How On-Demand Businesses Affect The Logistics And Courier Industry

nilay_rounded_152885823c.pngNilay D

Year on year, businesses across industries strive to be customer-oriented by aligning their product lines and/or services with customer needs. It is due to the rising customer-centricity that has increased the popularity of on-demand businesses.

This particular business model provides quick and convenient delivery of products on customer's doorsteps. These models pivot around speed and easy access to efficiently address evolving customer needs.

On-demand businesses function through on-demand platforms accessible through websites and mobile applications. Customers can pick products, place an order, and pay for them through digital platforms — in just a few clicks and also track their orders in real-time.

The same is with service industries. Think Airbnb! Customers can conveniently book a place to stay for a set number of days or weeks and stay updated with the Host until they reach the destination to take over the place.

Get anywhere, get anything with Uber.

Uber is an aggregator app-based platform that offers on-demand services for cabs, food, and freight. Their business model has disrupted the logistics and courier industry with convenient bookings, upfront pricing, and real-time tracking.

The emergence of on-demand services worldwide has facilitated businesses to jump on the bandwagon and automate their services.

A BIA/Kelsey research shows that the total US transaction value of the on-demand economy grew to $57 billion in 2017 from $22 billion in 2015. That is more than 50% YoY growth.

Impact of eCommerce growth on logistics

Ecommerce has been booming for many years now. It has attracted customers with competitive pricing, easy returns, fast and free shipping. The convenience offered by on-demand businesses essentially became a blessing during the COVID-19 pandemic.

As the world came to a standstill, customers needed more convenient options to buy essentials through their smartphones. Ecommerce growth has changed consumer behavior and particularly impacted logistics companies in several ways, such as:

impact of eCommerce growth on logistics

  • Last-mile delivery is gaining importance as companies are restructuring their fleets to augment just-in-time (JIT) delivery.
  • Logistics companies have shifted focus on scalability to keep up with eCommerce fluctuations.
  • Companies are opting for centralized distribution centers to speed up delivery and address scalability issues.
  • Logistic service providers are also redesigning their freight pricing models to fulfill free shipping and 'same-day delivery' for premium orders — despite decentralized lockdown in many countries.

But can delivery companies keep up with the eCommerce boom?

If there is one thing that the pandemic has taught us, we have more power than we think to evolve and adapt to external stimuli. The same case is with businesses. Many delivery companies are reworking their operations, pricing, and agreements to keep up with the rising demand for eCommerce deliveries. They are streamlining their processes with warehouse automation and robotics to improve profitability.

Traditional logistics and on-demand businesses: Challenges

challenges in traditional logistics and on-demand businesses

The on-demand business approach is challenged by a range of traditional logistics and supply chain models such as:

1. Delayed delivery

Traditional logistics involve multiple agencies for delivery services. It may lead to delayed delivery as drivers may not be able to track the destination or coordinate with the customer for delivery timing. There is also a risk of the package being misplaced.

2. Higher cost

The cost involved in handling and coordinating with third-party delivery companies is much higher than the charges of simple automation and optimization tools.

3. Changing customer expectations

A traditional logistics business model cannot keep up with the ever-rising customer demands of quicker delivery at minimal rates. When on-demand businesses are hesitant to automate, that only adds to the pile of troubles.

4. Cumbersome processes

Multiple agencies are involved in managing the logistics of a traditional courier company. The business process involves complex coordination and data sharing, which is tedious and time-consuming. Human intervention can cause errors.

5. Too much paperwork

Goods dispatch and delivery receipt is recorded through pen and paper in the traditional logistics model. Manual processes are more prone to errors, and maintaining too much paperwork is cumbersome. Why do it manually when documentation can happen online?

6. Poor customer support service

Courier companies following traditional processes rarely have robust customer support or feedback mechanisms. Delayed delivery along with non-availability of shipment status leads to an increase in customer frustration.

Poor customer support reduces customer loyalty and increases the attrition rate. On-demand businesses may not realize the damage caused by poor customer support service immediately, but this will definitely have long-term effects on their bottom line.

