3 Steps for reducing home-delivery costs:
Better order batching and routing
Efficiently handling a greater number of home-deliveries requires automated order fulfillment. Particularly in on-demand delivery, On the other hand, accurately grouping orders means that more orders can go out in the same delivery window, or with the same driver. This increase on-time deliveries, and can decrease the number of drivers needed, but it requires automated processes.
The same logic applies to automated dispatching and routing for deliveries that are planned. It can decrease the number of dispatchers needed and reduce the number of necessary drivers. Moreover, it opens avenues to increase revenue without additional expenses. For example, if a pharmacy can reduce the number of drivers needed for their current capacity, they can consider expanding their geographic delivery range with the same number of drivers. Expanding the geographic area, means more customer which translates in to more revenue for the pharmacy.
More flexible delivery options.
It might seem counter-intuitive but having more delivery options can reduce delivery costs.
How? By ensuring better delivery fulfillment that addresses each customer’s needs.
Imagine you’re online, about to purchase a new refrigerator. The website presents three options: same day shipping at cost, free next day shipping with a 4-hour time window, or free 3-day shipping with a two-hour time window. You have three completely different options, with different ratios of speed, convenience and price.
If your current fridge has broken down, you’ll prefer to get a new fridge today at cost, to avoid losing hundreds of dollars on spoilage. However, if there’s no rush, you’ll probably prefer the free shipping options. If you value your time more than speed, you might even prefer to wait several days, in order to get a shorter time slot.
When companies provide their customers with flexible delivery options, quite a few will choose an option that is less expensive for the business even if it’s also properly incentivized for the customer. Presenting more time slots, or narrower time slots, also guarantees that people choose the time that genuinely works for them; this will prevent many expensive failed deliveries.
From every angle, flexible delivery options are cost-effective. The catch is that they require a tremendous amount of coordination and, most commonly, technology solutions specific to last mile home-deliveries in order to run properly.
Invest in your customer experience
Believe it or not, investing in cust
omer will actually lower your home-delivery costs by reducing failed deliveries.
If customers know exactly when their package leaves the pharmacy, and get an accurate, narrow delivery window, chances are that they’ll make the effort to be at their door to pick it up. If for some reason the customer cannot make the pickup, or if the driver will miss the delivery window, a customer experience app can prevent missed deliveries. Drivers and customers can communicate directly with one another.
This is also where commoditization comes into play. Customers today not only expect delivery, but they have very specific expectations about everything from the type of delivery options, to the delivery costs, and even to how drivers will communicate with them. You don’t have to set new trends, but you do have to match deliveries to patient expectations, or risk losing customers.