Local delivery is a great business opportunity. In this guide, you’ll see how to use local delivery to drive more sales from local customers.
In today’s blog post, we’ll show you exactly how to drive more sales with local delivery.
In fact:
In 2020, there were 15.05 billion completed deliveries, according to our delivery statistics.
That’s almost 500 completed order requests every second!
And whether people ordered online or over the phone, most of them were delivered locally.
So if you’re looking to rack up sales and generate more profit, local delivery is the way to do it. It’s also why we know you’ll love this post.
Let’s dive in.
Local delivery is a rudimentary method of order fulfillment. It allows people to buy products online or over the phone and have them delivered right to their door. Local delivery is also less expensive for both consumers and businesses than shipping with a carrier. And more convenient than in-store shopping.
Local delivery has three stages: ordering, order prep, and fulfillment. Each stage is part of the life cycle of a delivery, and the larger process of managing delivery logistics in the local last mile.
Ordering is concerned with how consumers buy and request local deliveries at checkout.
Here, shoppers choose how they want you to deliver their purchases. They also give out personal information and address, agree with fulfillment policies, and pay for the delivery (depending on whether you offer free delivery or not).
Order preparation refers to sourcing goods from inventory, packaging them, and sorting them for delivery following an order request.
Here, inventory and delivery staff work in tandem to ensure that orders have the correct labels that tell drivers where to go. And that they will get loaded onto the right vehicle or handed off to the right delivery driver.
Fulfillment is the transportation of goods from a store or depot location to the customer’s doorstep. This stage has an additional two phases:
During the planning phase, logistics managers set order priorities, assign orders to drivers, and plan the routes and schedules for the whole fleet.
Once they get their assignments, drivers transport the order to the customer. They also collect proof of delivery (POD) to confirm the delivery is successful.
When you offer a local delivery service, you target the people living near your business. They become the primary audience you’ll sell your products to and market your delivery service.
This is a terrific way to build brand awareness through delivery, and attract customers who aren’t aware of your business. Which may also make you stand out from competitors.
Besides new customers, local delivery is also a great approach to keep in touch with your current, loyal customers. After all, according to business expert Kevin Kelly, all you need is 1,000 true fans to succeed in any commercial venture.
And following the impact of COVID-19 on last-mile delivery, this is more accurate than ever.
When you deliver locally to customers, you narrow down the area where you drop off goods. In doing so, you subsequently raise delivery speed, while lowering the cost of fulfillment.
These are two things all customers value in last-mile delivery: low prices and high speed. But that’s exactly what makes it convenient for them to buy your products, or use your service.
And because you shrink operations, you have greater visibility and control over fulfillment. (Especially if you’re using digital tools, like route optimization software).
This means less delays, missed deliveries, and better and friendlier delivery service.
When you add all those things up, it translates to an improved customer experience. And a delivery your customers will enjoy using time and time again.
As mentioned, shrinking the delivery area to the local last mile is a great way to increase delivery speed.
This means you can offer faster fulfillment options, like next-day or even same-day delivery.
Here’s our new guide on how to offer same-day delivery, regardless of your business size.
According to Shopify, when independent businesses offer convenient buying alternatives like local pickup and delivery service, shoppers spend 23% more money on a 25% larger cart.
Besides this, consumers who selected local pickup or local produce delivery at checkout in 2020 had 13% and 19% higher conversion rates than those that chose standard delivery.
This means you can also charge customers for local delivery to raise your average order value.
And in an age when customers are actively looking to support local companies, this can all help you to generate more profit at the local level.
With the state of last-mile delivery during the coronavirus as it was, local customers and delivery are ample solutions to lowering risk.
Continuing to offer local fulfillment services beyond the pandemic helps you in three ways:
First, you have a fallback plan. A way to sell products to a consistent audience regardless of what happens on the market. Or how consumer behaviors evolve in the future.
And it helps you to expand your operations. When you deliver locally, you can start small and test tactics to grow your delivery before you implement it at a larger scale.
It’s also easier to anticipate specific customer needs, and create a shopping experience that people will enjoy regardless of where they are.
Adding a local delivery option at checkout is pretty straightforward.
But to build a successful operation, you’ll need to do more than that.
You’ll have to consider these five questions:
Typically, local deliveries cover an area of 3 to 5 kilometers (1 to 3 miles). Usually, around the business that offers it, depot location, or warehouse.
