In Part I of this article, we identified the three expense groups that make up our direct costs for home deliveries. We looked at our Labor Cost, Operational Cost and our Vehicle Cost. We often see home furnishings retailers make the mistake of thinking their only cost to delivery merchandise to the customer’s home is the gas and an hourly wage of one or two guys. This couldn’t be farther from the truth. In order to improve our bottom line and increase profitability, it is critical that we address the direct costs listed in Part I and possibly eliminate some of those direct costs if at all possible.
So what’s the solution?
Now that we’ve taken a closer look at our true delivery cost, it’s easy to understand why so many retailers are now contracting their deliveries to a third party delivery company. As seen in dozens of articles at furninfo.com, many retailers are finding that contracting their deliveries to a third party delivery company allows them to better control their costs, minimize their liabilities and offer superior customer service throughout the entire customer’s experience.
What happens to your Labor Cost?
When contracting out your deliveries, your labor dollars are allocated to the specific needs or your store and your employees can now focus on productivity and sales. Many third party delivery companies will even promote your brand and do an excellent job representing your store; however you aren’t liable to pay their wages, taxes or benefits. Employee absenteeism will no longer affect you. And don’t worry about vacation pay, sick pay or holiday pay; you’re not going to pay for that either.
What about Operational Cost?
Professional delivery companies are experts at what they do. They are trained to carefully carry out each delivery with the utmost care, keeping your product in perfect shape. They employ the latest in route optimization keeping your deliveries efficient while saving you valuable time and resources. Once your product is on the truck, the liability then falls on the carrier. A smudge, a rip or any other damage found by the customer is now repaired or replaced by your delivery company, saving you thousands in operational expenses and any potential repairs to damaged property.
What about Vehicle Cost?
Most top rated delivery companies operate late model vehicles that reflect the standard of excellence their clients require. Imagine how nice it would be if you didn’t have to worry about insurance, registration, DOT requirements or breakdowns. When utilizing a third party delivery company, those liabilities fall on them and in the case of any breakdowns, they provide a replacement vehicle immediately at no cost to you. Retailers that outsource their deliveries enjoy worry free vehicles they can count on, they never having to purchase another vehicle again, or worry about their depreciation. Your third party delivery company is taking care of the delivery trucks that service you all year long, but you’re only paying for deliveries when you need them.
So, when calculating the true cost of your deliveries don’t just look at the tip of the iceberg, but also your costs that float just below the surface and often times out of sight. The true cost of home delivery consumes your time and includes unnecessary headaches. Remember the cost of a simple oil change and don’t let the cost of small details slip away from you. Consider hiring a third party delivery company and leave deliveries to the delivery experts so your employees can focus on what they do best-sell furniture!