MIT Sloan Management Review Article on Cutting Last-Mile Delivery Costs

New tactics can boost profitability and satisfaction with subscription services.

Costco and Amazon subscription services were just the beginning. Consumers can now subscribe to a pickle-of-the-month club, monthly shipments of coloring books, bimonthly boxes of survival tools, and more. Traditional subscription services, such as newspaper or milk deliveries to people’s homes, have been around for decades. But subscription-based home delivery services have become increasingly ubiquitous for other categories of physical products as well.

Subscriptions offer considerable benefits for companies, predictable cash flow chief among them. But for those that deliver physical goods to customers’ doors, the biggest challenge is last-mile delivery costs that eat away at profits. While subscription-based businesses aren’t the only ones that deal with last-mile costs, they are uniquely vulnerable to these costs and in the best position to reduce them.

About the Author

Stanley Frederick W.T. Lim (@retailopsprof) is an assistant professor at Michigan State University’s Broad College of Business and a faculty affiliate with the university’s Evolution and Future of Work Research Initiative.

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