Carrier diversification is a trend that is continuing to gain traction. This season’s peak season surcharges from national carriers like UPS and FedEx confirm that shippers using just one carrier face higher costs and less personalized service. It’s not just about mitigating the risks of putting all your eggs in one basket - shippers have discovered that diversifying their last-mile carrier mix can give them more granular control over service levels and costs. A multi-carrier approach can optimize capacity, improve customer satisfaction, and reduce costs.
According to Deloitte, brands that diversify their carrier mix with non-legacy carriers can “support growth and service performance.” In the large urban markets where most customers live, regional carriers that provide last-mile delivery services are better equipped to provide faster turn-around times, higher on-time delivery rates, and more personalized service than national carriers—all at a price point comparable to the national carriers’ ground rates. Industry analysts forecast the global last mile delivery market will climb to $200 billion by 2027. Small regional carriers are the fastest-growing sector in last-mile delivery.
The following seven questions can help you determine if a last-mile delivery provider has what it takes to meet and exceed customer expectations.
#1. How fast and reliable is the delivery service?
The standard ‘free shipping’ option for most online retailers is two- to five-day ground service from one of the national carriers. If you’re among the growing number of retailers who have decentralized your inventory, you can often cut a day or more off delivery times by working with regional carriers and bypassing legacy carriers’ hub-and-spoke distribution networks.
Faster delivery pays off. A new survey from Coresight shows that brands that can guarantee two-day or faster delivery will see on average a 10.5% increase in conversion and an 8.9% increase in repeat sales. It’s important to find regional carriers that can provide expedited delivery services with on-time delivery rates that exceed your current delivery partners.
#2. How do the costs compare with national carriers?
Consumers want delivery fast and free, but a large majority will choose ‘free’ over ‘fast’---a brand’s ultimate goal is to provide both, exceeding customer expectations on delivery times and fees. Next-day delivery at a price point comparable to national carriers’ ground rates is the sweet spot for top-end regional carriers. When reviewing last-mile delivery service costs, be sure to look for straightforward competitive pricing without added surcharges for fuel, residential delivery, or peak-season deliveries.
#3. Are service levels flexible enough for my needs?
If one-size-fits-all doesn’t fit your business needs, look at what levels of flexibility a carrier can provide. Can you customize your customer’s experience with personalized and branded messages? Can the carrier provide white-label tracking capabilities? Is there flexibility around injection times and how packages are bundled for optimized delivery times at the carrier’s sortation centers? If a load is delayed in transit, can the carrier accept packages late and still get them to your customer on time? Is the carrier able (and willing) to make accommodations for any special requirements you might have?
#4. Can they scale?
Package volumes can scale due to peak seasons, promotional offers, or simple organic growth. It’s critical that you partner with a carrier that can scale up and down with you. Asset-light regional carriers—delivery service providers that are not reliant on expensive, company-owned assets—have the advantage of being able to spin up sortation and warehouse capacity quickly in urban centers. And there is a ready-made supply of gig drivers looking for the consistent payout that batched last-mile delivery routes can offer. Whichever carrier you choose should be able to demonstrate how their technology and operations support your scalability needs.
#5. Is real-time tracking available?
Your customers want to know what’s happening with their deliveries. One recent survey found that 90% of respondents wanted to be able to track their orders, and half of consumers blame negative delivery experiences on poor communications.
To keep customer satisfaction in check, your last-mile delivery partner should provide real-time status updates from the warehouse to your customer’s doorstep, including real-time driver location information when the package is out for delivery. This is a value-added capability that not all carriers can provide. Poor tracking capabilities can cause confusion and create negative experiences for your customers, which not only damage your brand’s reputation but could cost you repeat business.
#6. How quickly can you be up and running?
In that same Coresight survey mentioned above, shippers identified integration issues as a major pain point driving higher costs. With traditional carriers, it can take months to get up and running. With the right technology, the best regional carriers can reduce the onboarding process from months to mere weeks. Look for providers that have pre-built integrations with your existing shipping platform and/or simple, well-defined APIs and webhooks to optimize technology integrations. When it comes to operations, you want a carrier that can provide flexibility on package injection locations and times to match your operational parameters.
#7. How are they addressing sustainability concerns?
We hear a lot about electrification, but the reality is that the transition to electric and other alternative fuel sources will take decades to accomplish. In the meantime, strategies like reducing unnecessary miles and optimizing vehicle utilization can help reduce fuel consumption and CO2 emissions. Sorting packages closer to the end customer and dynamic routing technology can reduce last-mile travel distances.
The use of gig drivers and a variety of vehicle types also allows for better matching of load to vehicle capacity. Adding alternative fuel vehicles where appropriate can further reduce CO2 emissions. Your carrier should employ all of these strategies.
The trend towards carrier diversification in the last mile is growing because it provides real, tangible benefits to brands. As an ecommerce business, you can get everything right - from the product selection, cost, customer service and ordering process - but if the delivery is subpar, the customer will not be happy. That’s why it’s crucial to explore your shipping options going forward.
The potential benefits of diversifying your carrier mix can pay off in multiple ways, from the costs you save on shipping to the repeat business you’ll earn from loyal customers who will become your biggest brand advocates.
