Delivery is the greatest hurdle in modern retail. The same is true when you sell products online.
In this post, you will learn about the 9 biggest delivery challenges eCommerce companies like yours face in 2020.
Not to mention, we’ll share the tools and tactics that can help you overcome each one effectively.
Plus, you’ll get a chance to see one tool work in action (and try it out for yourself).
So if you want to cut costs, boost customer experience, and maximize the speed and efficiency of your operations, this guide can get you there.
Let’s jump right in.
The cost of delivery is a big problem for retail.
Let’s face it, fuel, vehicle maintenance, payroll, return deliveries, free-shipping, customer service, and other operational expenses can all eat into your profit.
What’s worse, if you don’t find a way to keep those costs down, you can end up passing them on to your customers.
In fact, according to one source, the cost of last-mile delivery makes up 53% of all expenses.
That’s why reducing the cost of last-mile delivery is among the most important initiatives among retailers in the world today.
A key solution to this problem is optimization.
If you want to cut the cost of delivery, you need to look at ways to increase efficiency.
And you achieve this by reducing the waste of your resources to maximize their use.
Statistics back up this claim.
Organizations with optimized supply chains have 15% lower costs than those that don’t focus on optimization.
A big part of the solution is how you use technology. For example, you need to ask yourself questions like: Are you manually planning routes?
If the answer is yes, you have to look beyond traditional means of managing your delivery operations.
You have to seek out tools that automate the process and let you handle tasks automatically and without too much effort.
Once you start using technology, you can use it to pinpoint opportunities to optimize for better performance across the supply chain.
After that, it’s all a matter of locating wasteful processes, so you can move beyond them, which ultimately leads to fewer costs to your organization.
More and more customers want greater convenience from their online shopping experience.
Strictly speaking, they want immediate access to their purchase without stepping outside of their home.
It’s causing eCommerce stores to beat the clock by creating ever-shorter delivery windows.
It’s also why most businesses now offer next-day or even same-day delivery.
And if you want to reduce time to delivery so you can offer faster fulfilment, you need to increase the speed of your operations.
The solution here is to streamline the delivery process.
From the moment a customer goes to checkout, you have to be ready to source the purchase from your supplier, package it, and load it onto a transport vehicle.
In no small part, this comes down to how you organize your delivery.
First, you must simplify the supply chain.
You have to consolidate supply vendors so you always have enough stock to meet demand (even when demand exceeds your capacity).
Whenever possible, try using local or domestic suppliers as this automatically reduces the time it takes to stock up on inventory.
This also helps to increase the order frequency while reducing the time it takes you to sell that stock.
Beyond the supplier, operational agility can help you speed up delivery by speeding up how you plan and execute deliveries on the go.
Agility makes your teams more decisive so they can carry out swift actions at each stage of the delivery lifecycle.
In turn, you can meet new customer and market standards like reducing time to delivery.
Read this guide if you want to learn how to build an agile delivery operation.
Like with cost-efficiency, you should also look to technology for a solution when you want to improve the speed of your operations.
There is a clear correlation between same-day delivery and delivery management software.
Exploiting it will lead you to greater speed and more convenience for your customers.
And when customers find your service convenient, they won’t mind paying for it (whatever the price you charge).
Deciding on your delivery rate is a question of balance.
In this case, the balance between profit and customer happiness.
If the delivery fee is too low, you risk mounting operational costs you won’t be able to support.
You will generate more expenses over profit, and end up paying for each drop-off out of your pocket.
If you set the price too high, you risk disappointing customers and chasing them away. Most likely, to your competitors.
The solution is to set your delivery rate manually (if you are handling the fulfilment process yourself).
And while there are a few different methods to calculate how much to charge for delivery, you should take into account basic factors into the fee, like:
One way to calculate the delivery fee is to measure the average order weight of delivery based on the size of your catalogue, the number of products, and order size.
Here is a quick formula:
If you are yet to receive the first order, it’s a safe bet to base the delivery fee on the average order weight.
But it isn’t the only solution.
Another way to price your delivery is to create different delivery zones.
