Last-Mile Delivery 101
Last year’s Pandemic unleashed a new wave of aspiring last-mile delivery entrepreneurs and boy was it interesting to watch. As someone who ran a last-mile delivery service for several years, I had thought I would feel some form of regret for getting out of the business just before what seemed like the right time to be well-positioned. It did not help that my phone kept on ringing during the initial months because people still remembered I used to offer such a service. Well, I didn’t. I had well-founded reasons for shutting down my operations despite the market's promise, and I am overall better for it.
As things have continued to open up more and more the desire for people to use last-mile delivery services hasn’t waned. On the other hand, delivery service outfits seem to be popping up daily with none showing enough staying power. It really is concerning for me to see delivery services not lasting more than 6 months — 1 year regularly, so I feel it wouldn’t cause any harm to share a handful of observations with anyone who is looking to venture into this seemingly lucrative field.
- Last-mile Delivery margins are low: You have to understand that because of the relatively high operational cost of the business, you will not get generous profit margins as simply a Last-Mile delivery service provider. Forget what you have been seeing about the large numbers of delivery companies zipping about the city; you have to provide added services in the logistics value chain to gain more revenue. Either that or you play the numbers game; provide the last-mile delivery service in a high volume market. This isn’t as straightforward as it sounds because Nigeria has mainly three high volume markets and a handful of secondary ones to focus on while they respectively have their unique landscapes, meaning a one model template will be difficult to apply to all.
- Regulators Dream: The last-mile delivery sector is a regulator’s dream. From the VIO, the Local council, the Postal Service, the FIRS, the Advertising and display regulators, etc. Until a solution is found to stop the multiple taxations the only option is to ensure funds are appropriated annually for payment. Non- compliance will lead to a great deal of inconvenience and disruption in operations.
- Introduce Tech into the annual cost as early as possible: It can seem presumptuous but it is better to begin to introduce such things as tracking, mobile applications, automated reporting and customer care bots, etc. This creates a stronger sense of structure and process, not only for the clients but for the staff.
- Strategic partnerships are key: This is a general business rule, but in the last mile delivery space, especially in the early stage where visibility is key, any opportunity to collaborate with other businesses will give the outfit newer opportunities to reach other prospective clients and further cement its presence in an already saturated space.
- Staff Training: This goes without saying but it can’t be over-emphasized. Staff have to not only be trained on basic etiquette or operational procedure, but they also require training on customer care, technology and improvisation. These are the people who give your organization a face in the field, all bases need to be covered to ensure they represent the values you advertise.
Think long term: If last-mile delivery is something you consider a venture to make quick money, you might not have studied the business process properly. On a retail level, last-mile delivery is still relatively new. The potential has not been fully tapped most likely due to a contracting economy and shrinking purchasing power in the targeted demographics. This will ultimately change for the better but will still take considerable time, so the idea is to lay the groundwork now and bide your time until the good times are back. This is undoubtedly going to require significant capital, so ensure you have a deep war chest.