Offering delivery services to your customers can be advantageous. Depending on the current status of your business, delivery comes in many different forms, such as farm pickup, pickup locations, co-loading and direct delivery. If you are looking to offer direct delivery to your business, however do not have the resources or time to deliver yourself, partnering with a shipping partner could be an option. Here is all you need to know about getting started with a shipping partner:
What is a shipping partner?
A shipping partner or third party logistics provider is a service that receives, holds and transports a product from producer to consumer.
Some advantages include:
- Date management
- Temperature-controlled warehousing and travel
- Co-loading with other food suppliers to reduce costs and fuel
- Saves you time from delivering yourself, and
- They have plenty of delivery experience
There are disadvantages too that include:
- Customer responsibility - If the customer is not there to collect the delivery - the package will be returned to you. Within the food industry, this can be a huge problem. Due to the fragility and time concern with food, there is a possibility that when the product is returned to you, it will be lost stock. Note: This is dependent entirely on your type of product (preserved vs. fresh product).
- Expensive set up and usage fees - There are many upfront costs associated with setting up services with a shipping partner which can be a large investment in the short term.
- Out of your hands - In regards to customer service and accountability, the delivery protocol is out of your hands. If a bad experience occurs with the shipping partner, it reflects poorly on your business.
How do I know it’s right for me?
Ask yourself this:
- What is your current distribution plan?
- What are your customers asking for? Have you considered starting with pickup locations? Determine whether offering delivery is the right step for your business financially at this time.
- Are you fulfilling more than 10-20 orders a day?
- If yes, then you might want to consider partnering with an expert who can save you time. Dependent on your margins and still ensuring profit, it might be beneficial for someone else to take the load off of you.
- Is your business growing or about to spike?
- If this is the case, perhaps your current distribution methods will not be able to keep up.
How do I find the right one?
If working with a shipping partner is feasible for your business, how do I find the best one? Here are some good questions to get you started:
- Do they have an enforced non-disclosure agreement (NDA)?
- What are their hours of operation? Do they ship on weekends and holidays?
- Do they have at least a two-year track record of financial stability they’re willing to share documentation regarding?
- What is their capacity? Are they able to meet your delivery demands?
- Are they located in high-demand areas for your business? Do they have to travel far to get to you/your customers?
- Do they have good customer references from customers similar to your business?
- Do they have experience shipping food products?
- Can they provide necessary documentation regarding food and health safety standards? Are they temperature-controlled if necessary?
- How do they compensate for delays in delivery?
- Can they handle unexpected spikes in delivery demand?
- What is the communication strategy in regards to orders, shipping notices, receiving and adjusting notifications?
- What costs are included in their quote:
Transportation costs - the cost of picking up the product from you
Shipping costs - the actual cost of shipping your product to the customer
Return costs - the cost if a product is returned from a customer to you
Minimum costs - this the minimum cost of using the service. This is important to note when having a slow month.
If deciding to work with a shipping partner, talk to them! Be sure to get answers to the important questions. You don’t want a partner that doesn’t work for your business and be left with unfulfilled orders, unhappy customers, and lost sales.
A common mistake made is jumping into business without proper research. Do your homework! Working with a shipping partner can help your business, however only if done correctly.
If working with a shipping partner doesn’t sound feasible for your business, consider other options for distribution, such as setting up pickup locations and co-loading.