In an increasingly digital world, businesses are grappling with a new frontier in logistics operations — last mile delivery. This critical final stage in the supply chain, where goods make their journey from the distribution hub to the customer’s doorstep, has taken center stage in the e-commerce market. In this age of immediate gratification, where customers demand rapid, seamless and transparent delivery services, the success of your business hinges significantly on the efficiency of your last mile delivery.
Yet, we are only scratching the surface of the last mile delivery revolution. Recent market forecasts suggest that the industry in North America is set to expand by an astounding $62.71 billion from 2023 to 2027, propelled by a compound annual growth rate (CAGR) of 14.85%. The driving forces behind this surge are a flourishing B2C e-commerce sector and the premiumization of goods and merchandise delivery.
With such immense pressure on last mile delivery, your business needs a holistic strategy that exceeds customer expectations. This typically boils down to two options: building a comprehensive in-house delivery fleet or entrusting your delivery services to a third-party provider. But how can you strike the perfect balance between the two to maximize efficiency? The answer may be simpler than you think: outsourced fleet management.
The Balancing Act of In-House Delivery
Deploying an in-house delivery fleet offers businesses a valuable opportunity to shape the customer experience directly. However, this control comes with a set of demanding challenges that may disrupt the efficiency of your delivery services, impacting costs and customer satisfaction.
- High Costs: Managing a delivery fleet demands resources, including vehicles, fuel, maintenance, driver labor and delivery management software. As these costs continue to rise, maintaining a fully in-house delivery network can become a considerable financial burden.
- Operational Resources: In addition to delivery drivers, in-house fleets demand significant labor resources to plan routes, track deliveries, manage exceptions and field customer service-related communication. Recruiting, training and retaining talented staff is time-consuming and expensive, particularly in the face of ongoing labor shortages and increasing wages.
- Demand Volatility: Businesses often face variable demand influenced by factors like the time of day, seasonal peaks or unpredictable external elements like weather. Managing an in-house delivery fleet amidst such fluctuations can pose significant operational and capacity challenges.
- Scalability: Delivery solutions should be able to scale as your business grows. Expanding an in-house fleet means adding more vehicles, hiring more drivers and allocating more resources — exponentially multiplying the challenges.
Avoiding the Pitfalls of Outsourced Delivery
Outsourcing delivery services can help mitigate the challenges of managing a fully in-house delivery fleet, but it’s essential to remember that not all third-party delivery providers are equal. Knowing what you need from an outsourced delivery partner and being aware of potential pitfalls can be the difference between a successful venture and a last mile delivery nightmare.
Beware of Hidden Costs
In recent years, a wave of delivery startups have entered the market — each offering a service as “Uber for X.” It may be tempting to outsource delivery to well-known providers like DoorDash or Instacart, swayed by their popularity among industry competitors. All too often, though, there are hidden costs to these services in the form of fees or commissions, either as a flat rate or a percentage of an order’s cost. This can significantly impact your bottom line, especially if your business offers high-value products. It’s essential to thoroughly understand the cost structure of a third-party provider before committing, to avoid any nasty surprises down the line.
Maintain Control of Your Data
In today’s digital age, customer data is a cornerstone of effective marketing strategies. If your customers are ordering your products through an outsourced delivery app, you may inadvertently be handing over the ownership of their data. Similar to how some social media platforms claim legal rights to user content, companies like Instacart claim ownership of all data on their platform — even if your business directed the customer there. Given the increasing security concerns, it’s important to understand who controls and accesses your customer data before entering any outsourced delivery agreements.
Focus on Reliability
With so many emerging options available, the dependability of outsourced delivery services can be uncertain. Not all delivery providers can guarantee on-demand availability in real time, a shortfall that can significantly disrupt your operations. When a delivery doesn’t meet the customer’s expected time window or is delayed significantly, the customer experience is negatively affected. Unfortunately, it is the retailer, not the delivery service, that bears the brunt of the customer’s dissatisfaction — with 85% of customers willing to abandon a brand after just one poor delivery experience. It’s crucial to consider the reliability of an outsourced delivery partner before engaging their services.
Enhancing Delivery Operations with Outsourced Fleet Management
Outsourced fleet management offers a solution that bridges the gap between the challenges of in-house delivery fleets and outsourced delivery services. This hybrid approach blends the strengths of both strategies while addressing their respective limitations to create an optimized delivery network. It provides your business with a range of benefits, including:
- Elastic Capacity – Outsourced fleet management gives you access to flexible delivery capacity outside of your fleet to easily adapt to demand fluctuations. This elasticity helps businesses manage peak times, seasonal variations and unexpected surges more effectively than a fully in-house approach.
- Improved Visibility – A key challenge of outsourced delivery is the loss of control and visibility into the delivery process. However, with outsourced fleet management, you can maintain visibility across in-house and outsourced delivery operations, track shipments in real time and ensure a high-quality customer experience.
- Streamlined Operations – Managing a delivery fleet can be complex and resource-intensive, but outsourcing fleet management allows you to simplify operational processes. These solutions give you the ability to plan routes, track deliveries, communicate with customers and manage exceptions in a single hub.
An outsourced fleet management approach enables you to maintain the control and customer connection of in-house delivery, while benefiting from the scalability and flexibility of outsourced delivery. It’s the best of both worlds, helping to improve delivery efficiency, enhance the customer experience and, ultimately, drive business growth.
OneRail Driver: A Scalable Fleet Augmentation Solution
Introducing OneRail Driver, a comprehensive delivery management solution designed to simplify fleet operations while providing the flexibility to tap into an extensive courier network when you need additional capacity. With OneRail Driver, you gain access to an elastic last mile delivery fleet that can swiftly adapt to fluctuating demands, bolstered by state-of-the-art route optimization and real-time visibility tools.
OneRail Driver is a fleet management system that combines powerful features with an intuitive user interface to help you optimize operations across your internal and external delivery networks.
- Fast driver onboarding: Geofencing and automation make it easy to get your fleet drivers up and running, with limited in-app time.
- Advanced route optimization: Generate the most efficient routes for drivers, taking into account various factors such as distance, traffic and weather.
- Real-time tracking: Get a real-time view of where deliveries are along the fulfillment journey, available anytime to all stakeholders.
- Automated dispatch: Utilize OneRail Driver’s Smart-Matching API to right-size each outsourced delivery with the best-fit courier and service level at the best price.
- Seamless integrations: World-class integrations connect seamlessly, offering communication and visibility across fulfillment processes with minimal disruption to current workflows.
- Comprehensive reporting and analytics: Get the data you need to make strategic decisions about your delivery ops moving forward, including market data, NPS scores, on-time rates and more.
- Transparent pricing: Eliminate hidden fees and surprise add-on costs with up-front fleet and delivery management pricing.
OneRail Driver sets the benchmark as the premiere delivery fleet management solution, packing powerful features, user-friendly interfaces and adaptability to a diverse range of business needs. But where OneRail Driver truly shines is in its unique elasticity capabilities: It provides extreme scalability, backed by a vast courier network, seamless integrations and a 24/7 Exceptions Assist™ team.
Ready to experience unrivaled fleet management and network scalability? Sign up for a free trial of OneRail Driver today and start your journey to becoming an industry leader.