With the status of the economy, labor market, fuel expenses, and supply chain challenges, doing retail business is more difficult than ever. Surviving in this market is challenging, and businesses, particularly small stores with less than 20 outlets, must use maximum effort and inventiveness to succeed. Same-day or next-day local delivery is one of the essential services that local shops may provide. Local delivery, whether same-day or next-day, is no longer merely a possibility...It's a requirement for retailers. Food and beverage, medical supplies, pharmacy, car components, and a variety of other industries use it as a basic standard. Offering local delivery, on the other hand, is a wonderful way for businesses to boost sales volume.
As if competing with other local stores wasn't enough, local retailers now must compete with Amazon and other e-commerce sites that sell similar things, offer speedy delivery, and communicate well about sent items. Not to mention the major retailers like Walmart, Target, and the likes who also offer local delivery, make the lives of small businesses a nightmare.
For the majority of customers, same-day delivery is a terrific alternative for their hectic schedules and over 61% of those shoppers are willing to pay extra for that convenience. Consumers are prepared to pay for convenience, and if you provide it, you'll have a better chance of getting repeat business. You leave a lasting impression on your customers and set yourself apart from the competition by improving their experience. If rapid delivery choices are not accessible, you'd be surprised how many customers will go elsewhere.
There are numerous obstacles to achieving effective, efficient, and lucrative local distribution. Delivery at the local level is tough, but not impossible, given these larger constraints. Some of the most prevalent problems and things to keep in mind are outlined below.
6 local delivery challenges:
Limited and competent staff
Travel distance from store to door
Cost of delivery
Limited and competent staff
Finding safe, efficient, and dependable delivery drivers is difficult given the current labor shortage. It's difficult for major players in the logistics industry, let alone the local retailer or business. Finding, training, and retaining a good driver is a difficult task in today's gig economy because it is so easy for someone to job "hop." If you do find a driver, by the time you teach them the art of efficient and proper delivery, they will have moved on to another job.
Local delivery and logistics is not easy for the driver, dispatcher, or manager. When delivering items, there are hundreds of scenarios that come up where a driver needs to make a decision or ask someone for further instructions. “What do I do if no one is home?”, the office is closed for lunch, there’s a big dog in the yard, or the customer refused the items. Do you have a dispatcher or manager who can field those calls?
If you use one of your own employees to deliver, then there are other challenges associated with doing so. Some of those are covered below.
If you use your own employee to make deliveries, the driver and you are liable for the delivery from pickup to delivery. It is critical for business liability to ensure that a driver is properly insured with the appropriate commercial insurance.
It is not enough to have the driver add commercial coverage to their vehicle, as that will cover their car's damages, but what about the car they hit? What if they injure or kill someone? Do you think the driver will say I was just running errands or making a delivery for XYZ company? They will gladly provide the necessary information to shift the blame.
Is your business covered by insurance for that kind of risk? Because the accident did not occur "on premises" or is not part of your "core" business, your general liability policy is unlikely to cover it.
Inefficient Routing and Dispatching
As previously stated, delivery efficiency is critical. One aspect of efficiency is the timeliness of delivery and routing. Delivering late is inefficient, taking detours, and taking routes that take an excessive amount of time and distance are inefficient. Paying a driver for their time and distance without monitoring the route, distance, and time with modern technology can result in some hefty payments and/or reimbursements.
Travel Distance from Store to Door
Distance to delivery is important in both e-commerce and brick-and-mortar stores. Having an order from out of town is great but sending a driver to deliver and return can be costly. Choosing the best delivery radius for your company is dependent on a few factors.
Customer delivery charge
Driver time and distance cost (roundtrip)
Delivery item freshness or longevity (important for groceries or edibles)
The total purchase amount, related cost of goods, and cost of delivery is needed to confirm if making the delivery is profitable. Along those same lines…
Cost of Delivery
As you can see from the challenges listed above, almost all of them involve some sort of financial impact. As with most services, the cost of providing that service is critical to the bottom line. Though same-day delivery was never a requirement for business, the pandemic has made it a must-have service to stay competitive.
Profitable local delivery is subject to the industry and the product being delivered, whether you pass on the entire cost, eat a portion of it, or absorb the entire cost. Depending on the profit margin of the product you sell and the cost of delivery, you can get an idea of the value of providing the local delivery service. If your per transaction profit goes down due to the addition of the delivery cost, but you have a resulting increase in sales, then you come out ahead.
A lower-profit delivery sale is better than no sale. Giving a consumer the option to have a product delivered when they need is essential for customer loyalty. If they like your product, but can’t get it when they need, then they will find another retailer who can. Don’t lose a sale by not offering the service.
As previously stated, having a dispatcher or manager who can answer questions like "Where is my delivery?" becomes distracting and time-consuming. It's important to know where an order is and when it'll arrive and giving the recipient access to this information is priceless. In addition to providing proof of delivery with photos and GPS tracking, live tracking and real-time notifications are a requirement these days. Uber, Lyft, DoorDash and others provide these tech-heavy features that are demanded by consumers. Having the in-house technology to provide this, on the other hand, may necessitate an initial investment and be costly to maintain on an ongoing basis.
Challenges are an inevitable part of doing business and, of course, staying in business. It's all about how we deal with those challenges and make the most of what we have. In today's "need it now" society, with so many industries and businesses offering same-day delivery, businesses must provide the service to survive or lead the pack. As we discovered from the aforementioned challenges, efficiency, cost, dependability, and technology are critical when providing local same-day delivery.
If you provide in-house delivery, consider liability, staffing, and efficiency. Is it a good idea to send a store employee to make a delivery? Outsourcing delivery allows a company to concentrate on its core competencies and provide the best products and in-store service possible.
If you haven't started providing same-day delivery because you're overwhelmed by the challenges or don't know where to begin, we hope we've highlighted the issues you should be thinking about. What is it that is preventing you from moving forward? Can you afford not to provide the service? Are you losing business daily because you don't even provide the service? Could you expand your service area by offering delivery to a different part of town? Could you test a new part of town before opening a new location there?
Local delivery is a must for today’s retailer. Are you ready?