Why Last Mile Delivery Costs So Much in eCommerce

When people discuss logistics, they typically envision warehouses, planes, and long-haul trucks. But the truth is, the most critical and most expensive part of the journey happens in the final stretch. Last-mile delivery, the stage where a package moves from a local hub to your doorstep, accounts for 40–50% of total delivery costs. It’s the backbone of eCommerce, shaping both customer trust and business margins.

For years, my logistics brain rejected that idea. Why would anyone pay such a premium? Surely, it must be cheaper to jump in the car and pick something up yourself.

That was my belief, until a Saturday afternoon proved me wrong.

From Store Runs to Smarter Deliveries

My son runs a small lawn-cutting business in our neighbourhood. One weekend, he needed a new air filter for his mower.

I did what I’ve always done: hopped in the car, drove 15 minutes to one of Canada’s big-box retailers, and found the part on the shelf.

Then came the shock: $27.95 for a single filter. Add $2.50 in fuel plus 30 minutes of my time, and I was looking at a $30+ purchase for a $12 part.

Out of curiosity, I checked online. On Amazon, I found a two-pack for $12.95, with next-day delivery included in my Prime membership. Two for less than half the in-store price. And when they arrived, they worked perfectly.

That small experience reflected a massive truth: last-mile delivery is no longer a luxury; it’s the foundation of modern commerce.

Why the Last Mile Costs So Much

Think about what really happens in that “final mile.” A driver may have the perfect route on paper, but real-world challenges pile up fast:

• A customer isn’t home during the 12–6 pm window, meaning a failed delivery and a costly redelivery attempt.
• An apartment complex takes five extra minutes to access compared to a house. Multiply that by dozens of stops, and the entire route shifts.
• Congestion in urban centres eats into fuel, driver hours, and vehicle wear.
• It’s no surprise that studies estimate last-mile delivery makes up nearly half of total logistics costs. And yet, to the consumer, it often feels cheaper and easier than driving themselves.

The Shift in Consumer Behaviour

My air filter example wasn’t unique; it reflects a broader trend. In 2025, 77.6% of the Canadian population has embraced e-commerce, and delivery expectations around speed, cost, and reliability are higher than ever.

While brick-and-mortar retailers carry overhead costs such as real estate and staffing, digital platforms scale delivery more efficiently. Amazon, for example, moves over 1.6 million packages daily in North America, lowering per-unit delivery costs in ways traditional retailers can’t.

What This Means for eCommerce and Logistics

The old assumption was: “Delivery is a luxury. If you want to save, drive yourself.”

But the reality today is different. Last mile may be expensive for carriers, but for consumers it feels faster, safer, and even cheaper than shopping in-store.

That’s why the real competition isn’t about whether last-mile costs 40–50%, it’s about who can make that cost invisible to the customer while building trust through reliability.

The last mile isn’t just a cost, it’s where customer trust is won or lost. Companies that succeed will be the ones who make delivery seamless, flexible, and human.

That’s why we’re helping Canadian businesses reduce delivery costs, prevent failed deliveries, and scale smarter last-mile logistics.Learn how Koorier can help you deliver better.