Leveraging technology in logistics

Despite the roadblocks that traditional supply chain management pose, many tech stacks are changing how the on-demand businesses in this industry function:

leveraging technology in logistics

1. Tracking on the go

Integrating technology into the delivery process allows you to track shipments in real-time. You can also optimize delivery routes and customize delivery schedules through a courier app. It enhances customer experience and improves the efficiency of your delivery processes. 

2. Access to the data analytics

You can use the data collected through your technology-based tools to make informed decisions. Real-time analytics can be used to gain insights and resolve customer issues effectively. No more relying on manual calculations to come up with insights.

3. Smart route planning

Optimize the performance of your delivery team with logistics app-based route planning. You can manage deliveries by assigning the shortest and most effective route. Save fuel costs with agents delivering more orders in less time.

The current scenario will even help you detect COVID-19 containment zones to keep your delivery agents safe and accordingly inform the customers in case of any delivery delays.

4. Efficient order management

On-demand courier app development ensures the platforms have intuitive in-built interfaces. You can easily schedule pickups and monitor the delivery of your packages from a single dashboard. The functionality also minimizes the number of missing packages and courier thefts.

Benefits of on-demand logistics apps

Given how tech-savvy today's customers have become, it is not surprising to know they want advanced features in every service. The logistics and courier industry is no exception either!

To offer a swift, cost-effective and efficient delivery service, businesses can rely on on-demand logistics apps and utilize the following benefits:

benefits of on-demand logistics apps

1. Convenience

On-demand logistics is dynamic, and managing it through an application provides convenience. Your customers get the option to order, schedule, and track the delivery of products. They are stress-free when they know where their shipment is in real-time.

You can also coordinate with delivery agents and backend teams through the app, thus reducing friction and miscommunication. Having current info about deliveries can help you offer better customer service.

2. Cost-effectiveness

Streamlining your courier business operations through a dedicated app improves your ROI. Automation facilitates the optimization of resources and reduces the need for third-party integrations. You can deliver more in less time, improving the efficiency of your business.

Plus, contrary to popular belief, the cost to develop an app is not as high as it seems. Consult a development company to understand the project’s pricing better.

3. Enhanced security

Data security is of utmost importance to logistics companies and their customers. Robust on-demand applications offer high levels of security for all your data. You can breathe easily knowing your sensitive information is adequately safeguarded on the cloud.

4. Smooth supply chain management

An effective tracking process facilitates convenient communication among delivery persons and backend teams. Real-time information sharing helps streamline your supply chain operations.

5. Ease of warehouse management

Customized on-demand applications put warehouse management at your fingertips. You can keep stock of your inventory and scale as per demand. It helps in reducing overhead costs and unnecessary wastage for you to manage.

6. Effective fleet management

The real-time tracking of the fleet empowers all courier service providers to manage their vehicles properly. Backend teams can stay connected with delivery persons and drivers throughout the dispatch to delivery cycle.

24/7 connectivity allows you to coordinate with drivers for diversions, changes in weather conditions, shorter routes, and traffic jams. Logistics apps also alert you for preventive maintenance of your vehicles.

Future of on-demand logistics: what does it hold?

The world has changed exceedingly fast in the last 18 months due to COVID-19. We are more online than ever. Social distancing is the norm. There is still a lockdown in many different countries (and cities).

Naturally, this calls for logistics and courier companies to use innovative solutions such as drones, self-driving trucks, and AI-powered robots to automate as many processes as possible and achieve maximum efficiency.

future of on-demand logistics

1. Advanced delivery algorithms

Automate your supply chain with advanced delivery algorithms. Leveraging features like task-order matching and route optimization improve the efficiency of your business. Analyzing data from your on-demand logistics app will help identify process flaws and enhance your team's productivity.

2. Drones

Using drones for deliveries will speed up the delivery process and make it error-free. Last-mile operators can leverage the technology to reduce costs and improve delivery timelines.

Many eCommerce companies like Amazon use drones and offer quick delivery to customers paying premium prices. They anticipate it will streamline their last-mile delivery and optimally utilize their warehouses by increasing per day delivery volumes.