For your local delivery, you’ll have to map out this area, define its boundaries, and determine how far your drivers and delivery agents will travel to fulfill orders.
If you have multiple inventory sites, you can create multiple zones based on zip or postal codes. And assign specific fleets to cover all those locations.
Keep in mind that the larger your area the more customers will live within that radius. But your delivery time and transportation costs may increase.
Once you decide on the delivery area, you have to decide from where you’ll deliver to customers.
If you’re building a food delivery, this is pretty straightforward. You’ll probably deliver meals from the kitchen or restaurant.
But if you deliver consumer goods that aren’t food, you’ll need to centralize your delivery around your inventory and depot locations.
This will require you to plan single or multi-depot locations around last-mile delivery. To ensure that you keep the pick-up and drop-off times as low as possible.
So for example, if you want to run an uninterrupted pharmacy delivery, you’ll either need to deliver prescriptions and medicine from the pharmacy store, or from your warehouse.
Amazon Prime was the first to make free delivery a standard, and now 21% of small to medium-sized online businesses in the United States always offer it.
Consumers have come to expect free shipping as a result of this, and these expectations often apply to local delivery services, as well.
However, offering free delivery is not always viable. As you may need to cover related costs such as gas or additional delivery employees.
But if you’re determined to offer free delivery to local customers, you have several options on the table:
You can add the shipping cost to the retail price of your products. But this transfers the cost to the customer and can make you less competitive.
You can add a minimum cart value. Shoppers can only qualify for free shipping if they spend enough money on your products.
You can optimize your delivery operations using the software. Tools like delivery management platforms can help drive operational costs down.
In doing so, you absorb the cost of delivery, but in return, you’re far more competitive. And you can make up for the loss by driving more sales.
But if you don’t want to deliver goods for free, you can charge customers for that service.
In fact, according to delivery statistics, 23% of shoppers would pay more for delivery if it means they qualify for faster fulfillment options.
To set the price, you’ll have to look at how much you spend on fuel, transportation, payroll, and other overhead costs. On a global scale, the average cost of delivery is $6.4 per cubic meter of goods.
In case you own a specialized store, it probably doesn’t make sense to offer local delivery to someone who orders a few small items.
Instead, you can limit the offer to high-margin items, luxury goods, or heavier products that may be difficult for customers to transport home.
You’re not creating unreasonable expectations because customers often pay a shipping charge for larger items anyway.
At face value, there are two ways you can deliver orders to local customers:
You can build an in-house delivery fleet. Or you can outsource operations to a local carrier or fourth-party logistics (4PL) providers.
You can also use apps like Postmates if you’re short on staff or want to use a known brand.
The main thing you should worry about when using an external delivery fleet is the service fee.
So make sure to research how much each carrier will charge to deliver your goods, and whether they’ll do it per order or on a weekly or monthly basis.
Now that you know what you need to consider before you start offering local delivery, it’s time to start offering it.
Here, we outline four steps you need to take to include local delivery to your business offer:
The first thing you need to do is make local delivery available to customers. This means adding it as an order fulfillment option at the checkout on your website.
Your web developer should enable the option for the determined geographical area. And then put a gate to ensure that only customers living within the delivery can qualify for local delivery.
We’ve already mentioned that you’ll have to decide between using an internal vs. external delivery fleet.
The first option requires a substantial upfront investment. You’ll have to hire staff, rent space, buy vehicles, tools, and equipment.
The alternative requires less capital but raises your operational costs. You’ll also lose a lot of control over how the provider delivers goods to customers, which may result in a lower customer experience, as well.
One way to avoid this is by using delivery software, which can help you optimize for performance.
And it can also help you track key performance metrics in delivery logistics to ensure everything is running smoothly.
Local delivery typically has shorter delivery windows. For that kind of rapid fulfillment to work, you need to have a quality supply chain.
If demand exceeds your delivery capacity, your customers are the ones who will suffer because you’ll run out of goods to sell to them.
At the same time, buying too many supplies in bulk means many of your products will be idle. And you’ll spend a lot of money storing them.
One way to work around this problem is to raise the frequency of supply runs and sourcing goods from local suppliers.
That way you come full circle by buying from and selling to the local community.
Once you set the supply chain network, you’ll have to organize the inventory. The quality of your supply chain helps with this, as well.
