As we have been discussing, in the earlier parts to this co-delivery series, as a food supplier, your most important cost is distribution. It’s the difference between a profitable and unprofitable operation.
In part one of this series, we talked about the importance of co-delivery and why it needs to be implemented and in part two, we looked at the parameters of shipping food and how to properly implement co-delivery into your business.
As a small supplier, you can’t do it all yourself, and sometimes you get caught between a rock and a hard place. You know you need new customers to grow your business, BUT shipping to new customers is so expensive!
So, how do you find the right balance and keep a healthy margin?
Last year, three Local Line suppliers were all working on their own independent distribution plans: Vibrant Farms, Arrowhead Meats and 5 Chicks and A Farmer. Once they connected through the Local Line marketplace, they were able to combine delivery routes, increase efficiency, dramatically lower distribution costs, and ship to new customers.
What does it look like for them?
Shipping company - Arrowhead Meats
Shipping frequency - Every other Saturday
Transportation - Non-refrigerated delivery truck
Pricing - Farms are billed after delivery by Arrowhead Meats (shipping company) for their orders based on weight and size of boxes.
Conditions - The customers must be home to accept the delivery.
6:00-8:00 PM - All orders for shipping need to be in to Arrowhead Meats
6:00-8:00 PM - Customers are given delivery schedule to ensure they are present for delivery.
5:00 AM - All products are taken out of the freezer and put into insulated packs.
7:00 AM - Arrowhead Meats truck hits the road from Listowel, ON. Picks up orders from Vibrant Farms and 5 Chicks and a Farmer, just outside of Waterloo, ON.
7:30 AM - Delivery starts for the day making customer stops in Hamilton, Oakville, Toronto, and Markham before turning around and heading back to Arrowhead Meats.
A successful co-delivery system is based on an understanding between farmer, driver, and customer. When communication is frequent and expectations are clear and realistic, you can create a well-oiled co-delivery machine!
What have been the benefits of co-delivery to their businesses?
“Co-delivery makes our distribution more efficient. If we can get the truck as full as possible for the driver, we can deliver to more locations and everyone wins.” Luke, Arrowhead Meats
The new co-delivery program allowed Arrowhead Meats to fill their truck. Sounds simple but this is not always the case for farms. Often transport vehicles are left 50% empty; therefore transporting the products of other local food suppliers allows Arrowhead Meats to be methodical when delivering. Co-delivering also allows the driver to hit as many locations on one route. The route optimization tool in the Local Line platform ensures they see decreased fuel costs and more efficient schedules for their drivers.
Reach more customers
The ability to provide shipping to a larger area due to co-delivery, allows 5 Chicks and A Farmer and Vibrant Farms reach a larger customer base as Arrowhead Meats already provided shipping to the GTA.
“Co-delivery has allowed us to reach more customers. We didn’t have the staff to be able to offer delivery services, therefore having the ability to share the cost is very helpful.” Kathryn, Vibrant Farms
Ensuring PRODUCT quality control
This form of distribution allows you to work with people who know the industry. When using an outside distributor, sometimes they are unaware of how to properly store your products and how to manage direct to customer deliveries. If you’re not careful, this can lead to lost product. Luke from Arrowhead Meats explained that he once used an outside distributor, and at the end of the day the meat was returned to the farm barely covered in plastic and completely un-thawed because a customer was not there to answer.
What are the challenges of implementing co-delivery?
1. Temperature controls
When co-delivering meat products, you must maintain a consistent temperature during transportation. This can be a challenge on hot summer days, especially if each farmer is delivering to different customers. Each stop adds up, so you need to monitor your products condition carefully. That said, it doesn’t have to be complicated. Arrowhead Meats simply ships the products already frozen, and packages them with insulated boxes.
2. Insufficient orders
The challenge for Vibrant Farms and 5 Chicks and A Farmer is ensuring that enough orders are placed during each order period to make shipping financially feasible. The fewer the orders being shipped, the more expensive it is to ship per box. To help them with this, they followed some tips on how to increase your order intakes.
Any tips for farmers and food suppliers looking to start co-delivering?
- Start small - This allows you to scale your business and make sure the key things are working. Start with one vehicle and less frequent delivery trips. See how that goes and think about growing.
- Work with like-minded people/businesses - Working with farmers nearby who deliver similar type products will allow for the best partnerships. The people you are working with will understand the challenges of shipping your product and will make doing business easier.
- Consider parameters of food shipping - Always keep in mind the three parameters of shipping food products: timeframe for optimal freshness, temperature control, and compatibility of shipping partners.
- Beginner? Find a farmer that is already shipping - If you are just starting out to offer delivery for your business, look for a farm that has been shipping for a while and see if you can add your products to their vehicle. Delivery takes a lot of time, and requires employees to be able to execute; therefore use your time more effectively at the beginning.
For Arrowhead Meats, Vibrant Farms, and 5 Chicks and A Farmer, their businesses are much better off now that they’ve found each other! This kind of partnership allows for local food to reach more customers and make it more feasible for food producers to do so.