3. AI-enabled robots

Automating logistics services through AI-enabled robots helps in making warehouse operations agile. The robots smoothen operations on the floor with smart batching, quicker sorting, and more effortless movement of goods. These offer convenient warehouse management and improved resource optimization. Companies can save costs and deliver more with greater precision.

4. IoT integrations

IoT applications have spearheaded the transformation of the logistics industry. This addresses typical supply chain challenges through connected devices. Companies are implementing IoT in supply chain management for warehouse management, real-time fleet monitoring, predictive maintenance, cargo tracking, and even optimizing last-mile delivery.

iot in supplychain management guide cta

5. Self-driving trucks

Autonomous vehicles are among the most advanced technological solutions in the logistics industry. The improved speed and scalability offered by them have a significant impact on profitability and for a good reason.

They can assist in case of a shortage of drivers and even help with any maintenance requirements. These trucks are equipped with IoT devices to enable route optimization and platooning for higher cost-efficiency.

6. Blockchain

Blockchain in supply chain management addresses multiple challenges. It offers transparency and security to all parties, including warehouse teams, drivers, and even customers. It helps you monitor fleet performance and keep track of freight capacity in real-time. The technology comes in handy in resolving compliance issues and identifying fraud risks.

How leading logistics and courier companies are pivoting

Of course, on-demand businesses cannot function unless their logistical support also keeps up with the technological trends. Here are four businesses worth mentioning:

leading logistics and courier companies

1. FedEx

The multinational delivery services company has expanded its supply chain to accommodate the rising demand for deliveries due to the eCommerce industry boom. The company values customer satisfaction and has implemented virtual assistants to deliver a frictionless customer experience. They are also focused on intelligent solutions such as bots and drones to facilitate 'same-day delivery.' 

2. Amazon

The tech titan is expanding its warehouse management and delivery capabilities. Amazon Robotics business unit manages the e-commerce giant's warehouses through robots. They are also using drones for their pilot project known as 'Prime Air.' They are committing to deliver goods within 30-minutes of ordering.

3. Walmart

The retail giant is considered a leader in the adoption of innovative supply chain management solutions. They are focused on data sharing and collaboration for effectively managing their inventory on a large scale.

As the company stepped into the online business, it leveraged technology to boost sales. Walmart offers real-time discounts to customers ordering large quantities or multiple products. 

4. Uber Freight

An Uber business, it has transformed the trucking industry with its algorithm-based applications. The platform helps trucking companies find loads through a frictionless interface.

Using the Uber Freight app, truck drivers can improve their productivity and cost-efficiency. The app cuts down middlemen, and drivers can ensure lesser empty runs of their vehicles.

Hiring logistics service companies vs. Building your logistics channel

Without a doubt, on-demand delivery is here to stay, owing to the increase in digital penetration during the pandemic.

So it is not surprising that for on-demand delivery service providers, a fundamental question arises is whether they should hire a third-party delivery service provider or build their app.

In our opinion, developing a custom solution is a better idea for most companies. It is cost-effective and scales effectively in response to your business demands. An end-to-end solution will be easy to deploy and integrate with your existing systems.

It would evolve as per industry needs and keep your systems updated with the latest trends. If you opt for a good logistics app solutions development company, the entire process will be hassle-free, ensuring you spend more time managing your business.

Work with a sensible development team

Depending upon the scale of your operations, if you do choose to build your own logistics management platform, you must ensure you hire the best team for the job.

Wrong investment can take up additional time, cost, and effort at your end. Plus, let us not forget the maintenance costs can be hefty. It would be best if you worked with developers who understand your vision and share your entrepreneurial spirit.

That is where Intuz enters the picture. Our team has worked on many logistics and supply chain industry projects and can easily develop a custom solution for your business requirements?

Please share your contact details to get started with us, and our expert team will help you become the leading on-demand business in your niche with the help of technology.

Nilay D

Nilay D

Being in the industry of software development for more than 18 years, Nilay D is expert in Advising the right product suite to the clients. He has consulted numerous start-ups, SMBs and many fortune 500 companies for IT solution development.

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