Delivery as a Service (DaaS) Explained

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Many DTC brands offer great products and have revolutionary ideas to disrupt their respective industries. But they often fall short when it comes to providing exceptional delivery experiences, especially now that there’s a shift to omnichannel ecommerce. Fortunately, logistics innovations such as delivery as a service (DaaS) are here to change that and help ecommerce businesses transform their customer experience.

What is delivery as a service (DaaS)?

Delivery as a service (DaaS) is a service-oriented logistics business model in which businesses can gain access to on-demand deliveries without the need to hire and manage their own fleet. DaaS involves taking a customer-oriented approach by leveraging technology solutions and transport optimization to provide fast and affordable delivery experiences.

You can find dedicated DaaS providers that use virtual fleet technology to match businesses with available delivery professionals such as local truck and van owners. Some service providers have their own fleet of drivers to complete local deliveries. In addition, there are third-party logistics (3PL) companies that offer comprehensive services that encompass delivery as a service.

The growing need for delivery as a service

With the growing need to optimize delivery management, the importance of DaaS is also becoming more evident. Ecommerce giants like Amazon have changed consumer expectations by offering fast deliveries, sometimes as early as the same day. Now consumers expect the same from smaller businesses as well, with 61% of participants in a NielsenIQ survey wanting their orders to be delivered as fast as possible.

The number of people who would wait two or more days for their orders has also dropped in a 2-year period. While the number stood at 64% in 2019, it fell to 55% in 2021. Despite this, offering fast delivery is often prohibitive for sellers unless they’re willing to bow down to Amazon. That’s why delivery as a service has become a viable (and often necessary) option for businesses that can’t afford to scale their logistics on their own.

Beyond the ecommerce need, delivery as a service also makes sense with an increase in demand for local deliveries. Especially with people staying home more due to COVID-19, local delivery needs are growing.

eMarketer predicts that 51.3% of the U.S population will buy their groceries online, where they will need to make use of local delivery services. Meanwhile, American consumers are also ordering takeout or deliveries a lot, with 60% opting for this at least once a week. This is another area in which delivery as a service can meet the demand for local delivery services.

As such, it comes as no surprise that the courier and local delivery market has seen significant growth in the past few years. In 2021, the market was worth $126 billion with a steady increase resulting from the pandemic.

What delivery as a service providers offer

Delivery as a service providers help alleviate many delivery-related headaches that businesses face, especially in terms of managing logistics and cost.

On-demand delivery

In a world where consumers increasingly seek convenience, on-demand delivery has become a necessity rather than an option. On-demand delivery is the process in which customers choose when and where to have their orders delivered. This often means delivering the products as quickly as possible to meet customer expectations.

For many businesses, especially startups and smaller retailers, on-demand delivery can be a challenge because there are too many moving parts involved. This typically includes finding the right shipping partners, negotiating rates, picking and packing orders, planning routes, and coordinating shipping.

In some cases, businesses may also have their own fleet of vehicles to perform the deliveries instead of working with a shipping partner. With the significant time and monetary investment involved, it is simply not viable for some businesses to provide on-demand delivery on their own.

Delivery as a service providers help address this major challenge by allowing businesses to provide on-demand delivery without the need to hire and manage their own fleet. The DaaS provider takes care of the shipping process on behalf of the business by picking up orders that are ready for shipment and completing last-mile delivery.

In the case of 3PLs that offer DaaS as a part of their service, the entire fulfillment process is taken care of by the 3PL. This normally includes (but isn’t limited to) picking and packing, shipping coordination, and final-mile deliveries. Some 3PLs can even help with first-mile delivery to further streamline the supply chain process.

Affordable entry into local food delivery markets

In the age of the convenience economy, restaurants are only going to see an increase in delivery orders. However, meeting this demand is easier said than done. There are many moving parts involved (e.g. hiring drivers and maintaining a fleet of delivery vehicles) which can take a toll on overhead costs. Businesses will have to make further accommodations such as parking space, which adds to the inconvenience especially for restaurants located in busy and congested areas.

