Diversifying Delivery Networks for Superior Customer Experiences
Retailers today are diversifying their delivery networks in order to better compete in last-mile delivery. Customers have come to expect fast, free, sustainable shipping and rate it as one of the most important aspects of their customer experience. Diversifying delivery networks creates logistics adaptability and resilience and allows retailers to achieve superior delivery experiences for their customers.
Last-mile delivery is expensive, accounting for fifty-three percent of overall shipping costs. In addition to being expensive, last-mile delivery is also complex and can be an inefficient process. In order to best compete in last-mile delivery, fifty-seven percent of retailers report their last-mile delivery networks have become more outsourced in the past five years.
According to FarEye’s 2023 ‘Eye on Last-Mile Delivery’ report, only thirty-four percent of retailers utilize their own fleets for deliveries. Retailers also outsource through the postal service, courier express and parcel (CEP) delivery companies and gig fleets to provide their last-mile deliveries.
What are outsourced carrier networks?
Outsourced carriers are third-party companies contracted to carry a shipper’s product from one location to another. Using a network of outsourced carriers helps retailers provide their deliveries in a timely and efficient manner, with reduced capital investment, labor, and asset management costs.
How Using Outsourced Carriers Benefits Retailers
Retailers who outsource their last-mile deliveries claim they gain flexibility and speed. Sixty-four percent claim they have faster delivery times, according to the FarEye ‘Eye on Last-mile Delivery’ survey. Additional benefits include an increased capacity for deliveries and increased scalability.
However, outsourcing deliveries to carriers does come with its own set of challenges. The most commonly cited challenges by retailers include: high cost, inaccurate tracking, a lack of reliable information from the carrier, poor delivery quality and customer service, insufficient capacity, and a lack of customization and standardization on the deliveries.
Although retailers typically gain flexibility when they outsource, many cede control of the delivery experience as well. Eighty-four percent of retailers claim their organization needs more control of their outsourced delivery networks, according to FarEye’s 2023 ‘Eye on Last-Mile Delivery’ survey.
For retailers, effective carrier management is essential for an optimized last mile. It is difficult for companies to reduce their cost-per-delivery and provide a superior consumer experience without properly managing their carrier networks. How can they best manage their outsourced networks?
How to manage outsourced carriers?
Shippers who choose to expand their carrier capacity and want to build an ecosystem of multiple carriers to fulfill demand will find that a whole new set of challenges arises with managing deliveries through multiple carriers.
Carrier management includes choosing a set of carriers, tracking shipments, measuring their performance, managing their contracts, and ensuring compliance with regulations. Companies can best manage their outsourced carriers through carrier management software.
Carrier management software, as part of a last-mile delivery platform, helps shippers manage carrier performance by providing real-time tracking and monitoring of shipments. It helps the shipper identify roadblocks that can occur while executing deliveries and facilitates quick resolution of delivery challenges.
Carrier management software can also measure the performance of the chosen carriers. Metrics such as on-time delivery rates, transit times, and claims ratios can be used to evaluate carrier performance and make informed decisions about carrier selection and rate negotiation.
Benefits of Managing Carrier Networks
Retailers who manage their outsourced carriers with carrier management software will see lower delivery costs and more efficient deliveries while also providing superior customer experiences to today’s demanding consumers.
Lower Delivery Costs
Managing carriers through carrier management software means the software chooses the carrier with the best price and lowest cost delivery options. This allows the shipper to always get the best price-per-package and be able to control their shipping costs without relying upon one carrier.
Carrier management software helps automate carrier decisions, which makes the process more efficient. There is no second guessing or manual searching for the best rates as rates and routes are chosen based on pre-set criteria, making carrier selection easy, fast, and automated.
Diversified Delivery Networks Make Sense for Retailers
Retailers who want to use outsourced delivery networks also need a way to manage those networks and can best do it with a last-mile delivery platform that includes carrier management tools. Managing carriers allow retailers to simultaneously reduce delivery costs and enhance consumer delivery experiences, creating competitive advantages that translate to increased market share.
About the Author
Jorge Lopera has over 15 years of global logistics experience in senior roles encompassing customer growth, product management, and strategy. As Vice President, LATAM & Industry, Jorge is responsible for FarEye’s expansion into the LATAM region, overseeing commercial and operational activities including sales, account management and channel & ecosystem partners. Jorge serves as FarEye’s industry expert, contributing to major publications and supporting analyst relations.