All you have to do is offer different rates to customers living in different geographical areas.
For example, you might offer the most affordable rates to customers that are the nearest to your supply chain (1.5-3 miles), and raise it as you move away.
This is especially useful when you sell products nationwide or internationally, or when you want to invite consumers in your area to use a local delivery service.
On the other hand, you can leave the fulfilment rate entirely up to your third-party delivery logistics provider to determine.
Technically, there are two ways you can go about delivering products to your customers.
The first is to create an internal fleet and fulfil the orders yourself.
The second is to outsource the delivery to a third-party provider.
While eCommerce stores use both models, it’s entirely up to you to choose which one works best for your business.
But, there are certain benefits to using each solution.
When it comes to using a third party delivery operator (or dedicated courier service), the biggest advantage is that you don’t need large capital investment to get started.
It also means you don’t cover the operational cost of the delivery fleet.
Besides that, outsourcing fulfilment also gives you:
But the biggest downside to using dedicated providers is that it erodes your margins over time.
Because you have to cover the service fee (per delivery, per vehicle, monthly or annual), you have less control over how you price products.
Usually, this makes you less competitive.
On the other hand, you can build your own delivery fleet.
Using a dedicated delivery fleet gives you back control over the price of your products (including delivery fees).
It allows you to offer free delivery or same-day delivery without losing service quality, which is useful in an age where you have to know how to compete with Amazon delivery, Walmart, Alibaba, or eBay.
Likewise, it also provides other benefits which might make it enticing for you, such as:
But all of these benefits come at a cost.
Crucially, you need high initial capital investment to set up a private fleet before you can start delivering products to customers.
Here’s a complete guide about the advantages (and disadvantages) of operating an internal vs external delivery fleet, if you want to know more.
Customers want a dependable service they can count on.
If you say you are going to deliver their purchase by a certain time and date, they expect you to keep your word.
But things don’t always happen the way you plan.
Delays, unexpected circumstances, and other disruptions to your delivery schedule can happen without notice.
In these situations, you need to keep customers in the loop about their delivery and be transparent about it.
The ideal solution is to give customers the ability to track their deliveries in real-time.
Using eCommerce delivery management software allows you to share a map with the current location of the customer’s order for 100% transparency and ETA accuracy.
A simpler solution is to let customers pick the time and date when they want their delivery to arrive.
And it doesn’t even need to be too specific.
All you have to do is give customers a few options for the time of arrival at checkout.
For example, the ability to choose between morning, afternoon, and evening deliveries.
Giving them the control to choose the time of arrival means you avoid the complications when dropping off their order while maintaining a suitable level of transparency.
Operating a delivery service is an active process.
Sometimes things may occur that are beyond your control.
An order may be mislabeled and arrive at the wrong address.
It may arrive damaged or broken.
Or the customer may have ordered the wrong item and wants to return it.
These situations can happen and do happen to everyone.
How you deal with them is what matters more to your customers and greatly impacts how they see your brand.
The solution is to have an operation that can handle forward delivery, just as easily as reverse logistics.
If you don’t know what reverse logistics is, simply put it’s the control of the movement of return items back to your store, warehouse, or supply depot. For this, you need to have three things:
Taking care of returns quickly like this is a good business practice.
It helps you save money (you can exchange return items for cash faster) and removes much of the customers’ frustration.
Another way to protect your organization is to purchase insurance.
This ensures you don’t lose money on lost or damaged deliveries, especially on more valuable deliveries.
If you are using a dedicated provider, the process is much simpler.
All you have to do is settle on a service fee since the rate for return deliveries is different from regular drop-offs.
But keep in mind that delivery providers usually can’t provide the same quality of service you want to deliver to your customers.
And when things go wrong, providing the best possible customer service is exactly what you need to focus on.
Customer service is an important part of the delivery experience.
You have to maintain a high level of quality from the moment a customer lands on your website down to the moment when their purchase arrives at their door.
And customers agree with that.
In fact, 90% of people in the US cite customer service as a factor that drives their decisions.
The best way to achieve that level of satisfaction is to build and nurture relationships with your customers.
