Last-mile delivery is an expensive part of the shipping process, comprising 28% of the total cost of delivery. That’s a huge chunk of change! Innovations in last-mile delivery may be able to reduce that figure, but senders (not recipients) will likely bear the brunt of the cost, says McKinsey & Company in their recent report, "Parcel delivery: the future of last mile.”
If you think about it, the high cost of last-mile delivery makes sense - especially when compared to personal travel. Let’s say you buy a plane ticket that costs $500 and transports you thousands of miles with a hundred or more passengers. But how about when you arrive and need a ride to your final destination? Sometimes it’s $40-$50 just to go a few miles - by yourself, in a taxi.
As individual travelers, we frequently have the option to hop on a more cost-effective bus or train. However, that’s not an option for delivering goods - not yet, anyway. So in the meantime, what can businesses do to reduce the costs associated with last-mile delivery? Consider working with a same-day delivery service to take advantage of economies of scale.
Related: Tackling Last Mile Logistics
Vehicles and drivers
In order to manage same-day delivery internally, you’ll need access to a vehicle or group of vehicles. Those vehicles need drivers available at a moment’s notice to provide on-demand service. It’s especially tough for small business owners like Brian Herbstreit, owner of Nothing Bundt Cakes in Westlake.
"I used to do 100% of all our bakery deliveries myself, and with 8-10 deliveries every day, it was becoming a full-time job,” said Herbstreit.
Larger businesses need a process to manage the vehicles and drivers, so they aren’t strapped for drivers during high-demand times, or paying for idle drivers when there aren’t any orders. And vehicles also need regular maintenance, coverage for unplanned repairs, and insurance.
Drivers need training and insurance as well, and businesses may end up paying them overtime for after-hours deliveries. All of these costs add up.
Related: Fleet Replacement
By working with a same-day delivery service, businesses can gain access to a large pool of vehicles and drivers - without the extra costs of doing it on their own. The whole process is managed by the same-day delivery service, and customers only pay for what they use.
As if the cost of vehicles and drivers wasn’t enough, there’s also the back-end technology that makes on-demand service possible. Imagine building an online platform that processes delivery orders and efficiently assigns deliveries to available drivers, including GPS capabilities to target the exact location at any given time. That’s another large investment right there, and one that needs constant updating to meet changing delivery needs.
Rather than reinventing the wheel, businesses can leverage the existing platforms of same-day delivery services. These platforms provide direct integrations to e-commerce systems and warehouse management software, so orders can flow straight from the source.
Related: API and Last Mile Logistics
And what’s more, API access allows you to directly connect your end customers to on-demand service. That means customers can seamlessly schedule their delivery order on your website as they check out, with no extra clicks.
Offload last-mile costs with same-day delivery
Let’s face it: last-mile costs aren’t going to fall in the near future. However, there are ways to offset them by plugging into a broader on-demand delivery network. Taking advantage of a fleet of drivers and vehicles, as well as a constantly-updated online platform, can help your business meet expectations for same-day delivery without breaking the bank.
Learn how much you can save with Dropoff’s same-day delivery service. Contact us today for a demo.