5 Ways to Reduce Costs For Your Delivery Businesses
Resources Blog Delivery Business 8 Ways to Reduce Delivery Costs For Your Businesses

8 Ways to Reduce Delivery Costs For Your Businesses

Published on: November 08 , 2022 Updated on: June 25, 2024 Reading Icon 12 min read

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    By Rahul Saini
    Rahul Saini

    Rahul Saini

    Content Marketing Consultant

    Rahul Saini is a seasoned Content Writing Specialist with a decade of experience transforming intricate technical topics into accessible content for diverse audiences. His expertise spans a wide range of areas, including: Marketing Automation, Salesforce, Technical Documentation, IoT Platforms and Products, Edtech Solutions, SEO-Driven, Products, Financial Tech Products, HARO Solutions.

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    Delivery costs are one of the most crucial financial burdens for logistics companies and the entire supply chain. One of the most popular ways to deal with them is to have a last-mile delivery solution in your technology stack, as these deliveries constitute over 40% of the entire supply chain expense.  

    Ever since the COVID-19 pandemic hit the world, the eCommerce industry has experienced unprecedented growth, with more people moving towards online shopping. Consequently, online brands have had to pay keen attention to new and improved delivery options. 

    On top of that, customers are becoming more demanding and impatient and expect to receive their orders the next or even on the same day, and they don’t even mind paying extra for that. So, if you are a business owner and want to stay on top of the delivery mechanics, you need to cut down on delivery costs that might plague your business.

    This article will look at the top five ways to reduce delivery costs. Let’s begin.

    1. Utilize your resources efficiently

    To execute the perfect cost-saving strategy, you must create a master plan. Time is money, and you need to capitalize on every second if you wish to reduce the delivery costs for your business.

    To manage delivery costs, you must ensure that the right number of products are placed in the suitable transport vehicle at the right time and are delivered using a seamless delivery process. It all comes down to keeping all the stakeholders connected, as it reduces the friction in the process and results in the orders reaching their destination much faster.

    2. Leverage AI-Powered Route Optimization and Geofencing

    Not knowing what’s happening to the orders you dispatch is stressful not just for the business owners but also for the customers. Therefore, you need to deploy robust delivery management software with AI-powered route optimization capabilities.

    The orders will quickly reach customers when the delivery teams travel on a predefined route free of congestion. On top of that, it will also create a geographical area of operation for the delivery partners so that they don’t spend time and resources juggling their existing delivery jobs and incoming deliveries. 

    Failure to implement a technological solution will lead to a high risk of shelling out extra money on fuel and workforce, along with more incomplete deliveries. However, if you can get over these hurdles, you can steer clear of clashes with customers and increase the efficiency of your logistics operations manifolds. 

    3. Streamlining the Supply Chain

    To trim those pesky delivery costs, let’s turn our attention to a critical component: the supply chain. A streamlined supply chain is indispensable in cutting down expenses.

    Leveraging Technology to Forecast Demand and Manage Inventory

    By using predictive analytics, you can anticipate customer demand and maintain the right amount of inventory. No more overstocking or emergency restocks—a surefire way to slash those extra storage and handling fees.

    Reducing Unnecessary Storage and Handling to Save on Costs

    Too much of anything isn’t good, especially regarding inventory. By shedding excess storage and streamlining handling, you’re tidying up your warehouse and significantly nudging down expenses. Remember, every square foot of storage space and each touch of your product costs money.

    Establishing Efficient Supply Chain Practices to Minimize Delays and Reduce Rates

    Optimize the flow of goods from suppliers to customers to dodge unnecessary delays that can balloon costs. Fine-tune your supply chain practices, and watch as improved speed and reliability follow suit—leading to reduced shipping rates and happier wallets.

    • Align with reliable suppliers who understand the value of punctuality.
    • Monitor transportation routes to ensure the quickest, most cost-effective pathways.
    • Invest in training your staff to handle operations with greater competency.

    4. Offer Live Tracking Options to Your Customers

    Today, customers are hooked to their smartphones and get instant updates about just anything through direct messages. Top brands offer them instant gratification during their journey with the brand, and there is no reason you shouldn’t be able to do the same. 

    NetworkON enables your customers to get real-time information about their order in transit, which significantly adds to their experience with the brand. Every time they receive an update about their order, whether it is about the shipping or ETA, they are delighted. Moreover, getting access to a delivery partner’s real-time location when the order is out for delivery and the ability to connect with them directly increases order accuracy and first-time delivery rate. 

