Demand for home delivery continues to explode, including on-demand, same-day delivery services for everything from groceries to medicines to consumer staples and home improvement goods. And the impact of the COVID-19 pandemic and shelter-in-place mandates have accelerated online ordering even more. Total online sales are up nearly 20% year-on-year in the U.S., based on data from Earnest Research. Both FedEx and UPS have raised home delivery fees due to the surge in eCommerce-generated deliveries.
The last-mile has long been the most challenging and most expensive leg of a product’s journey to the customer. It’s now a market awash in innovation from established players and an emerging field of alternative service providers rethinking last-mile logistics. There are many providers competing for a piece of the delivery pie, selling their version of the “best new thing” in on-demand delivery. But despite so much innovation, same-day delivery is at risk of becoming a race to the bottom, with retailers focused more on price than quality standards or the customer experience.
As transportation and logistics professionals have learned time and again over the years, the lowest prices don’t always achieve the lowest cost. Creating apples-to-apples comparisons of the variety of players in the field isn’t as easy as comparing price.
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Choosing between on-demand providers
Not every provider has the capability, experience or capacity to serve every type of same-day product delivery. Goods for same-day delivery can span the gamut from:
- An oversize sofa or refrigerator
- A flat-screen TV
- A restaurant take-out order
- Wines, beer or other distilled spirits
- Groceries and other home staples
- Construction tools and building materials.
In virtually every case the product type dictates the vehicle used, requiring the provider to have a flexible fleet, from autos to pickup trucks to straight trucks with lift gates. Not to mention some SKUs may require the delivery driver to have specific skills, certifications, tools or product knowledge.
We see a clear pattern from supply chain leaders evaluating on-demand services. Typical, industry-standard factors that logistics managers consider in measuring and ranking delivery services include:
- Delivery prices and fees
- On-time service quality (pickup and delivery reliability)
- Safety performance
- Geographic coverage
- Capacity and scalability (to handle peak periods)
- Fleet/vehicle mix
- Technology/tracking systems and data
- Exceptions/service failure management and resolution
The lesson here: know what to ask, know how to evaluate the true cost of service and the very real cost of service failure or inconsistency. You have to go beyond simple price and understand the many components that will comprise the overall cost of a service for your business – and to your customers.
If you want your delivery program to scale, you’ll need a full suite of enterprise features that fits your short- and long-term needs. Rolling out a quick, low-cost solution only to outgrow it in 12 – 18 months can be costly in more ways than one.
An on-demand delivery order for heater repair parts that don’t arrive in time to be installed can leave a family without heat on a winter night. A grocery delivery that breaks the cold-chain results in raw chicken and ice cream that customers have paid for but can’t eat. An unnecessarily complicated delivery from an ill-prepared driver results in a disastrous last-touch with your most loyal customers.
Understanding the hidden cost of delivery storefronts
Tons of players in the on-demand space have created consumer platforms and are offering up access to a new audience. This is in addition to providing access to a pool of drivers that can make deliveries when you need them. The “added value” comes with significant added costs. Most notably, you’re handing over business-critical customer purchase data. Without access to data on how customers are utilizing the new channel, you’re unable to quantify the importance of it in your mix.
In short, the total cost of delivery isn’t very transparent. Consumer-facing platforms will charge you more for access to their users. Listing your product on the provider’s platform and using their delivery service comes with a commission fee anywhere from 10 to over 30 percent. There might also be a “marketing” charge of up to 20 percent or a “technology support” fee. While they may charge you a comparatively low rate, a number of these delivery services are marking up the cost of your products (often without informing you), and still others advertise “free” delivery and fail in a crunch. In all these scenarios, their lowest cost advantage goes out the window, and you’ve lost control of your customer’s experience to a third-party provider.
When aggregators add value, and when they detract.
Last-mile platforms are incredibly important for some supply chain organizations. The most popular and highest quality providers offer important value to logistics professionals with limited resources: integrate once and create efficiency, visibility, and long-term savings.
The one-to-many model is meaningful for leaders that truly don’t have the resources to manage the last mile. But over the long-term, you could be sacrificing service for short-term gains. Aggregators will often play last-mile services against each other for the lowest price. And while healthy competition is ultimately good for the consumer, a constant battle of price with no focus on performance results in poor service that undermines consumer trust in-home delivery.
Tapping into multiple delivery providers through a last-mile platform will also create multiple customer journeys. Depending on which service you’re choosing for different regions or products, store employees and end customers will have experiences – some better and some worse. The added complexity from price shopping each delivery through a last-mile platform translates to less consistency and more work to ensure an excellent customer experience for each and every purchase. The value of one-to-many platforms become significantly diminished.
Besides, the complexity of integrating with last-mile providers is overstated by many in the aggregator space. In today’s plug and play technology world, integrating eCommerce ordering platforms and delivery services, done strategically and with foresight, is not a major cost factor. In fact, a standard integration can be done in a week, with many delivery platforms providing basic integration services at no charge or for minimal fees. As well, some providers will do the integration for free in return for a set volume of business.
Don’t underestimate the value of control – or the cost of losing it
At the end of the day, you cannot discount or underestimate the value of controlling your relationship with your customer – from the storefront to the doorstep. It’s especially critical in the time-sensitive and urgent world of home delivery, often of essential or perishable goods.
Even amid the disruption to retail and retail supply chains over the last decade, one thing remains constant: every customer touchpoint is a win/lose moment for your brand. And that’s as true for the delivery as it is for your store experience. Customers expect an easy, convenient trouble-free transaction – from the moment the order is placed, selecting the delivery mode, tracking progress, and the driver arriving at the right place and time. If one or more touches in the chain break, you’ve hurt or even lost the customer’s trust. And once lost, it can take three times the effort to win it back.
While competitive pricing is table-stakes for any last-mile delivery provider, Roadie’s same-day and on-demand delivery platform makes it easy to integrate quickly and leverage our high-quality delivery network. Features like a robust API, driver background checks, custom workflow training and our rigorous chain of custody tracking, deliver long-term value towards building a great end-customer experience.
Roadie is committed to helping you strategize and innovate as an extension of your brand. It’s a reputation we earn every day through our high customer satisfaction scores, our 99+ percent on-time deliverability, and the continuing support of and growth of our customers, from consumer and small mom and pops to respected brands including The Home Depot, Walmart, Tractor Supply, Advance Auto and all five major U.S. airlines.