Over the last 6 weeks I have been hunting for the best prices for deliveries from Johannesburg to Cape Town. This has been the biggest cost factor on the business by a long way and has been sucking around half the entire budget.
When I agreed to take over the business it was through the insight knowing I could make savings and having friends and contacts involved in the logistics industry. The price I was given originally as a fair price guide turns out to be not entirely true and was roughly a year out of date.
Saying this was going to be challenging is shown in the time this has taken to get as close to that price as possible. The problem is when you are delivering items to retail (Amazon and Takealot) you have time slots and this is not just a simple drop off. The price I was originally told was depot to depot and not to retail with booked slots. This hassle because that is what it is bumps the prices up considerably and more than double in most cases.
My original train of thought was to get the order delivered to a depot who would then charge a small fee to move it into the retail warehouse. This is not ideal but would be the cheapest option saving serious dollars per load. We have cut back on the number of deliveries to Cape Town from 3 x per week to just 2 and is impossible to cut that to just a single trip weekly.
Funny enough we had a 1 pallet delivery to a client in Sadhana Bay which is the bay above Cape Town on the map and that was quoted at 12 x new number I will now pay for Cape Town. People are greedy and mad, but there are idiots out there who will pay these numbers.
We have a cheapish logistics company who we met with a week ago who can handle maybe 2 trips per month with someone doing the extra delivery from the depot. You also do not know the quality of service either so there is risk which could get the online selling account suspended.
Tomorrow we are negotiating with a company I found over the last few days who are a registered logistics supplier for Takealot and their price is literally $5 more per pallet than where I thought I would end up. Obviously the negotiation is to now get that price in my target zone and another box can be ticked. This is not the 60% saving I was originally aiming for, but 55% is close enough and I know we can relax due to them already dealing with our client.
This week coming out of my pocket we have already paid an exorbitant amount with 12 pallets being sent to Cape Town which at this new price would have paid for next weeks deliveries as well. I have to admit I have been under the pump with this one because I hadn't come through with what I had originally promised. Better late than never and now I can move on to the next problem to solve as tis is going to be never ending until you hit the sweet spot.
I had been given a new online site to look at which was similar to one I have used before where transport companies bid for your loads via a Dutch auction which is an auction in reverse that drops in price. The problem is the price fluctuates and even then possibly could be a total shambles. A one off delivery yes, but not multiple lads weekly.
Maybe I will use this platform in the future so I am not ruling it out entirely, but for now it is more important about making profit whilst providing a service keeping everyone happy.
The spin off from this is I have over 100 logistical companies and contacts in my database who I can now try and sell them packaging material. Even if I can manage to land 5% that would be a decent result.