Introducing the unknowns or less-knowns of the online business model
- Are you planning to start/shift to an online business model? Then you are going to automatically get into two situations that may increase your business risk. One is managing the last mile delivery and the other is, believe it or not, your carbon footprint!
- Usually, businesses tend to think that outsourcing will solve the last mile delivery problem for them. But, you need to plan before your delivery partner or 3PL does the delivery, which may become a hassle. Read this case study which exactly highlights this point.
- As more and more businesses are getting online, the greenhouse gas emissions are going up, as there are more delivery vehicles making more trips. In the near future, all businesses using delivery will be forced to take up the green route. Just like packaging materials had to shift to eco-friendly packaging or the electric vehicle battery industry is already thinking of manufacturing recyclable batteries.
- We have written this blog keeping in mind how you can avoid falling into these two traps and lose time or money or both! Read further to get a grip on these two risks and how to mitigate them.
Last Mile delivery
What is last mile delivery?
A Product would travel many miles from the manufacturing point to the customer’s doorstep. Last mile delivery is the last leg of the journey where the product travels from a warehouse nearby the customer's location to the doorstep of the customer. Look at the following graphic which will make this more clear.
The last mile delivery is the most important step of the entire delivery process because it's the moment when a package is finally delivered to its destination, whether that's a home or a store.
What is the risk associated with last mile delivery
With the rising consumer demand for quick shipping, businesses have to make sure that their last mile delivery is both efficient and speedy. Unfortunately, this last stage of the journey is also the most expensive one. But in order to keep up with customer demands, businesses have to find ways to optimize their last mile delivery process.
What are my last mile delivery costs?
The last mile delivery is expensive because you have to distribute low volumes over a large area of operation. In other words, as the last mile disaggregates and breaks the bulk to reach the customer, it becomes an expensive process.
Most often businesses tend to use a 3PL for the last mile delivery service. Even if your company's increased sales can cover the additional costs of using a third-party logistics (3PL) provider, your prices and profit margins will still be affected by the carrier's fees. Carriers usually push for higher volumes to reduce costs. So, as your business volume increases you will have more negotiating power.
Of late, fuel costs have been rising. Though this cost directly impacts our bottomline, you must know that you don't have full control over this. However, you can ensure lower fuel consumption of your operations by:
- Optimising the delivery routes.
- Ensuring full capacity utilisation to do more in less trips.
- Reduce vehicle idle time with technologies like Electronic Proof of Delivery
- Ensure higher first attempt delivery success rates
- Ensure proper vehicle maintenance periodically
Cost of Geographical Scaling
Your online business can help you expand to newer geographies. It maybe new areas within your city or new cities or even new countries if you want to. Servicing an expanded geography may require you to work with more 3PLs. This means a complex operation, which leads to mistakes. Delivery failures negatively affect business as each failed delivery can increase your cost by at least 250%.
Cost of unutilised capacity
Capacity planning and consolidation allows you to ensure that you are delivering more in as few trips as possible. Unoptimised capacity means higher cost per parcel. It also means more trips to finish deliveries as per promised ETAs. This leads to higher fuel and vehicle maintenance costs.
Controlling your carbon footprint and going green!
The World Economic Forum has estimated that carbon emissions from last mile deliveries could increase by 30% by 2030. This means that unless you find ways to make your last mile deliveries more environmentally friendly, your online model could be at risk from growing public awareness of the ecological impact of online shopping.
Optimised routes are not only pocket friends, but also eco-friendly. This option helps to ensure that the vehicle travels the least amount with maximum drop points, and also avoids traffic whenever possible so the route can be completed in the shortest amount of time.
Consolidate delivery or collaborative delivery
The Collaborative Hyperlocal Delivery model is a great way for businesses to save on delivery costs. By working together, businesses can share resources and eliminate the need for duplicate infrastructure. This model also helps to improve customer satisfaction by providing a more efficient delivery experience.
Your perfect technology logistics partner
Fortunately Logibee can help you to hedge these risks and more. Here are ways in which logibee can help.
Powerful AI based routing
Logibee use powerful AI for routing algorithms that can ensure lower fuel consumption per trip. This is not only pocket friendly but also eco-friendly.
Total Logistics Automation
The Our fully automated planning process can work with your 3PLs capacity constraints. Logibee can generate fully capacity optimized trips in minutes. When combined with our route optimization, this will give you a power packed pathway to control your costs.
Real time incident resolution using mobility suite
With our mobility app, our driver partners can effectively resolve any on ground situation such as missed deliveries because of customer unavailability, sudden route disruptions because of traffic or weather, parcel damaged during transit, etc., and ensure high first attempt delivery success rates. This has both cost as well as ecological impact.
Collaborative delivery enablement
You can coordinate with other retailers in your area and organise multi pickup, multi drop schedules easily with our hub and spoke model enablement. So your 3PL can pick up items from multiple pick up points and drop them to customer locations. This way you can use your unused capacity or even share a fleet with other retailers without losing control over your operations.
More Power Features for saving cost and environment
Our E Proof of Delivery systems reduce wait times between trips. Our driver partners can verify parcels before the start of the trip and before delivery to ensure that the right parcels are being delivered to the right locations.
Connect with us to know how these features work and help you to safely shift to an online delivery model which is both profitable and sustainable.