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Should You Outsource Delivery Services For Your Business Or Keep It In-House?

By Tanvir Singh 28th March 2019

In a world full of digital technologies where consumers can get virtually anything from clothes, food, grocery, and everything else they want to be delivered next to their doorstep.

In a Survey by Capgemini, 40% of consumers stated on time delivery services to be a must-have for any food, and grocery business and 90% of consumers said they track every order detail and want deliveries to fit their lifestyle

Last-mile delivery is one of the fastest-growing services out there as more people prefer door-step deliveries. The harsh reality is that if businesses that do not offer last-mile delivery services to their consumers will lose significant customers in the coming few years.

New startups and small businesses will always ponder a question. Should they invest in their own delivery operations or outsource? While they’re trying to figure out their business model. This question is even more serious for established Brands/enterprises, since excelling in Delivery services is not their main forte, but often a deal-breaker for customer experience.

There are two entirely contrasting options to choose from. The option they choose will have a huge impact on how they use their business resources and make day-to-day operations better and successful. As per business needs, the option they choose might help them make deliveries faster and cost-effective to serve customers better.

Before deciding between building an in-house delivery fleet or outsourcing it to any third party, You must consider various aspects of on-demand space carefully.

Keeping Your Deliveries In-House

In-house delivery is a viable option, as some business owners may have the workforce needed to make the delivery. It requires the businesses to deliver the product at consumers end using their own fleets to get good consumers. In-house delivery is an engaging choice for businesses who don’t have a good-quality third-party delivery company working dedicatedly for them.

Pros Of Making In-House Deliveries

  • Profits Higher Than You Expected

As per some studies, the in-house delivery team saves roughly about 50 percent of expenses than running deliveries with the third party. Businesses with existing resources end up making more revenue by having an extra margin in the profits. Moreover, maintaining an in-house delivery team sidesteps hidden and setup costs which are uninvited with the third party players. Not to forget that the staffing burden and incidental expenses will all fall on you.

  • Brand Consistency

Customers relate to the brand for the quality of service they provide. Keeping your deliveries in-house maintain the consistency of your brand on all platforms and your loyal customers will appreciate it. Maintaining an in-house delivery gives you full control as to how your customers are treated and how your delivery operations are carried out. Outsourcing deliveries can sometimes bring possible branding and customer service issues.

  • You’ll be the one and only

In-house deliveries leave you with the complete control of your delivery runs. You can single-handedly operate deliveries for your business and make actionable to improve the customer experience. You act as a sole decision maker in case something goes wrong without having to work through someone else’s management.

Cons Of Making In-House Deliveries

  • Can Lead To Failure For The Unexperienced

Looking after the in-house deliveries is not an early bird’s task. If you don’t have enough experience making last-mile deliveries for your customers setting an in-house delivery service can place a heavy financial burden on the services you offer. You have to make sure that all the deliveries are timely and professional to retain your customers. Often the third party is pretty good when adding delivery to your existing list of services. A third party offers the flexibility to make deliveries up to speed.

  • Heavy Startup Cost

Businesses who are new to the delivery service world will cost a huge startup. Business owners have to recruit new staff to make deliveries. In addition to this business owners need to provide vehicles for making deliveries and pay for fuel, insurance or pay drivers fairly for using their own vehicles. As an owner, you’re responsible for recruiting, training and monitoring delivery staff. Again, these and other associated headaches may not be worth it if you don’t have the bandwidth or resources to take care of everything on your own.

  • 100% Liability

With an in-house delivery service, you are responsible for all the misdeeds happening in your business. You’re bound to incur all the losses, customer’s wrath. You must use your own time and resources to restructure when things are not working as per your plan. It is often said that “With Great Power Comes Great Responsibility” and this concept works aptly correctly when it is about setting up an in-house delivery service for your business.

Outsourcing Your Deliveries To A Third Party

Third party delivery means outsourcing your delivery services to another company. A simple example of third-party delivery is when an e-commerce company pays DHL to deliver its products at customers door-step. Outsourcing delivery to third-party is considered as the most convenient mode of delivery as they carry the experience in the field at par.  

Pros Of Outsourcing Deliveries To A Third-Party

  • Higher Revenue Potential

Both types of delivery services offer a huge revenue potential for the company. Outsourcing the delivery service to a third party might increase the revenue slightly high for your company. Third-party companies are backed by its huge loyal customer base and getting in front of more customers base you stand a chance to make more profits. By leveraging the deliveries to By leveraging a reputable third party’s customer base and resources, you can focus on balancing in house and delivery orders for the best customer experience.

  • Cut Down on Staffing and Labor

Quite simply, when you outsource your delivery services to a third party company they are responsible for handling all the staffing hiccups on their end. They supply all the resources for making last mile delivery smoothly. Business owners don’t have to deal with the increased phone calls related to delivery orders. Furthermore, hiring decisions, and most liability issues associated with driving and insurance, are handled by the third party taking care of your delivery service.

Cons Of Outsourcing Deliveries To A Third-Party

  • Less Potential Brand Spotlight

Third-party delivery service can boost your business to a great extent by showcasing your business products on its platform. They offer an amazing user interface experience via mobile apps and it’s their brand that gets the brand spotlight. This can create a disconnect between your brand and customer base.

  • Reduced Profits

Third party delivery companies operate at a very high costing. They charge a percentage of every delivery they make for your business. So while the third-party delivery company can push your sales with their customer base, it all comes at a premium. You’ll soon notice that a significant amount of your profit will now be of the third party delivery company.

  • Lesser Control On The Services

Once you handoff your delivery services to a third party company there’s a lot you lose control over your operations. Once the package leaves warehouse you have no control over it. There is always a probability that a third-party delivery company mishandles the product, delivery it late or talk to the customer rudely. Your brand name is always at a stake.

Wrap Up

I believe now you have the right understanding of the pros and cons of running delivery services in-house or outsourcing it to a third party. The high costs and transportation concerns associated with in-house delivery make it an option only suited to well-established, larger businesses that can comfortably take on these burdens while still being able to provide value and innovate. For small and medium-sized businesses outsourcing the delivery services to the right party sounds like the best option.

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