DaaS providers help keep costs low while enabling restaurants to deliver food in local areas. By using delivery as a service, restaurants can meet the demand of their customers without the overhead of hiring drivers or maintaining delivery vehicles. This gives them a budget-friendly way to tap into the local food delivery markets minus all the extra work.

Delivery as a service for ecommerce retailers

While final-mile delivery may be the top priority for brands that are looking for DaaS providers, they often have other fulfillment needs that also need to be addressed. That’s why businesses should look for a 3PL that can offer comprehensive fulfillment services to outsource everything from warehousing and inventory management to returns management.

With ShipBob, you can take advantage of a distributed network of global fulfillment centers. That way, you can use the best carriers for a given region or location every time. This will guarantee better rates and delivery experiences for your customers. Plus, orders are sent out from the closest fulfillment center to the delivery location, which keeps costs low while ensuring faster deliveries.

And since you’re storing inventory across various fulfillment centers, you’re saving money on storage and warehousing costs. Additionally, this means that ShipBob will take care of all your inventory management processes for you. With the help of our proprietary software, we give you full visibility into how your inventory is stored across our fulfillment network. This provides you with real-time updates on stock levels, reorder notifications, and demand forecasting.

ShipBob also helps you seamlessly tie in your delivery operations with the entire order fulfillment process to improve coordination and enhance the delivery experience. ShipBob’s software connects to your store and automatically sends orders to warehouses as they come in. From here, orders are picked, packed, and shipped out with the best carrier that will complete final-mile delivery in as quickly as two days.

With this streamlined fulfillment process, there’s no disconnect between your delivery processes and the rest of your ecommerce operations. Delivery as a service doesn’t function as a separate operation but serves as one element in a larger ecommerce ecosystem. ShipBob even integrates with your returns management system so you can manage the pre and post-purchase experience in one place.

In need of a shipping partner?

If you’re searching for the right shipping partner to provide delivery as a service, ShipBob gives you the perfect solution by addressing all your fulfillment needs. By partnering with ShipBob, you don’t just outsource last-mile delivery, but the entire fulfillment process so you can save time and streamline your ecommerce operations.

In addition to offering fast and affordable shipping, ShipBob takes care of your inventory management and order management processes. That way, you can ensure that every step in your ecommerce process works in tandem. From helping you store your inventory strategically across our fulfillment network to making sure that your customers receive their orders on time – ShipBob is the shipping partner you need to transform your delivery experience and ultimately scale your business.

“Our fulfillment team worked 5-6 hours every day preparing orders to be shipped out. This added up to be a massive time sink, taking up scarce staff resources. I knew we had to outsource fulfillment to a 3PL to support the volume we wanted to achieve. Since partnering with ShipBob, we’ve scaled from $300,000 in sales per year to over $1.1 million due to infrastructure, technology, and scalability improvements.”

Ryan Casas, COO of iloveplum

What is DaaS?

DaaS refers to a logistics business model in which a DaaS provider helps businesses to provide on-demand delivery without the need to hire their own fleet.

Does ShipBob provide DaaS?

ShipBob offers a comprehensive fulfillment service that covers the entire fulfillment process from warehousing and storage to inventory and order management. That means although ShipBob offers delivery as a service (DaaS), its service isn’t limited to just final-mile delivery.

Is DaaS the same as last-mile delivery?

Traditional DaaS providers typically only take care of last-mile delivery. But the two terms are not interchangeable since there are 3PLs that also take care of other aspects of your fulfillment process while providing DaaS.

Is DaaS a type of SaaS?

Although delivery as a service (DaaS) often includes technology solutions, it’s not a type of SaaS. DaaS providers don’t just offer software but also take care of physical order deliveries and manage delivery fleets.

Written By:

Meredith is a Content Marketing Specialist at ShipBob, where she writes articles, eGuides, and other resources to help growing ecommerce businesses master their logistics and fulfillment.

Read all posts written by Meredith Flora