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Why Third-Party Delivery Providers do Last Mile Delivery Best

Posted by Safeena Walji on Jul 11, 2018 8:00:00 AM

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With consumer demands at an all-time high in today’s e-commerce landscape, logistics providers must get creative to give people what they want. Industry titans like Amazon have taken leading strides to optimize last mile delivery with offerings like Amazon Prime and Amazon Flex for crowdsourcing deliveries. And businesses that depend on legacy shipping companies aren’t equipped to keep pace with the increasing demands of last mile delivery.

Speedy shipping, for example, is now seen as less of a luxury and more of a requirement when it comes to consumers’ e-commerce needs. Particularly around the holidays, consumer expectations for order fulfillment take a steep hike. According to the findings of our 2018 holiday survey, 91% of U.S. consumers are concerned about gifts arriving on time and 67% have abandoned a gift purchase in the last year due to slow delivery options, which is a 16% increase from 2017.

However, it’s not enough for logistics companies and their retail partners to simply deliver a package on time. In the same survey, it was found that 71% of consumers are “highly” likely to recommend a retailer to others after having their holiday gift purchase delivered the same day. Along with same-day delivery, real-time tracking capabilities also present retailers in a good light. 85% of consumers are more likely to re-purchase from a retailer if their holiday gift delivery can be tracked in real-time.

This is where third-party delivery providers can really shine. Compared to legacy shipping companies, locally-based, third-party providers are quickly becoming one of the most obvious and practical choices for retailers.


The Challenges of Legacy Logistics Companies

Legacy shipping companies do an excellent job at what they’re designed to do; they move mass parcels along lengthy distances at a reasonable price. The problem, which seems to grow more dire as time passes, is that the cost/mile is extremely expensive for legacy shipping companies to move packages across short distances.

That final leg, or last mile, of their journey directly to consumers is an inefficient process, as it usually involves making multiple stops for small amounts of packages. Whether they’re delivering to dense cities, where they’ll encounter endless traffic congestion and delays, or to less-populated rural areas, where they’ll have to travel long distances between delivery points, it’s inefficient all the same.

While some of these legacy companies are investing in technological advances to catch up to consumer expectations, it’s proven to be difficult to make any considerable moves in adjusting their business model to the tough demands of last mile delivery.


Amazon Sets a Good Example for Last Mile Delivery

When it comes to last mile delivery, Amazon is consistently innovating new ways to use technology to make package delivery fast and efficient. With the likes of Amazon Prime and Amazon Flex already in its repertoire, the retail giant is releasing a new program for drivers who may want to start their own delivery business.

Unlike Amazon Flex, the crowdsourcing delivery program where drivers had to utilize their own cars to make deliveries, this new program leases Amazon-branded delivery vans out to drivers. Drivers do not need to have any previous logistics experience and Amazon will take care of everything from gas and insurance to uniforms and supplementary equipment like dollies, which also resolves many of the grievances that drivers had about the Amazon Flex program.

While the program is sure to hit some speed bumps initially, Amazon is influencing the way shipping providers should look at e-commerce delivery, and many third-party delivery providers are stepping up to the plate – if not currently doing it better.


Third-Party Delivery Providers Step in for Local Retailers

While Amazon’s program will scale much wider, there are third-party delivery providers already taking a similar approach to support retailers. By specializing in last mile, the third-party logistics partner can provide retail businesses access to their fleet of drivers and vehicles without any risk or burden of doing it on their own.

For small retailers, making efficient last mile and same-day delivery a priority can give them the aggressive edge they need to compete with larger businesses. Almost half (47%) of today’s consumers have said that they’ve paid extra for same-day delivery in the past year, so local retailers can find an advantage in depending on local couriers to handle their deliveries.

Many third-party delivery providers are currently putting technology in the forefront, creating personalized, one-on-one relationships with their retail partners, and making sure the customer always receives their package on time and in immaculate condition. They also understand that the very last touchpoint, at the customer’s doorstep, can have a lasting effect on an individual’s impression and attitude towards the retailer.

Technological innovations in the logistics industry play a huge role in the advances made in same-day and last mile delivery. However, successful third-party delivery providers realize that combining technological advancement with a human and personal experience throughout the entire delivery process is key.

At Dropoff, we take consumer and retailer trust as a big part of our business model, and we use technology to build that trust, whether it be through on-demand or pre-scheduled scheduling, real-time tracking or providing consumers with clear, up-to-the-minute ETAs.

Topics: Retail

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