According to an essay by business guru Kevin Kelly, 1000 true fans is all you need to succeed in business.
And maintaining true relationships is the cornerstone of that mantra.
We’ve already mentioned several ways you can do that.
Letting customers choose the time of arrival and making return deliveries as painless as possible are good starting points.
Beyond that, you need to create a culture in your organization that puts a lot of emphasis on customer service.
All your teams have to be aware of this.
From dispatchers down to drivers and field agents, everyone has to be on board with this decision.
And technology can help you out here as well.
Equipping your teams with delivery apps lets them communicate with customers directly. In doing so, you also promote customer-employee interaction.
Imagine how a customer feels when he receives a direct message from a driver saying that he’s fifteen minutes away from their address.
And when a customer knows their delivery is arriving they can prepare for the handoff.
It leaves more room for drivers to talk to your customers person-to-person, rather than “Hello. Sign here. Goodbye.”
But for a truly great experience, you need to go to even greater lengths. And this requires listening to your customers and finding out what they want.
Data is taking over business.
As more and more customers look for a personalized experience with every purchase, big data is letting businesses create those experiences for them.
The same is true for delivery.
Collecting data during delivery is a great way to get to know what your customers think about the service before they have something to say.
It gives you a window into their behaviour, preferences, needs, and desires.
The final result is a personalized delivery experience that customers will adore.
Customer data also opens up new possibilities.
It allows you to anticipate customer needs, as well as demand.
You can start adding a personal touch to each delivery.
You can even stock your vehicles with customer favourites and let delivery agents upsell them during drop-off.
Learn more about upselling and cross-selling with delivery.
If data processing might seem a bit beyond your reach at the moment, another way to improve your delivery is to ask for feedback.
Customers are always eager to give you a piece of their mind, especially if they have had a bad experience.
The best part is that all you have to do is listen to what they say.
Don’t look at it as a tarnish on your reputation. Instead, try to see it as an opportunity to give them what they want.
Use customer feedback to evaluate your operations, and see what’s working and what isn’t.
At some point, you will fix what’s wrong, add what’s missing, and improve upon what you are doing right.
As you do, customers will start noticing it and associate your brand with amazing delivery.
Automation is practically second nature for most eCommerce companies.
If there is a digital solution to a problem, you are probably using it.
Not to mention there are also a lot of platforms where you sell your products, like your website, social media, Amazon, or Shopify accounts.
But receiving orders from multiple sides and using various disconnected apps to manage them isn’t what you had in mind when you set out to automate your delivery operations.
The solution to your problem is delivery management software.
This type of software takes care of your delivery end-to-end.
You can use it to receive orders and schedule deliveries, as well as increase efficiency by optimizing your routes or customer service.
What’s best about this solution is that it can integrate with sales platforms or order management systems via APIs (Application Programming Interface).
If you have a Shopify account, for example, and connect it to a delivery management solution, you can manage all the deliveries from one dashboard as soon as a customer checks out.
From there, you can schedule the delivery, assign a driver, map out their routes, and even do it all in real-time.
Best of all you can do it with several different apps, including inventory monitoring or customer service.
Now, it’s your turn.
What’s the biggest challenge to your delivery? What solution do you think will work best for your store?
You may have noticed that technology is the ideal tool that lets you work out most of these challenges without too much hassle.
And when it comes to eCommerce delivery management, we think the easiest way to manage it is by using delivery management software.
But we can help.
We have everything you need to start improving your delivery.
Here are the nine free guides that will show you exactly what we do to optimize the last mile and dominate delivery logistics.
1. The definitive and complete guide to Route Optimization Software
2. Why mapping multiple delivery stops is impossible without software
3. How to leverage Route Planning Software to drive delivery excellence
5. How we crush customer experience with delivery management software
6. Where to find and how to choose delivery management software
8. How we dominate reverse logistics and eCommerce returns
9. How teams dominate remote work using nothing but Field Service Software
eLogii is an end-to-end cloud-based delivery management platform. Our powerful solution solves the biggest challenges of modern distribution and field service businesses, including: route optimization, planning and execution.
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