The terms Middle man delivery and last-mile delivery are nowadays discussed with relation to eCommerce channel Though they can be used in a brick-and-mortar store channel also). E Commerce is the new way of doing business, and that is also too evolving going through changes all the time. Imagine you purchase an item from an e-commerce portal. The item usually gets shipped from the warehouse or the fulfilment centre directly to the customer’s doorstep. This is known as “last-mile delivery” – that is, who is the last stage that item has to travel through. Last-mile delivery can also be classified as business to consumer. Now consider a situation wherein the item is shipped from the warehouse or distribution centre to a mid-place- fulfilment centre – from where the customer comes and collects the item – is known as middle man delivery. This is also known as second-mile delivery or local delivery. Second-mile delivery can also be classified as business-to-business delivery.
These terms can also be used in a physical channel interpretation. Suppose an apparel manufacturing company is there, and it has its distributors spread across the country. The distributors, in turn, service the retailers. While retailers service the end consumer. Here the manufacturer to the distributor is the first mile. The distributor to the retailer is the middle mile (one business entity to another). While the retailer services the end customer (business servicing the customer).
Advantage of Middle Man Delivery
- Industries where margins are tighter and competition is very fierce and cutthroat; Middle man delivery comes to the rescue. By reducing the “last-mile” that the item or product has to travel and thus cutting short the shipping costs – companies can leverage the saved cost to increase margins or give more competitive pricing and stay ahead of the competition.
- In this modern world where speed is of the essence, in a covid world where the customers want the product to be touched by fever people, – middle man delivery is a very much possible solution.
- Generally, the mid-place fulfilment centre is also owned by the platform. For example, in Walmart’s case, people can shop on Walmart’s website while Walmart will ship those to one of their stores. Since both the head and tail are under the control of Walmart – the tracking can be managed much more easily, thus ensuring the status of delivery of the goods. It is always not necessary that mid-place fulfilment centres be under-owned or controlled by the manufacturer. In this case, the tracking mechanism is weaker, and thus, the supply chain dynamics become a bit weaker. Though in Last-mile delivery- dependence is definitely on 3rd party logistics (3PL) companies, and thus, the dependency, tracking, and breakage of the supply chain may happen at any time.
- In rural areas – or areas with low connectivity or poor eCommerce penetration – middle mile delivery can be of much more convenience to the customer.
- It gives a chance for you to pull the customer to your retail location – which may lead to incremental sales.
Advantage of Last-mile delivery
- The most crucial aspect of last-mile delivery is convenience. That’s that trade-off that companies need to identify- customer convenience or reducing costs. Last-mile delivery gives comfort and ease to a customer. Coupled with an efficient tracking mechanism that adds the icing on the cake.
- The last stage of the customer delivery experience is under the control of the platform. Since the platform’s last-mile delivery is being done, they can ensure the delivery experience and the end touchpoint is of top quality, thus ensuring satisfied customers.
- The timelines of delivery can always be assured and committed to the customer as everything is done in the purview of the platform.
- Since delivery is done by the platform in liaison with the 3rd party logistics company, electronic proof of delivery is always maintained, thus ensuring proof in case of any issue.
- In areas and cities where the penetration of eCommerce is really strong, complex route mapping algorithms can be defined to maximise deliveries in one delivery beat – thus minimising cost overall.
- Security and insurance are added benefits and customer service options that can be given to the platform service provider to give a more enriching experience to the customer. Security and insurance become especially important when getting high volume and high ticket size items.
- As stated earlier, since everything is under the purview of the platform service provider – the order tracking is much stronger – thus providing customer information at every step.
The middle mile delivery is an optimisation technique being used to increase profits and maximise revenues, but it comes with a cost of efficient tracking and convenience. In the future, companies will need to evaluate the pros and cons of each delivery method based on the industry and domain they are in. Who knows, a hybrid approach of the two may be in store for the future?
We understand that deciding on a last-mile delivery or middle mile delivery strategy, which one is better, can be challenging. That is why we at YRC are happy to provide you with assistance in doing the due diligence and understanding the market and industry per se in decoding which strategy is best suited for you. Our management consultants are amongst the best in the country, and with their experience and expert guidance, we could help you achieve all the business goals and achieve new heights of success.