    This feature is a must-have for every logistics business as it eliminates the dubious claims that some notorious customers often make, like not receiving the package. In addition, with digital proof of delivery, delivery partners can execute e-signatures, barcode scans, photo-proofs and contactless deliveries without hassle.

    5. Improving Packaging for Cost-Effectiveness

    One of the smartest ways to reduce delivery costs is by improving your packaging strategy. It’s not just about making things look pretty; it’s a critical step for savings. Let’s unwrap the art of packaging without inflating your expenses.

    Choosing the Right Boxes and Packaging Materials

    Every inch counts when it comes to packaging. Selecting boxes and packaging materials that fit your products can dramatically lower costs. Oversized boxes add weight and can lead to paying for space you don’t need. Match your packaging to the size and weight of your items — your budget will thank you!

    Balancing Protection with Packaging Economy

    We know you want your products to arrive in one piece, but that doesn’t mean wrapping them in a fortress. It’s a delicate dance between protecting your goods and keeping an eye on the economy. Use just enough packaging to ensure safety, and say goodbye to unnecessary layers that only add weight and waste.

    Exploring Eco-Friendly and Lightweight Packaging Options

    Sustainability doesn’t just win you brownie points with consumers; it helps your wallet, too. Eco-friendly packaging materials are often lighter and can save on shipping costs, not to mention they reduce your environmental footprint. Consider options like biodegradable packing peanuts or recycled paper — Mother Nature and your accountant will applaud!

    • Think inside the box: the right size can lead to big savings.
    • Layer wisely: protection should never outweigh cost efficiency.
    • Green is great: sustainable materials that benefit the planet and your purse.

    6. Optimize Warehouse Operations

    The agility of your warehouse operations has a direct impact on your bottom line. When your warehouse processes are optimized, you improve efficiency and significantly reduce delivery costs. Efficient warehouse operations lead to quicker packing and dispatching times, fewer errors, and less wasted inventory – all of which contribute to cost savings in shipping.

    Optimize Packing and Dispatching

    To diminish handling time and minimize errors, consider these strategic approaches:

    • Automated Sorting Systems: Implement conveyor belts, sorting systems, and robotics to speed up the sorting and packing of products. Automated systems ensure accuracy and reduce manual labor costs.
    • Employee Training: Regularly train your staff on best practices for packing and dispatching products. This upskilling can reduce the likelihood of mistakes that lead to returns and reshipments.
    • Quality Control Checkpoints: Set up control points within the dispatch process to catch errors before products leave the warehouse. This will reduce the costs associated with shipping incorrect or damaged goods.
    • Warehouse Management Software: Utilize advanced software to manage inventory and track orders in real time. This leads to a more organized warehouse, where products are easily located and dispatched.
    • Standardized Packing Procedures: Create standard operating procedures for packing orders. Consistency in this process can increase packing speed and reduce the amount of packing material used, saving time and resources.

    Streamlining your warehouse operations sets the stage for a more cost-effective and efficient delivery system. Take the time to review your current processes and implement these strategies where needed to see a marked decrease in your overall delivery costs.

    7. Enhance Your Shipping Strategy with Local Delivery and Pickup

    Offering local delivery or pickup options is a powerful tactic to reduce delivery costs for your business and customers significantly. By minimizing the distance your products need to travel and streamlining your distribution, you can achieve more cost-effective and efficient shipping.

    Local Delivery: Cost-Effective and Community-Centric

    Integrating local courier services into your delivery options can substantially cut down expenses associated with long-distance transportation. Local couriers are typically more flexible and can offer competitive rates for nearby deliveries, which helps keep operational costs low while supporting other local businesses.

    Incentivize Customer Pickups to Slash Shipping Costs

    Encouraging customers to pick up their orders directly from your store or a designated pickup point can lead to considerable savings on shipping charges. Not only does this eliminate the need for individual delivery services, but it can also drive foot traffic to your store, potentially increasing in-store sales. Consider offering discounts or loyalty points to incentivize in-store pickups, which can create a win-win situation by enhancing customer engagement and loyalty while reducing logistical expenses.

    • Reduced Delivery Expenses: Local deliveries or pickups save on the costs related to packaging, labor, and long-distance transportation.
    • Customer Satisfaction: Offering convenience to the customer with flexible delivery or pickup options can improve their overall experience.
    • Community Support: Using local courier services fosters community and supports the local economy.

