In areas with high labor cost, it is very hard to justify distributor storage with last mile delivery on the
basis of efficiency or improved margin. It can only be justified if there is a large enough customer
segment willing to pay for this convenience. In that case, an effort should be made to couple last mile
delivery with an existing network to exploit economies of scale and improve utilization. An example is
Albertson's use of existing grocery store facilities and labor to provide home delivery. A portion of the
grocery store serves as a fulfillment center for online orders as well as a replenishment center for the
grocery store itself. This helps improve utilization and lower the cost of providing this service. Last
mile delivery may be justifiable if customer orders are large enough and customers are willing to p