Building a Dynamic Last-Mile Strategy: Optimizing Internal and External Fleets for 2025
Is a hybrid fleet strategy the answer to balancing cost, control, and scalability in last-mile delivery?
If you’re a leader in logistics, you're likely facing the pressure of building out a 2025 last-mile strategy. And with last-mile delivery accounting for about 50% of total shipping expenses for merchants, and 75% of end-customers willing to spend more for an excellent last-mile experience, the stakes are high.
While cost savings are always top of mind, leading merchants are innovating beyond costs. They’re analyzing their entire fleet setup—both internal and external—and leveraging them strategically to drive key business goals, such as:
- Cutting delivery costs
- Building fleet flexibility to pivot with market shifts
- Refining operations to match evolving customer expectations
- Keeping customer satisfaction high
So how do merchants balance cost, customer satisfaction, and market shifts within fleet strategy? The good news: with the right orchestration, you can apply these balances across fleets whether internal, external or you’re taking on a hybrid approach.
Why Brands Choose Internal Fleets
Internal fleets have traditionally been used to give companies control over their drivers, customer experience, and brand representation. Merchants like Kroger and Woolworths use internal fleets in core markets to ensure a consistent customer experience. With their own drivers, merchants can control operational components, such as training and performance tracking, ensuring a consistent delivery experience.
Some benefits of internal fleets include:
- Brand control: Complete oversight of the delivery process.
- Data-driven performance: Ability to collect and analyze data to improve operations.
- Training and consistency: Drivers can be trained to meet specific brand standards.
However, running an internal fleet has its trade-offs:
- High fixed costs: Maintenance, driver salaries, and insurance add up—whether the fleet is in use or not.
- Scalability challenges: During high demand (like holiday spikes), scaling internal fleets quickly can be difficult without leaving customers waiting.
Internal fleets can work well in core markets where you want tight control, but they’re harder to scale efficiently during peak demand periods.
Why Brands Choose External Fleets
External fleets offer flexibility. When merchants need to extend delivery radius or handle a seasonal rush, external providers let merchants scale without upfront investments in new vehicles or additional drivers.
Some advantages of external fleets include:
- Scalability: Quickly adapt to high demand without long-term overhead.
- Cost efficiency: No need to bear the cost of fleet maintenance or long-term staffing.
- Specialized services: External fleets often provide options for handling larger, more complex deliveries like big and bulky items that require special handling or equipment.
There’s a misconception that using external fleets means sacrificing control over the customer experience. But merchants can still maintain strict performance standards with external providers through delivery orchestration platforms that offer defined Standard Operating Procedures (SOPs) and real-time tracking. This approach allows businesses to combine flexibility with operational excellence.
The Power of a Hybrid Approach
For many merchants, it’s not either/or—in fact, a hybrid fleet strategy is ideal. The hybrid approach offers the benefits of both internal and external—allowing companies to keep control where it matters most and scale with external fleets when needed.
The key to making a hybrid approach work is sophisticated orchestration. Rather than relying on basic dispatch rules, retailers can use data-driven insights to ensure the right fleet handles the right delivery. The hybrid approach is about balancing cost efficiency, operational flexibility, and customer satisfaction.
Hybrid Fleet Strategy: A Case Study
In early 2024, a major pharmacy retailer faced challenges with its delivery strategy. The company had long relied on its internal fleet, but with increasing costs and the need for scalability, they needed a more flexible solution.
The merchant saw incredible results from their tailored hybrid strategy:
- Cost per Delivery (CPD): Over a span of six months, the pharmacy saw its CPD decrease by nearly 30%, dropping from $7.06 in February to around $5.72 by August.
- On-Time Delivery Rates: Despite the reduction in internal resources, the company maintained a high on-time delivery rate, consistently above 98%.
- Customer Satisfaction (CSAT): Customer satisfaction, already high, remained steady.
This transition allowed the retailer to significantly reduce costs while maintaining the high delivery standards that were essential for the brand and overall business growth.
Bringing it All Together with Nash Orchestration
The Nash platform simplifies managing both internal and external fleets, ensuring each delivery is dispatched to the right fleet based on your business’s unique needs—whether it’s internal drivers or a third-party provider. Nash works behind the scenes, making sure everything runs efficiently, saving you time, effort, and costs.
Here’s how:
- Smart Dispatch: Nash intelligently dispatches in real-time by optimizing for cost, speed, reliability, capacity, and delivery type, using live data to ensure seamless coordination between internal and external fleets
- Optimized Routes: Nash groups and routes deliveries for maximum efficiency, cutting down on unnecessary trips and improving delivery times.
- Real-Time Adjustments: When unexpected changes happen, such as traffic or a sudden spike in demand, Nash adjusts— and deliveries stay on track.
- Learning Over Time: With every delivery, Nash’s machine learning algorithms analyze millions of data points, refining dispatch decisions to get better and better over time.
With access to over 1000 external fleets, Nash gives merchants greater fleet diversification to refine operations and scale without losing control. Nash’s AI-driven orchestration ensures successful dispatch across all fleet types, moving beyond basic dispatch rules to smarter, data-driven decisions.
With Nash, balance the strengths of internal and external fleets, offering flexibility without sacrificing control over the customer experience. Logistics leaders get the best of both worlds: cost savings, efficiency—and the ability to scale while maintaining high-quality delivery performance.
Takeaways: Is Your Fleet Strategy Ready for 2025?
As you plan your last-mile strategy for the coming year, consider the following questions for your team to determine the best fleet approach:
- What are the key priorities for our fleet strategy? Are we aiming for cost reduction, faster delivery times, or improving customer satisfaction?
- How flexible is our current fleet? Can it scale effectively with market demand, or should we consider integrating external providers for greater agility?
- Are we optimizing our internal fleet operations? Could outsourcing certain deliveries help us reduce operational costs and improve efficiency?
- Which deliveries require internal oversight? Are there specific deliveries where internal control is critical, or can external fleets handle the job while maintaining our standards?
- Is our fleet strategy built for growth? Will it support future expansion into new regions without causing operational bottlenecks?
- Are we leveraging technology effectively? Can we better automate fleet management to balance internal and external resources for greater efficiency?
Reflecting on these questions will help ensure your fleet strategy aligns with your 2025 goals, whether you're focused on cost savings, flexibility, scaling operations—or all of the above.
Nash can help you orchestrate a hybrid fleet strategy that balances it all.
Reach out today for a demo, and to learn how Nash’s platform can streamline your fleet management.