    8. Optimize Savings through Strategic Inventory Management

    Effective inventory management is vital for minimizing delivery expenses and avoiding costly expedited shipping due to stock-outs. Implementing refined inventory practices can result in significant cost reductions.

    Prevent Expensive Last-Minute Shipments

    To avoid expensive express shipping when products unexpectedly run out, employ robust inventory management systems for proactive reordering.

    • Monitor Stock Levels: Use inventory software for real-time tracking, enabling accurate data for proactive reordering.
    • Analyze Sales Patterns: Understand sales trends to predict potential stock shortages and replenish inventory cost-effectively.
    • Set Par Levels: Establish minimum stock thresholds that automatically initiate restocking, preventing stock-outs and costly expedited shipping.
    • Improve Forecasting: Utilize historical data and market trends for better demand forecasting and optimizing inventory management.

    Reduce Holding Costs

    Optimize inventory to minimize excess stock and alleviate the financial burden of unsold goods.

    • Just-In-Time Inventory: Adopt a just-in-time (JIT) approach to receive goods as needed, minimizing warehousing costs.
    • Regular Audits: Conduct periodic manual checks to ensure system records align with actual stock counts, preventing overordering and understocking scenarios.

    Incorporating these practices enhances overall efficiency and reduces unnecessary expenses in your inventory management process.

    Next Step

    Logistics business operates on tight margins and deadlines, and often you might have to deal with some last-mile contingencies. But if you have a robust delivery management system in your technology stack, you can optimize every aspect of your logistics business and reduce the constantly rising costs. 

    NetworkON is a state-of-the-art delivery management software that can be tailored to your business needs from the get-go. Some of the most notable features of this platform include the following:

    • AI-powered route optimization and geofencing
    • An instant digital proof of delivery
    • Accessible fleet and vehicle management 
    • Automated dispatch capabilities
    • Easy white glove delivery execution
    • Special features for bulky and large goods delivery
    • Seamless communication between all stakeholders
    • Easy integration with third-party apps using the NetworkON marketplace
    • Live to track orders
    • Push notifications

    So, do not be afraid of the uncertainties anymore and ensure the success of your logistics business with NetworkON.

    Get a free demo today and see what your business will look like with a NetworkON integration. To know more about it, email us at info@networkon.io.

    Frequently Asked Questions:

    Why is last-mile delivery considered a significant financial burden for logistics companies and the supply chain?

    Last-mile delivery constitutes over 40% of the entire supply chain expense, making it a critical factor in the overall financial burden for logistics companies.

    How has the COVID-19 pandemic impacted the eCommerce industry and the need for improved delivery options?

    The pandemic has led to unprecedented growth in the eCommerce industry, increasing the demand for efficient and reliable delivery options as more people shift towards online shopping.

    Why is it crucial for businesses to focus on reducing delivery costs in today’s market?

    Customers are becoming more demanding and expect faster deliveries. To meet these expectations and stay competitive, businesses need to cut down on delivery costs that can impact their overall efficiency.

    What is the significance of utilizing resources efficiently in reducing delivery costs?

    Efficient resource utilization involves creating a master plan and ensuring the right products are in the suitable transport vehicle at the right time. This strategy minimizes friction in the process and results in faster order deliveries.

    How do AI-powered route optimization and geofencing contribute to cost reduction in delivery management?

    Implementing AI-powered route optimization ensures orders reach customers quickly, avoiding congestion. Geofencing creates a defined area of operation for delivery partners, preventing unnecessary time and resource wastage.

    Why is the automation of the dispatch process important for scaling up delivery operations?

    Automating the dispatch process, as facilitated by delivery management systems like NetworkON, helps efficiently assign new orders to delivery partners without manual intervention, enabling scalability.

    What benefits do live tracking options offer to both businesses and customers

    Live tracking options provide real-time information to customers about their orders in transit, enhancing their overall experience. This feature reduces dubious claims and increases order accuracy and first-time delivery rates.

    What are the key features of NetworkON that make it a suitable solution for reducing delivery costs?

    NetworkON offers features such as AI-powered route optimization, instant digital proof of delivery, accessible fleet and vehicle management, automated dispatch capabilities, white glove delivery execution, and more. It is designed to optimize logistics operations and reduce costs effectively.

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