Delivery as a Service (Explained): Is It the Right Solution for Your Business?

keyKey Takeaways:
  • Delivery as a Service (DaaS) outsources delivery logistics, sparing businesses from managing complex supply chain operations.
  • DaaS offers on-demand convenience, scalability, and customization, ensuring businesses can meet rising customer expectations in the on-demand economy.
  • The decision between DaaS and in-house delivery depends on factors like business size, scalability needs, local logistics requirements, and budget constraints.

Fast-paced modern markets demand efficient business operations. For companies competing in the on-demand economy, quick and reliable deliveries are now a prerequisite. 

In fact, 80% of customers demand same-day shipping, with 61% expecting delivery within three hours.

The mantra is clear: swift deliveries make customers satisfied

However, ensuring speedy transportation and logistics with high customer satisfaction poses challenges. One of the biggest challenges is building a sophisticated delivery infrastructure that requires significant investment and eats into slim profit margins.

So, how do you keep up with the demand for speed without compromising the integrity of your business?

This is where Delivery as a Service (DaaS) comes in as an optimal solution.

DaaS allows companies to outsource delivery logistics to professional delivery service providers, which spares them the hassle of managing supply chain complexities.

So, let’s understand the key facets of DaaS and see whether outsourcing transportation makes sense for your business or not.

What is Delivery as a Service (DaaS)?

“Delivery as a Service” (DaaS) refers to a logistics business model where a third-party provider offers delivery services to other businesses or individuals. This can involve the delivery of goods, packages, or even services.

DaaS is often used in the context of e-commerce, food delivery, and other industries where timely and efficient delivery is crucial.

The DaaS provider handles the operational complexities of managing delivery fleets, warehouses, and drivers while ensuring products are shipped out in a timely manner.

They utilize network capacity, technological infrastructure, and logistics expertise, so you don’t have to build these delivery capabilities in-house.

Delivery tasks that can be offloaded to the DaaS provider include:

  • First and last-mile transportation
  • Picking up shipments from warehouses
  • Efficiently planning routes and modes of transport
  • Managing a network of delivery vehicles/drivers
  • Live tracking and status updates
  • Proof of delivery documentation
  • Scalability to handle order surges
  • Round-the-clock customer support

This enables you to offer faster and more flexible delivery options like same-day delivery by leveraging the provider’s infrastructure. Customers also benefit from real-time visibility and a reliable experience.

The goal is to provide a convenient and reliable delivery solution for businesses that may not have the resources or expertise to handle delivery logistics on their own.

How Delivery as a Service (DaaS) Works

Understanding the intricacies of how Delivery as a Service (DaaS) operates is key to unlocking its potential for businesses. 

Let’s explore the step-by-step process that provides the ultimate customer convenience.

1. Initial assessment of needs

The process begins with the DaaS provider fully grasping your specific delivery requirements through consultation. 

This lays the groundwork for a customized solution. What expectations need to be met?

2. Order integration

Next, the company’s order management system is integrated with the DaaS provider’s advanced technology platform through APIs. 

This allows new delivery orders to effortlessly flow from the business to the delivery provider, initiating the delivery process.

3. Instant transmission of delivery requests

As a customer order comes in, those shipment details are directly transmitted to the delivery service provider as a delivery request. 

This streamlined transmission ensures that the delivery chain is activated promptly, minimizing delays.

4. Smart allocation of logistics resources

Here’s where the magic happens. Leveraging sophisticated algorithms and machine learning, the service-oriented delivery provider intelligently allocates delivery requests to optimize logistics resources. 

This includes dynamically assigning warehouses, local delivery routes, and available fleets based on delivery location, traffic, and real-time demand.

5. Swift shipment pickup and transportation

With everything allocated, the delivery fleet swings into action! 

From warehouses or store locations, orders are picked up and transported using the fastest mapped route to the destination. Determining the most efficient route, scheduling, and dispatch are handled seamlessly through advanced route optimization software.

6. Real-time delivery monitoring

As the orders are on their way, the emphasis is on providing complete visibility. System dashboards provide live updates on the current location and estimated time of arrival (ETA), ensuring transparency throughout the journey.

7. Proof of delivery

Upon successful delivery, proof of delivery is captured, and the status of delivery is updated, ensuring accountability. It’s not just about delivering; it’s about delivering with precision.

8. Additional services integration

Above is the basic process that we discussed. But DaaS goes beyond the basics. 

DaaS providers also offer additional services like warehousing and inventory management, picking and packing orders, and labeling for shipment. This comprehensive approach caters to businesses looking for end-to-end solutions.

Why is There a Growing Need for Delivery as a Service (DaaS)?

Today’s consumers have little patience – they expect on-demand delivery convenience. This means delivery timelines have drastically shortened, with 8% of US online customers citing shipping speed as an essential consideration in their decision to buy from an e-commerce store again.

Same-day shipping is now common rather than being a luxury. In fact, the US market for same-day delivery alone is forecast to reach USD 9.82 billion from 2020 to 2025, according to a recent market study by Technavio. 

