brand remains their first choice.
For forward-thinking investors, this is an opportunity to capitalize on a logistics transformation that’s not just profitable but essential for global commerce.
The Path Forward – Open Commerce as the Catalyst
The traditional model of closed, opaque supply chains no longer works. It’s fragmented, inefficient, and hemorrhages value at every stage. Open Commerce has fundamentally reimagined this process, creating a collaborative, interconnected ecosystem that empowers local partnerships. By democratizing access to data, logistics infrastructure, and technology, Open Commerce unlocks exponential growth for players of all sizes.
The final mile in the supply chain shouldn’t be where value is lost but where competitive advantage is gained. With the right partnerships and tools in place, last-mile distribution can become a streamlined, powerful driver of growth.
Want to transform your last-mile operations and gain real market insights? Contact us to partner with Open Commerce today. Collaboration isn’t just the future of logistics: it’s the only way forward.
