The process of moving goods from a shop or warehouse to your doorstep is known as “last-mile” delivery. It’s usually outsourced by retailers to 3rd party companies, though some businesses might insource their last-mile.
The growing demand among consumers who want fully integrated omnichannel retailing drives innovation, leading us to transition from traditional last-mile transportation. This transition has led companies towards developing faster, more sustainable, and more efficient ways that will help reach all corners around cities where customers live.
This blog post looks at the pros and cons of in-house and outsourced shipping, the challenges of outsourcing your last-mile delivery, and how Packaly helps you overcome these challenges.
Pros of in-house last-mile shipping
Keeping your last-mile delivery in-house will give you complete control over the entire process. If done right, this will offer you the opportunity to have a complete overview of your last-mile logistics and assist you in maintaining the same level of customer service, which in some cases might not go well.
Proper customer support could make or break your business, and having control of it could be highly beneficial for your business. According to HubSpot, 7 out of 10 people would pay more for a product knowing that the company offers better service.
Having control of a vertical streamline of communication with your customers starting from the start until the end of their shopping experience could benefit your business. However, it does incur a very high cost in employment, training, compensation, and liability, and in many cases, it could cause more harm to your business than good.
Cons of in-house last-mile shipping
Keeping your shipping in-house could be highly costly for your business. In fact, 28% of an eCommerce business costs go to last-mile delivery. This could be a major number that will break businesses, but why are there so many costs associated with shipping?
Last-mile is a complex process that requires dedicated staff that needs salaries, training, and benefits. It also needs fulfillment centers and facilities to process the orders and keep the fleet. A third big expense of a business is the fleet. It could be costly to buy a fleet and manage it while maintaining a sustainable footprint that aligns with the customer’s expectations or government regulations.
Another major cost is the technology that comes with the last-mile delivery. 6 out of 10 shoppers who have a bad delivery experience never shop again from the same website again, and one mistake could cause you a customer. Having the technology to ensure a reliable delivery that lives up to the ever-changing last-mile trends and the fast delivery expected by customers could come at a very high cost no matter the size of your business.
The highest cost might be the fixed cost of in-house shipping, as with a 3rd last-mile partner, you will have different pricing models available, including a pay per parcel model which means you will not have to pay salaries, rent, subscription fees to software, and training when your shipping rate is low or during the off-season.
Last-mile delivery is a new team to be added to your business, and team creation takes time. To find how to create a delivery fleet that meets your business and customer needs, finding the right team leader and strategy and the technology needed to manage and maintain your team.
So, it is not only the financial cost that could lead your in-house last-mile delivery to fail, but the time cost too. Read how Packaly helped Lush launch across the Netherlands in two weeks only.
Creating an integrated in-house supply chain could be challenging. If you’re looking for an integrated omnichannel strategy, logistics might get more complicated to deal with in house Challenges of logistics for an in-house last-mile delivery can be:
- Finding the right locations and specifics of warehouses and fulfillment centers
- Finding the right fleet that meets your business needs and market trends
- Tracking and tracing your parcels in real-time
- Reverse logistics
- Supply chain management
- Routing and routing efficiency
- Ever progressing technology
Having more departments limits your business from scaling up and expanding because of the extra costs that come with it. A new department means an extra project when expanding or scaling up.
By limiting your last mile to in-house delivery, not only will you add a new project for your scale-up projects, but you will also need to add extra costs, market studies, time, and staff members with significant risk.
So what can be the solution? Outsourcing your last-mile delivery might be what you’re looking for.
Pros of outsourcing last-mile delivery
cost. Outsourcing your last-mile delivery would make it a variable cost that helps you save time and money on staffing, training, fleets, among other costs.
By partnering up with the right last-mile partner(s), you will be able to expand and scale up your business faster without having to worry about reaching the right customers, understanding the logistics of the market, or adding new projects to your already complicated process.
Having a good last-mile partner would also allow you to target different customer segments, whether through fast delivery, sustainable delivery, track and trace, or simply by choosing a company people trust.
Finding the right employees and training them for your last-mile delivery is very costly and essential for a successful last-mile delivery. But finding the right last-mile delivery partner would save you from a potential business breaker.
By finding the right last-mile partners, you ensure that your parcels are handled by well-trained and experienced staff with clear reliability.
As mentioned earlier, technology and experience are the biggest obstacles to keeping your last mile in-house. Last-mile companies provide their services to many companies and are always looking to invest in improving their business efficiency.
