New Platforms Test Legacy Carriers’ Ability to Go the Last Mile, Says AxleHire CEO

According to Raj Ramanan, who has just taken the reins as CEO of AxleHire, the last mile is the last and best chance for eCommerce firms to make the best impression.

At a high level, “consumers hold brands accountable for the delivery experience,” he told PYMNTS’ Karen Webster. And a satisfying delivery, he said, can lead to repeat purchases.

“Delivery,” he said, “should be thought of as an extension of the brand, and not just a cost bucket to manage.”

The last mile, he said, is the “last leg” of getting the brand to the end customer — the last interaction where the perception of quality is shaped. Amazon Prime, of course, is the standard that everyone’s shooting for.

For the logistics firms that get it right, the rewards can be significant, said Ramanan, who took on the CEO role this month as AxleHire seeks to deliver what it has termed an Amazon-like experience to all brands.

The greenfield opportunity is staggering: Domestic delivery will be a $200 billion market in the next few years, and is growing at about 15% annually.

At the moment, coming off the peaks of the pandemic, there may be some overcapacity in the market — but the long-term trends are up and to the right. And no matter what’s being delivered, the consumer preference is for two-day, next-day or same-day delivery.

Complexity in the Mix

But there’s a lot that goes into the last mile, in the bid to make sure those deliveries are prompt and accurate.

“The whole supply chain is complicated,” he said, “but the last mile is the most complicated part.”

The last mile is where logistics and delivery firms grapple with hundreds of different routes.

AxleHire has forged a model that differs from the largest delivery and logistic firms, and operates with a platform that provides booking and tracking transparency and sorting activities across a national network of drivers and 21 warehouses that span 19 urban markets.

There’s a warehouse app, a dispatch app and routing app that help gig-sourced drivers get time-sensitive deliveries (think perishables and meal kits, for example) where they need to go. AxleHire’s customer roster includes American Eagle and other retailers, grocers and meal delivery firms.

Depending on the delivery window, the company offers different services. For some brands, packages are sorted at the fulfillment center or store, picked up by AxleHire’s drivers, and delivered locally from their site.

For next-day delivery, packages are “injected” into AxleHire sortation centers by as late as midnight the night before delivery.

The drivers, per this model (60% are gig economy workers, the remainder are small delivery companies), pick up and deliver the next day.

Separately, for longer delivery times, AxleHire offers custom line-haul solutions to meet client firms’ first- and middle-mile demands via AxleHire’s network partners. The company boasts 99% on time delivery because the platform algorithms “cluster” deliveries across different brands for maximum efficiency.

Ramanan said that another feature of the model is that packages are left exactly where they’re instructed to be left.

“The packages are delivered on time, in the right spot — if you want it, for example, in the shade on your patio — and the box will be right side up,” he said. “And that’s what winds up being an extension of the brand experience.”

A Business Model that’s Tough to Replicate

Asked by Webster if the larger carriers will be able to replicate the AxleHire model, he said that the big players have high fixed costs, marked by large fleets with full-time, unionized drivers.

“We have this lean business model,” he said, that has a flexible structure, especially with the [demand side platform] and the gig workers … that helps match supply and demand.”

The home-grown technology, he said, also serves as a competitive advantage for AxleHire, crafting what amounts to a bespoke service for brands. The data that flow across the platform also help track and share delivery failure and complaint rates for consistent monitoring and improvement.

The company’s “complaint rates” are under 0.2%, he said.

Looking ahead, the company has an internal project in place for “Q4 readiness,” as the holiday season is, of course, make-or-break for many eCommerce firms. That plan will focus on better forecasting of demand, on right-sizing the corporate footprint and delivery fleet and staff in the warehouses.

Over the next 12 to 18 months, he said, the company will seek international growth.

“The long, long-term aim is to bring this level of quality to the whole market,” he said.