If you increase the supply run frequency, you won’t have too much inventory, to begin with. That means you won’t have to rent a whole lot of space. You’ll be selling goods almost as soon as you start stocking them.
A delivery schedule, in technical terms, is a road map for how your company utilizes time.
At the same time, the efficiency of your delivery schedules is determined by your schedule.
If a driver, for example, completes his deliveries on time and according to his schedule, there is flexibility to expand his workload and make better use of his time.
If a driver, on the other hand, consistently misses his delivery windows, there is an issue that is causing him to lose time.
It is simple to analyze but difficult to optimize schedules because they must be created on a daily basis.
That’s why many companies are using vehicle routing software like eLogii, and other digital tools to make it easier to plan routes and schedules.
In this part, we’re going to share some of the best practices in local delivery that we’ve picked up over the years.
So if you’re ready to drive even more sales from your local delivery, this part is for you.
Let’s dive in.
Local delivery is a great opportunity for your business to increase sales. That’s why it’s important to ensure you use it to build relationships with your customers.
In fact, 96% of all customers say that their experience is the most important reason behind their loyalty to a brand.
Still, the customer may not always be right. But it’s your job to educate them and provide what they really want. And what do your customers want?
According to a PwC survey about the future of CX, it comes down to five things:
1. Efficiency
2. Convenience
3. A friendly service
4. A knowledgeable service
5. Easy payment
If you shape the service around these four aspects, then you can improve the customer’s experience.
Local delivery is already an efficient and convenient way to fulfill customer orders.
If you offer free delivery and people can request it online, then there is no payment they’ll have to concern themselves with.
So if you can motivate, train and educate your delivery force to always be friendly and knowledgeable, they can pave the way for a much more customer-centered delivery.
People won’t use your local delivery service if they don’t know about it. So you have to promote it for it to get off the ground.
Best of all, you don’t have to spend too much money on marketing because you’re only targeting a narrow audience that’s living near your business.
And you can use both new and traditional marketing channels to do it, like radio, television, newspapers, social media, and email.
Branding your delivery is important when promoting your local delivery.
Uniforms and vehicles in the colors of your brand make your service physically visible to potential customers.
The same is true when you support local events that the community cares about.
To ensure your reputation stays intact, it’s important to have a clear delivery policy. This can protects your business against unsatisfied customers, or people who don’t qualify for local delivery.
A simple delivery policy page on your website that explains who can qualify for local shipping, how you handle returns, missed deliveries, or damaged goods can solve many of these problems.
And if you apply the aforementioned form that’s gated and allows only people who actually live within your delivery zone to use this service, you’ll minimize the chance of complaints.
This can be a problem in urban areas due to the lack of space and high real estate prices.
A way to solve this problem is to use your physical stores as both inventory and depot locations.
At the front, shopping will continue as usual. But at the back, your drivers will arrive to pick up orders for local delivery.
Besides the practicality of using stores as places to stock inventory, it saves you a lot of money, now and in the future.
Since if you need to add a new depot location, you’ll open a new store, and that means a new place where local customers can shop.
We’ve mentioned this several times before. Software is a way to improve the efficiency of your local delivery operations.
From the financial point of view, it helps you to cut costs by helping you to plan better delivery schedules and routes. This significantly reduces expenses associated with delivery, such as fuel, idleness of employees and vehicles, maintenance costs, and other.
It’s also much easier to map out routes with multiple stops. This means your staff at the office can spend more time focusing on other important tasks, like growing your business.
On the other hand, delivery management software boosts customer experience.
With a digital map with precise locations of each delivery agent, you know exactly where each order is, its estimated time of arrival, and whether it’s delivered successfully or not.
All of this can help eliminate human mistakes when it comes to how you plan, manage, and optimize your local delivery.
Giving customers the option of how and when to order products from you, removes the barriers to fulfillment.
Local delivery also enables your business to provide faster fulfillment at a lower cost.
Combined with more focus on customer experience and operational excellence, all of this can raise trust and loyalty. All of which can help your business to become a valuable part of the local community.
Once that happens, and word gets around, sales numbers will go up. You’ll generate more profit, which you can then invest back into improving your service offer.
All thanks to local delivery.
And if you’re looking to go beyond local delivery, we can help you improve your entire offer right now.
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