This includes investments in staff training, the right technology and tools, customer experience, routing, and more.
Cons of outsourcing last-mile shipping
The logistics industry is one of the most polluting industries in modern times. WEF concluded that emissions from last-mile delivery traffic would go 32% higher and cause 21% more congestion in the cities.
With growth driven by environmental awareness, sustainability has become a key factor for customers who want their delivery on time no matter what — this means extra costs as well! Traditional networks are vehicle-oriented and rely heavily upon highly carbon-emitting methods like trucks or cars to move goods around.
When you hand over this part of the customer journey to a 3rd party, reliability is another essential precondition. After all, if they can’t get your order delivered on time and in good condition, how will it reflect your own brands?
There are many logistics partners out there that have been around for years now. Still, not all can combine the magic formula of good customer experience, speed, sustainability, and high delivery rate.
Same WEF study found that around 82% of shoppers had bought something from an eCommerce site within 3 months. The rate at which same-day and express deliveries are increasing annually by 36% and 17%, respectively; therefore, speed is no longer a secondary feature but one that customers will soon take for granted – unless we work hard to maintain it.
However, speed can be very challenging for many businesses with the long parcel journey between different locations, stores, fulfillment centers, and warehouses.
Outsourcing your last mile means that a communication channel with your customer will be handled by a 3rd party while still related to your business. And if you are an eCommerce-only business, this might be the only physical communication your customer has with you.
According to a recent study from Dimension Research, good customer service has the biggest impact on consumer trust. In fact, 39% of consumers will avoid buying from that business for more than 2 years after one bad experience with their support team. So, trusting the wrong 3rd party with your customer communication could have a devastating effect on your business.
But what could be a solution to all these challenges? The answer is simple, Packaly!
Why should you outsource your shipping with Packaly?
Packaly is a CO2-neutral last-mile delivery service that offers businesses an opportunity to reach their local customers in a fast, sustainable and reliable way. We are currently partnered up with some of the biggest businesses around, like Blokker, LUSH, Samsung, and Decathlon, helping them move towards a more sustainable and reliable way by using our services as well.
Sustainability is the core of Packaly’s mission. We believe in leaving a green impact everywhere we go, and therefore, we only offer CO2-neutral shipping to all our partners.
We only allow bikes, focus on our output, and aim to eliminate any source of emissions throughout the whole last-mile process.
Different last-mile services
According to a study conducted by Capgemini Research Institute, 73% of customers prefer convenient delivery time or just speed. Still, only 19% of the stores consider this a priority. At Packaly, we offer services that fit your customer and business needs:
Delivery is quick, convenient, and environmentally friendly with our on-demand express delivery service. With local resources at your disposal, we’re able to provide customers with an unmatched competitive edge while being completely CO2 neutral.
With scheduled delivery, you can offer convenience for when things need to be delivered without having to deal with extra costs. Let your customer choose the time that suits them best and stay on top of their parcel with our real-time tracking feature.
We do not only offer services that meet your business and customer needs, but we are also very efficient at doing so. We have a track record that proves our efficiency and reliability with a successful delivery rate of 99.8% and +1200 bike couriers. Don’t take our word for it. Check our clients’ success stories.
Complete control with our technology
We are tech-driven. We use technology to offer you the most convenient last-mile delivery solutions while maintaining complete control.
Our easy-to-use plug & play Delivery Dashboard helps you get up and running within several minutes and get your parcels delivered within the next hour. Start shipping with Packaly’s plug & play Delivery Dashboard and reach your customers sustainably.
We offer our API allowing you to integrate Packaly seamlessly into your eCommerce website. Read our API documents.
We offer easy-to-set-up integrations for your webshop, with a fully automated checkout option display and track and trace options. Check the integrations Packaly offers and start shipping right away.
As a tech-driven company, we have developed a multi-drop algorithm that allows our Riders to pick up and deliver multiple parcels on the same delivery route, cutting delivery time and enabling you to reach more customers faster.
Unlike many other companies, we only offer a pay-per-parcel model that will make your cost based on the number of parcels we deliver to your customers, rather than a fixed fee that might cost your business more during off-peak seasons.
Other benefits that come with Packaly are:
- Fixed pricing model, no hidden costs, clear and simple
- 7 days a week operations
- Age verification if your product requires it
- Damage and loss insurance
- Professional bike fleet that ensures proper communication with your customers
- Live support team 7 days a week with an average response time of 1 minute
- Delivery verification through a uniquely generated code