DaaS allows retailers to keep pace by providing access to delivery infrastructure, as evident by the success of major businesses:

  • Take Amazon’s logistics as a service phenomenal success with Prime – leveraging partnerships to enable same-day and 2-hour deliveries, leading to more sign-ups and revenue growth.
  • Similarly, Uber Eats facilitates fast food deliveries by tapping into its vast network of drivers to make the entire fulfillment process easy. This aligns perfectly with the evolving consumer appetite for quick commerce.
  • Instacart makes grocery delivery frictionless by acting as the delivery layer for stores, leading to surging adoption during the pandemic. The promise of optimization keeps customers hooked.

The last mile of the supply chain remains the biggest bottleneck for timely fulfillment. Businesses find managing in-house vehicles, delivery drivers, and logistics extremely capital-intensive. DaaS introduces flexibility to the entire fulfillment process. It’s affordable, with on-demand access.

So whether it’s changing customer expectations, success stories like Amazon Prime, or the need for agility – multiple factors are making DaaS a lucrative business proposition.

The time is now to evaluate whether outsourcing logistics capabilities can accelerate your Ecommerce growth story. Can you match customer speed expectations?

8 Key Benefits of Using Delivery as a Service

Fulfilling customer orders swiftly and reliably is now an expectation rather than an exception. 

Delivery as a Service (DaaS) provides businesses with the infrastructure and capabilities not just to meet but exceed these rising expectations and service level demands. 

So, let’s explore the key benefits that make DaaS an indispensable solution for businesses seeking streamlined and effective delivery logistics:

1. On-demand delivery convenience

Managing the sudden rise of orders is challenging without excess buffers or additional resources. 

But you don’t have to worry about that!

DaaS offers on-demand convenience. 

Based on your live order volumes, additional delivery capacity gets seamlessly activated via the DaaS provider’s virtual fleet technology. 

This on-demand delivery scalability means you pay only for the exact capacity consumed. It converts fixed transportation costs into variable expenditures aligned with revenue.

2. Customizable delivery solutions

Every business has unique delivery requirements. DaaS providers understand this diversity and offer customizable solutions. 

Whether it’s same-day delivery, next-day delivery, weekend delivery, or specific time-slot deliveries, DaaS adapts to your business’s delivery needs.

3. Strategic competitive advantage

In the competitive landscape, providing reliable and expedited delivery service can give you an edge over your competitors. 

Using DaaS, you can showcase delivery excellence by fulfilling next-day delivery or even same-day shipping at competitive pricing. This increases perceived brand value, conversions, and retention. 

Instead of large upfront investments, DaaS offers to pay for measurable transport output, making it financially sustainable too.

4. Seamless market penetration

Every business dreams of increasing its geographic footprint and revenue pools. 

However, expanding into new markets often poses logistical challenges. It includes setting up transportation infrastructure, such as warehousing and fleets across locations, which is a capital-intensive exercise. 

DaaS simplifies this process by providing access to virtual fleets. Whether you are a local business testing the waters or a national brand aiming for a broader reach, DaaS facilitates easier market penetration.

5. Reduced operating costs

Maintaining dedicated delivery personnel, vehicles, or warehouses binds significant working capital. 

DaaS turns these fixed or semi-fixed expenses into complete variable costs aligned with actual shipping volumes each month. 

You just have to pay for the logistics services you use, reducing overall operating costs.

6. Advanced tracking capabilities

Customer anxiety over delayed parcel delivery can make or break brand loyalty. 

DaaS enables real-time monitoring of order journeys through advanced telemetry, sensors, and responsive systems. 

From order fulfillment services to last-mile delivery, you can gain refined control over your delivery supply chain.

7. Improved customer service

Despite keeping a check on each supply chain process, occasional mishaps are inevitable. Shipping delays can be a concern, but responsive and knowledgeable customer support can turn the tide. 

DaaS providers’ dedicated customer service bridges communication gaps and provides insurance against a damaged reputation. 

They take ownership of issues and provide frequent, customized updates through delays and post-resolution. 

Rather than improbable perfect operations, responsive issue management wins long-term loyalty.

8. Integration-friendly Platforms

Seamless integration is crucial for operational efficiency. 

DaaS allows connecting inventory dashboards, order systems, fulfillment apps, mapping software, etc., with logistics APIs for holistic data exchange. 

This simplifies the process of embedding the delivery services into existing business workflows.

Through this, as orders get logged, transportation capacity planning happens in parallel.

4 Challenges in Using Delivery as a Service (DaaS)

While Delivery as a Service (DaaS) brings a myriad of benefits to businesses, it’s essential to acknowledge the challenges associated with this model. 

Let’s explore the cons of DaaS, shedding light on the potential drawbacks you may encounter:

1. Additional costs add up

While Delivery as a Service (DaaS) offers the potential for reduced operational costs, it’s crucial to recognize that you may incur additional expenses when opting for this model.

The convenience of outsourcing delivery logistics comes with a price tag, and as delivery fees accumulate, businesses need to assess the financial implications carefully.

