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Elite Extra
[WHITE PAPER] THIRD PARTY DELIVERY REIMAGINED: THE DELIVERY NETWORK MODEL FOR 3PL
How to Best Deliver With Fleets Like Lyft, Uber, DoorDash & More
WRITTEN BY: COLTON WARD | ELITE EXTRA
Third party logistics (3PL) has taken the logistics industry by storm and has uprooted the way we think about delivery opera the last few years, outsourcing logistics functions has become a
In the last mile, recent tech advancements have paved the way on demand delivery services for companies looking to deliver their products. This concept has grown in popularity over the past few years as consumer delivery demands have skyrocketed while staff and driver shortages have worsened. This form of 3PL has helped companies bridge this gap and offer more streamlined
of delivery apps such as DoorDash, Uber Eats, Postmates, and more in the restaurant industry. However, third party delivery is gaining popularity outside of food delivery, and industries are now using outsourced providers to deliver products like auto parts,
This concept has proven to be a brilliant way for companies to get products to their customers even when their internal delivery resources may be lacking. But is the outdated implementation of third party delivery—where companies partner directly with a single third party provider—the best form of this innovation? Is there a better model out there for third party delivery that limits the drawbacks of this approach?
mentation of third party delivery during the Covid-19 pandemic:
[CASE STUDY]
Third Party Food Delivery During Covid-19
SETTING THE SCENE
At the height of the global pandemic in 2020, lockdowns spread throughout the world, and restaurants were placed in an impossible situation. These already tight-margin businesses were forced to close their dining rooms, and consumer spending at their restaurants dropped by 29% (Marchesi, 2022). At this rate, Covid-19 was becoming an existential threat for many restaurants.
Third party delivery through online platforms like DoorDash, Uber
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Eats, etc., was the saving grace these businesses needed to menu items easier than ever before. Restaurants even saw delivery revenue growth during this time of uncertainty and economic turmoil (Ahuja, 2022). These platforms became so popular during the pandemic and beyond that online ordering grew 300% faster than in-house dining in 2021 (Fundera, 2021).
On the surface, this case appears to be a massive win for the third party delivery concept: restaurants, unable to reach their Meanwhile, customers who were barred from visiting their favorite restaurants could order and receive their food more easily than ever before.
Unfortunately, our story doesn’t end here.
THE FAILURES OF THIRD PARTY DELIVERY
As stated above, many restaurants saw growth in their delivery this period, in many cases resulting in negative margins. Tradi meanwhile the delivery charges from these third party platforms were roughly 15 to 30 percent (Ahuja, 2022). The fees charged by delivery apps were not sustainable for these restaurants to handle, especially when the businesses couldn’t rely on high-margin dine-in sales (wine, alcohol, etc.) to foot the bill. This created an environment where third party delivery helped some businesses weather the Covid-19 pandemic, but the model was not sustainable for the long term.
Additionally, throughout the pandemic, several legal disputes surfaced between these delivery app providers and the restaurants they were serving. One such case involved an antitrust lawsuit where a collection of popular delivery apps were accused of delivering through other platforms, direct delivery, takeout, or din two popular third party delivery apps for “deceptive and unfair tactics” that harmed restaurants during the pandemic (Robertson, 2021). These tactics included falsely advertising delivery services without restaurant consent, charging customers misleading fees, and hiding additional delivery costs.
Though third party delivery was an ingenious way for restaurants to reach their customers outside their dining rooms and provided an improved customer experience for purchasing food, it proved to be an unsustainable and harmful practice for many businesses.
WHAT CAN WE LEARN?
As convenient as it would be to mark this experience as a failed experiment for this delivery model, its impacts are too extensive to be ignored. In the restaurant industry, the online food delivery (Statista, 2022). This means third party delivery isn’t going anywhere, and restaurants will have to continue relying on delivery apps to service customers ordering online.
Beyond the restaurant industry, consumers are increasingly purchasing their products online and are expecting fast, reliable delivery apps have once again stepped in to help. Uber, Lyft, Doordash, and many more delivery apps are now offering same day delivery of products along with food.
third party delivery avoid the pitfalls seen in its initial implementation during the Covid-19 pandemic?
First, companies must move past the one-to-one partnership model of third party delivery. As was seen in the restaurant industry, a one-to-one partnership with a third party delivery provider gives the provider too much power to dictate prices and the relationship as a whole. To make this delivery model sustainable, companies need the ability to choose between multiple delivery providers for every delivery, so they can choose the best option that works for them. Having access to multiple providers opens up the third party delivery market, so no single provider can dictate these delivery partnerships.
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contracting with multiple third party delivery providers is aggregated into a single platform, companies can easily access the best partnership process for companies, making them less likely to be taken advantage of by third party delivery providers.
Now, these ideals may solve the issues of third party delivery, but are they feasible? This is where a new, innovative model for the third party delivery concept comes into play.
WHAT IS IT?
party delivery process to solve the challenges that this delivery concept has faced in the past. The central point of this Delivery Network model is just that–creating a network of third party delivery services.
