Smart delivery zones lead to faster delivery and more revenue.
For companies like yours looking to grow their delivery business— in food, cannabis, laundry, and beyond—it’s not just a matter of trying to attract as many orders as possible. Sometimes it’s about making data-driven decisions so that the deliveries you make from each store are the right deliveries.
Specifically, it’s about getting your delivery zones right. When your enterprise has defined your delivery zones in a smart way, you end up slashing delivery times, which drives more customers and revenue. In fact, at GetSwift we’ve seen that when delivery times decrease by more than 30 percent, a customer’s order value increases by an average of 12 percent. Moreover, these customers also return to buy about 4 times more than a customer who experienced a slower delivery.
So, how do you start to refine your delivery zones? Let’s focus on three big steps to get your delivery business going on a smart path.
Dive Into Data
First, it’s about diving into your data. (If you’re not collecting your delivery data, GetSwift’s delivery management system can help with that). You can start by looking at a map or table of a day’s or week’s deliveries from one of your stores, and calculating your average delivery time.
Then look for any outliers—any deliveries that were far away from all the others. Try eliminating those long trips from your data, and then go back to look at your average delivery again. If your average delivery time drops significantly, that’s one sign it may be time to stop delivering to those customers from this store’s delivery zone.
While declining a customer is a tough decision, in the end, if the outliers are dragging down your delivery times and the efficiency of your shift, it’s the smart move.
Know Your Algorithm
Second, know that technology is here to help in myriad ways. Most importantly, it’s about a good algorithm. Right as a customer places an order, the algorithm should determine if that delivery would be efficient for your operation at that time. (At GetSwift, we can even tweak these algorithms to suit your unique business). If the algorithm determines it wouldn’t be efficient, there are at least a couple of options.
One option is declining the order by sending the customer a message that you’re too busy at this time. While declining an order should be rare, it doesn’t mean it’s out of the question. If a distant customer is going to hurt your other deliveries, it just might make sense.
Another option is: the algorithm could send a job request to another store that’s better positioned to deliver to that customer. For example, if a customer places a delivery order in Midtown Manhattan to your franchise in the Hell’s Kitchen neighborhood whose drivers are all already downtown, the algorithm could determine that it would be faster and more efficient to deliver from your store on the Upper East Side.
Algorithms can also accomplish much more than ensure that your driver’s routes are optimized. For example, smart dispatching software can group the right orders together and hold orders back until there are enough being made from a certain area. The point is there are efficiencies to be inserted at various stages of delivery, and all it takes is the right tech and the right delivery management system.
Add Stores or Warehouses
Third, just because you want to grow your delivery business doesn’t necessarily mean you should be decreasing your footprint of walk-in stores. If you want to do more delivery and carryout business, you may have to consider adding more locations. Domino’s, which surpassed Pizza Hut to become the #1 pizza chain in the U.S. in 2017, is mastering this strategy by planning to add 2,000 new locations by 2025 because, according to Domino’s’ Chief Operating Officer, “proximity matters. It allows for better service.”
Sometimes this strategy leads to splitting a franchise in two, which you’d think might be bad for one individual franchise, but, in fact, it lets each store provide better delivery and takeout service (namely: better quality pizza) and deliver faster. For instance, when one Domino’s Las Vegas area went from three to four stores, average annual sales increased by an average of $42,000 per store, according to Forbes.
In sum, being smart about your delivery zones is crucial to your growth and success in delivery. The good news is you and your team can start by looking at the data and making recommendations rather quickly. Download the data, come to conclusions, and then start running some tests with your fleet of drivers. You can always start small, but make sure you have a logistics technology provider to help you out along the way.
Is your company looking to get started with delivery logistics software? We’re here to help. Get in touch.