How to Improve Grocery Delivery Logistics in 2024: An Operator's Guide

Last year, online grocery market were projected to reach a staggering $146 billion in revenue. Yet, turning a profit remains a crucial concern for digital grocers. 

Research shows that most digital operations did not turn a profit for grocers in 2022, with $298 million lost in margins. As a result, 77% of surveyed digital grocers said that "improving fulfillment efficiency" is their top priority in 2023.

To meet this challenge, operators must adopt better strategies around fulfillment and streamline their delivery logistics. In this comprehensive guide, we’ll explore practical insights and effective approaches to improve last-mile grocery delivery. Whether a local grocer or a supermarket chain, you can use these strategies to enhance efficiency, boost customer satisfaction, and turn the tide on margins.

1. Expand Delivery Coverage + Capabilities with Third-Party Providers

Expanding delivery coverage is essential to reaching more customers and giving your operations more flexibility. This is where third-party providers come into play.

By partnering with third-party providers, operators can tap into their extensive networks and resources, effectively bridging gaps in coverage. Working with third-party providers gives you access to their built-in logistics like tracking and cost transparency. 

The true beauty of partnering with third-party providers lies in flexibility. Operators can scale their operations based on fluctuating demand, ensuring efficient and reliable deliveries across multiple locations. This strategic collaboration empowers operators to meet the diverse needs of customers and reach rural areas. It opens doors to previously untapped markets and establishes a strong foothold in the competitive online grocery landscape.

Lastly, another perk of tapping into third-party providers is the variety of vehicles available for specific delivery needs. For example, you can request and dispatch a vehicle equipped for cold storage to deliver frozen or refrigerated items. The best part is you can use these vehicles as needed without commitments. It's much more cost effective than purchasing them and adding a significant line item to your grocery fulfillment budget.

‍2. Orchestrate and Optimize Internal and Third-Party Fleets

Despite the benefits we laid out above, recent findings show that grocers are moving away from outsourcing to third-party platforms. Nearly 10% of grocers will bring their online operations in-house this year to gain better control and manage costs.

At Nash, we know that an all-or-nothing approach to grocery delivery services does not work. Grocers using Nash for delivery orchestration between internal and third-party fleets can see up to a 40% reduction in delivery costs compared to those using just one delivery provider or internal fleet.

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The key is finding the right balance between internal and third-party fleets to meet your needs. While third-party providers can offer extended coverage and additional capacity, internal drivers often know their surrounding area better and have established customer relationships.

To leverage the strengths of both fleets, operators can implement intelligent orchestration strategies. For example, you can assign internal drivers routes in high-density areas or during peak times. Meanwhile, third-party providers can handle deliveries in less dense areas or take long-distance routes. This balance can make a more efficient use of resources.

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3. Create Dynamic Delivery Windows Based on Availability

Dynamic delivery windows can make a big difference in grocery logistics, where convenience and speed give you a competitive edge. Operators can create precise and flexible delivery time slots by leveraging real-time data across all available fleets. Dynamic delivery windows offer customers accurate delivery times and prices while optimizing operators' resources. You can tailor delivery windows based on driver availability to ensure efficient route planning and minimize idle time for drivers.

You can also use dynamic pricing to influence customer behavior. For example, grocers can showcase their most cost-effective delivery windows at key customer journey points. These points can be at checkout or when they first add an item to their cart. It’s a win-win since both the store and the customer can save money with cheaper delivery fees.

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4. Make Delivery Routes More Efficient with Hyperbatching

Hyperbatching means strategically scheduling several drop-offs across a single route within a specific time frame. It’s a powerful technique for optimizing last-mile fulfillment. By strategically combining orders, operators can minimize the number of trips and maximize the use of vehicles and drivers.

At Nash, we’ve found that operators who embrace hyperbatching see a remarkable 30-50% reduction in total last-mile fulfillment costs. This reduction in expenses is a result of using less fuel, reducing driver idle time, and improving speed to delivery.

Hyperbatching not only drives cost savings but also contributes to enhanced customer satisfaction. Customers receive their orders promptly, increasing loyalty and positive brand experiences. Embracing hyperbatching can be a game-changer for grocers seeking more profitable and efficient grocery delivery operations.

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5. Reduce Click-to-Delivery Times to One Hour or Less

How often have you come home from the grocery store just to realize you’ve forgotten that vegetable or spice mix essential for tonight’s dinner recipe? Imagine pulling up the app for your nearest grocery store and seeing that the subsequent delivery window isn’t for another two hours.

Chances are you’re going to go somewhere else for that missing ingredient.

Grocery stores miss out on these transactions because their delivery times are simply too far out and vague. Without improvements, customers will go to a delivery marketplace that gives them a faster and more accurate delivery time. 

But by adopting what we’ve discussed so far in this post and effective inventory management, you can whittle down your click-to-delivery time to just under an hour. 

At Nash, we’ve seen a 20-25% boost in successful on-demand deliveries in 30 minutes or less through automated driver reassignment. If the initial driver encounters delays or isn’t available, we automatically reassign orders to the next best available driver. With this, we can unlock one-hour or less delivery slots for grocers to offer customers. Which, in turn, makes forgetting an ingredient much less of a pain for them.

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6. Implement Real-Time Tracking for All Stakeholders

Tracking allows customers to see their delivery from the moment the order leaves the store until it arrives at their doorstep. By giving customers an accurate status of their deliveries, operators can build trust, improve communication, and avoid any potential customer concerns.

Real-time tracking benefits operators, too. With tracking, you can gain valuable insights into the performance of your delivery operations. You can identify potential bottlenecks, optimize routes, and make data-driven decisions to enhance efficiency and customer satisfaction.

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Improve Grocery Delivery Logistics with Nash

By tapping into Nash's global network of 500+ providers, you gain access to a diverse range of delivery options, expand your coverage, and reach more customers. Our custom dispatch strategies orchestrate between internal and third-party fleets, optimizing resources and reducing costs.

With intelligent routing capabilities, Nash enables dynamic delivery windows, hyperbatching, and on-demand grocery delivery. Plus, we understand the importance of tracking. Our solution provides SMS updates for customers and a centralized dashboard for operators to monitor deliveries in real-time.

Learn more about how Nash powers grocery delivery at usenash.com/grocery

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