Thanks to eCommerce giants like Amazon, we’re all familiar with same-day shipping. In fact, it’s quickly becoming an expected part of the shopping experience.
While this shift has primarily affected B2C retailers, it’s having ripple effects across every industry — even construction.
Contractors are already realizing the benefits of on-demand materials delivery, including reduced carrying costs and increased productivity.
Building suppliers like Home Depot, Emco, PPG and Sherwin Williams have taken note. Many have rolled out same-day and two hour delivery options in the past few years.
To stay competitive, suppliers need to reevaluate their delivery offerings.
In this article we’ll look at the trends influencing last mile construction materials delivery and what suppliers can do to stay competitive in 2020 and beyond.
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What is Last Mile Delivery?
Last Mile Delivery is the final step of the delivery process where materials make their way from a distributor to the final delivery destination — typically a consumer residence. In construction, it often refers to the delivery of materials from a supplier to the job-site.
The last mile is one of the most important parts of the delivery process. Even if it’s handled by a third party, it can have a huge impact on how consumers view your company — and whether they choose to buy from you again.
The last mile also accounts for around 53% of your total transport costs. That means reducing your last mile delivery costs can have a big impact on your total freight costs — but they need to be balanced with a focus on customer experience. Last mile logistics focuses on delivering products as quickly as possible, with an eye to creating a seamless customer experience.
How Amazon is Influencing Customer Expectations
10 years ago it would have been hard to imagine ordering something online and having it delivered within a few hours. But that’s exactly where last mile delivery is headed — and leading the way is Amazon.
CNN Business reported that Amazon is spending an extra $1.5 billion to transition to one-day shipping this year. And they’re investing heavily in technology that will allow them to deliver parcels in 30 minutes.
“When we have a full drone fleet you’ll be able to order anything and get it in 30 minutes if you live near a hub that’s serviced by drones.”
— Jeff Wilke, Amazon CEO of Worldwide Consumer
Drone delivery fleets may seem like some distant sci-fi version of the future. But it’s not just Amazon investing in the technology. Alphabet, FedEx and UPS are all heavily researching drone delivery. And while drones may be contained to the consumer market future for now, the rising expectations for same day delivery are having ripple effects in construction.
Contractors expect materials to be delivered quickly — and building materials suppliers are taking note. Major merchants like Home Depot, Emco, PPG and Sherwin-Williams have all rolled out 2 hour delivery in the past few years.
As if this wasn’t enough competition for suppliers — Amazon is also moving into construction. They currently hold the #4 spot on MDM’s list of top industrial and construction products distributors in North America. For context, they didn’t even make the Top 40 last year.
To compete against Amazon and other major merchants, suppliers need to offer the delivery options that customers want. And that means on-demand, within a few hours.
Realities of Last Mile Delivery in Construction
As we’ve discussed already, expectations for delivery are rising. But too often merchants view 2 hour delivery as a cost centre — or even unnecessary. They assume getting supplies out the next day is good enough.
But unlike the consumer market, where waiting an extra day isn't (usually) table stakes — delays of even a few hours can have costly implications for contractors.
When materials are delayed, tradespeople need to wait to complete work, leading to lower productivity and expensive delays. In fact, one study found that building costs were 9% higher when contractors didn’t use just-in-time materials delivery.
This is why next day delivery doesn’t cut it.
If a contractor needs materials at their site in the next few hours, they’re not going to wait for you. They’re going to hang up and call the next supplier who can meet their needs.
How Merchants Can Prepare to Offer 2 hour Delivery
By now you should hopefully see that on-demand delivery can help you stay competitive and earn back revenue from competitors.
The question now is… how are you going to fulfill those deliveries?
Many merchants have a fleet of delivery trucks already, but these fleets aren’t prepared for 2 hour delivery. As a result, store employees often have to complete last minute deliveries — and this is expensive for suppliers. Not only are you paying hourly wages and mileage charges for employees to complete deliveries, you’re also paying for productivity losses.
A better solution is to outsource some (or all) of your last minute deliveries to a on-demand partner. Let’s look at two common situations where outsourcing can help.
Merchants with Existing Fleets
To handle 2 hour delivery with your fleet, you need to have capacity on hand at all times in case an order comes through. You’ll have to pay for trucks and drivers to sit on your lot “just in case.” This often means your fleet utilization goes down — and your OPEX costs skyrocket.
A better option is to augment your existing fleet with an on-demand delivery partner. Your delivery partner can handle last minute deliveries on-demand — so you just pay for the service when it’s needed.
You can also use your on-demand partner for emergencies or peaks in service. For example if your regular driver is sick and you need to complete a delivery, you could schedule it with an on-demand partner. This can also help reduce your CAPEX and OPEX costs by eliminating the need for additional trucks and drivers.
MERCHANTS WITHOUT FLEETS
If you currently rely on couriers to fulfill your deliveries, you can run into cost issues when ramping up for 2 hour delivery services.
Typically couriers charge by size, weight, or item quantity — which can add up fast when you’re delivering construction material supplies. Delivery can turn into an uncontrolled cost centre that’s hard to forecast.
Instead of using couriers (or trying to build out a fleet) a better option is to use a on-demand logistics partner. These services typically charge a set price per vehicle size making it easier to forecast delivery costs. Plus some last mile delivery services (like GoFor) are meant for the construction industry — so drivers are familiar with job sites, wear proper PPE, and are trained on delivering dangerous goods.
The Bottom Line
The future of last mile delivery is on-demand. And it’s already here.
With giants like Amazon entering the construction space and large merchants offering 2 hour delivery you need to start looking at your delivery offering now to stay competitive.
Regardless of if you have a fleet, outsourcing last minute deliveries can make it cost-effective to offer 2 hour deliveries. Look for services that are specialized for the construction industry, require drivers to wear PPE, and have the right vehicles for your needs.
With the right delivery partner you can easily offer 2 hour delivery — and start winning business back from your competition.