This model takes all of the advantages of third party delivery: service delivery demand Improving customer experience
And addresses the downsides: Companies can access multiple delivery providers such as Lyft, Uber, Doordash, Postmates and more to increase Companies can compare delivery costs and times between these providers for every order so they can choose the option that is best for their business An open market of third party delivery providers ensures no one provider can dictate delivery relationships Central contracting and billing to simplify the partnership process and allow any company to connect to third party User experience inconsistencies solved with central, brand-driven delivery experience
WHAT DOES IT DO DIFFERENTLY?
In this model, logistics software companies serve as an intermediary between third party delivery providers and companies looking to deliver. These software companies negotiate agreements with work” of delivery providers.
Then, companies looking to deliver sign a single agreement with the logistics software company to gain access to the Delivery All contracting and billing runs through the software company so businesses don’t have to worry about communicating with these negotiate a partnership agreement with these large companies.
Finally, within the logistics software company’s platform, companies can seamlessly send pickup and delivery orders to the third these companies can see delivery times and costs of multiple delivery providers for every order so they can choose the one that works best for them. This aspect of choice opens up the market delivery market and set prices and partnership agreements.
THE FUTURE OF THIRD PARTY DELIVERY
become a staple of the delivery industry–allowing companies to meet rising consumer demand for delivery without damaging their bottom line. In this future, third party delivery is an open market best service and prices.
This model also opens the door to further automation in delivery potential that these software solutions provide. This means setting dispatching routes to third party drivers on certain days/times, and more.
logistics software is full integration and implementation across
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third party delivery within a company’s eCommerce platform so customers can choose from multiple third party delivery providers for same day delivery of their products. Along with this, all third party delivery data and performance insights can be shared ness software a company may use.
Most exciting, perhaps, is future delivery methods that are just on and more. Some industry experts predict that drone delivery will be implemented at scale by 2030 to help match the ever-increas work model for third party delivery provides the platform neces in a practical manner. Once these advanced delivery methods are in a drone, autonomous vehicle, delivery robot, etc. to pick up and Luckily for businesses, under this model, the innovation required to make this futuristic delivery scenario a reality is in the hands of logistics software companies already on the cutting edge of software. Because of this, these companies can take part in the advancements of the delivery world without having to focus on the innovative technology necessary themselves.
CONCLUSION
It’s clear that the consumer demand for delivered products isn’t going anywhere but up. In fact, a recent McKinsey article estimates that parcel delivery volume will match mail volume by 2025, a ratio that favored mail volume 8:1 in 2010 (Mckinsey & Company, 2020). Meeting this demand is not easy for most companies, and third party delivery is becoming an increasingly popular option to bridge the gap.
implement, don’t fall into the same traps restaurants discovered during the Covid-19 pandemic. Take advantage of this innovative Delivery Network model and remain on the cutting edge of deliv
Getting Started
If you’re unsure where to get started implementing this Delivery Network model of third party delivery, look no further than Elite EXTRA. Elite EXTRA is an industry leading last mile logistics software company that has pioneered this model with its Delivery Network third party delivery platform. Countless companies across and more. If you are interested in learning more, feel free to visit www.EliteEXTRA.com or contact the Elite EXTRA team via email at sales@eliteextra.com
WORKS CITED
Ahuja, K., Chandra, V., Lord, V., & Peens, C. (2022, June 21). Ordering in: The rapid evolution of Food Delivery. McKinsey. Retrieved November 2, 2022, from https://www.mckinsey.com/industries/technology-media-and-telecommunications/our-insights/ordering-in-the-rapid-evolution-of-food-delivery
https://www.businesswire.com/news/home/20210616005050/en/New-Research
anti-trust violations. Nation’s Restaurant News. Retrieved November 2, 2022, from https://www.nrn.com/news/third-party-delivery-companies-sued-diners-anti-trust-violations
Fundera. (2021, September 6). 20 food delivery and online ordering statistics for 2021. Fundera. Retrieved November 2, 2022, from https://www.fundera.com/ resources/food-delivery-statistics
2030? McKinsey. Retrieved November 2, 2022, from https://www.mckinsey.com/ industries/travel-logistics-and-infrastructure/our-insights/debate-will-deliveryuavs-scale-by-2030
The Impact of COVID-19 Pandemic on Food-Away-From-Home Spending. https://www.ers.usda. gov/webdocs/publications/103455/ap-100.pdf?v=350
McKinsey & Company. (2020). The Next Normal – The future of parcel delivery: Drones and disruption. McKinsey. Retrieved November 2, 2022, from https:// www.mckinsey.com/featured-insights/the-next-normal/parcel-delivery
‘unfair and deceptive’ practices. The Verge. Retrieved November 2, 2022, from suit-tipping-phone-order-fee-cap
Statista. (2022). Online food delivery - US: Statista market forecast. Statista. Retrieved November 2, 2022, from https://www.statista.com/outlook/dmo/eservices/ online-food-delivery/united-states
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