To strike a balance, you should conduct a thorough cost-benefit analysis. You should weigh the extra costs against the savings achieved through streamlined business processes, optimized last-mile delivery, and the ability to focus on core business activities.

2. Loss of direct control

Outsourcing delivery to a third-party provider means relinquishing a degree of control. 

This means less direct oversight and hands-on control over the last-mile transportation process, fleet operations, and delivery professionals.

The delivery experiences, which are crucial touchpoints with customers, are now in the hands of an external entity. 

3. Operational hurdles

Third-party deliveries introduce an element of risk, including the potential for late deliveries or damaged goods. 

These mistakes can adversely affect customer satisfaction, tarnish the business’s reputation, and lead to order cancellations.

4. Dependence on the DaaS provider

The operational efficiency of businesses utilizing DaaS is intricately tied to the delivery performance of the service provider. 

Any hiccups or issues faced by the DaaS provider can quickly translate into operational challenges for you if you rely completely on their delivery services.

Choosing Between DaaS and In-House Delivery: Which One is Right for You?

Navigating the decision between Delivery as a Service (DaaS) and in-house delivery management is like choosing the right tool for the job. 

Let’s break it down to help you make an informed decision based on your unique business requirements:

Ideal scenarios for using DaaS

  • DaaS is beneficial for emerging small businesses that lack the financial resources to develop an intricate delivery infrastructure.
  • DaaS provides the benefit of fast delivery scaling without the hassle of owning assets for businesses that want to enter new markets.
  • DaaS provides a flexible capacity model, making it apt for businesses experiencing significant demand fluctuations and catering to a broad customer demographic.
  • DaaS is advantageous for businesses dealing with products that pose transportation challenges, such as oversized items or those requiring specialized handling.

Scenarios favoring in-house delivery management

  • In-house delivery management is a personalized solution for businesses aiming to foster direct relationships with local customers.
  • In cases requiring hyper-local logistics with strict Service Level Agreements (SLAs), in-house delivery shines.
  • In cases where upfront budget constraints are a primary concern, managing deliveries in-house can be a financially prudent choice.
  • In-house management ensures continuity and efficiency for businesses that already have streamlined internal transportation processes.

FAQs

DaaS differs from traditional models by offering an on-demand, outsourced solution where a third-party provider manages the entire delivery process. Unlike traditional models that require in-house logistics, DaaS streamlines delivery operations, providing a scalable, cost-effective, and flexible solution.

The industries that can benefit the most from implementing Delivery as a Service are E-commerce retailers, food delivery, healthcare, and retail. Businesses dealing with time-sensitive deliveries or perishable goods or those aiming for rapid scalability find DaaS particularly advantageous.

DaaS often includes last-mile delivery as a component, but it extends beyond it. While last-mile is a crucial aspect of DaaS, the service includes end-to-end logistics management, from order integration to real-time tracking, making it a comprehensive solution.

DaaS and 3PL services both involve outsourcing logistics, but DaaS typically offers a more comprehensive and technology-driven solution. Unlike 3PL, DaaS often includes features like route optimization, real-time tracking, and advanced analytics, providing a more integrated approach to logistics.

While DaaS shares similarities with Software as a Service (SaaS), they are distinct. DaaS focuses on delivering a service (logistics and delivery), while SaaS primarily provides software solutions accessible via the Internet.

DaaS partnerships offer retailers access to a ready-made, efficient delivery infrastructure without the need for heavy investments. Retailers can focus on core business activities while ensuring reliable and timely deliveries, contributing to improved customer satisfaction and loyalty.

DaaS providers leverage technologies such as GPS tracking, route optimization algorithms, machine learning, and cloud-based platforms. These technologies enable efficient order processing, real-time monitoring, and data analytics for continuous improvement.

When choosing a DaaS provider, factors like reliability, scalability, technology integration, real-time tracking capabilities, and a proven track record should be considered. Evaluating the provider’s ability to meet specific business needs and industry requirements is crucial for a successful partnership.

Choosing the Ideal Delivery Approach for Your Business

As we have explored, Delivery as a Service (DaaS) provides immense value through flexibility, optimization, and a focus on core competencies. 

However, it also brings risks of dependence, loss of control, and execution gaps.

For businesses where customer experience is an utmost priority or those lacking scale currently, managing logistics in-house aligned with strategic objectives may be prudent.

This is where route planning and optimization software, Upper, proves invaluable by bridging technology gaps.

Designed to elevate your delivery experience, Upper empowers businesses with advanced features for route optimization, real-time tracking, and seamless last-mile logistics.

It not only aligns with the ethos of DaaS but also puts control back in your hands, allowing you to manage your deliveries with precision and efficiency. 

Ready to simplify your delivery process and redefine your customer experience? 

Experience the Upper advantage by taking the today!

Author Bio
Rakesh Patel
Rakesh Patel

Rakesh Patel, author of two defining books on reverse geotagging, is a trusted authority in routing and logistics. His innovative solutions at Upper Route Planner have simplified logistics for businesses across the board. A thought leader in the field, Rakesh's insights are shaping the future of modern-day logistics, making him your go-to expert for all things route optimization. Read more.