Sunsetting the Dispatch Fleet
In the beginning, Dispatch had a fleet of cargo vans in each market. When we entered a new city, we would have a mile-long checklist of items to complete. This system worked for our first markets, but in order to scale the business, we needed to change gears.
Owning a fleet was inefficient for our business model. Even though we use a sophisticated algorithm to route deliveries, our in-house fleet competed with our independent drivers. Our fleet of cargo vans was extremely expensive, took deliveries away from our independent driver network, and stalled growth for the business.
“Our number one expense was labor, second was insurance. With our part-time drivers and the overtime that was happening, that was a huge expense,” said Natalie Johnson, former VP of Human Resources.
After internal discussions and number crunching, the decision was made to sunset the Dispatch fleet.
Our team developed an eight-phase reduction plan that happened over the span of several months. While the plan made sense on paper, it was not easy to execute. The weight of the fleet was lifting, but the toll of losing team members was felt across the organization.
Several people transitioned to full-time roles or joined as independent contractor drivers. Those who didn’t stay on the team were either provided an incentive to stay with us or a severance package if they exited the organization. The people aspect was not the only toll. We were also facing the challenges of an oncoming pandemic.
A few months in, COVID-19 hit, and we needed to finish sunsetting the fleet and implementing curbside delivery. The decision to exit the fleet came at the perfect time, and a contactless service model became a necessity for safety.
Contactless delivery was essential to keep our customers and drivers safe, and it became part of the fleet exit plan as we operated as an essential business during the pandemic.
It was a long road to sunset the Dispatch fleet, but it positively impacted our business in more ways than one. Exiting the fleet allowed us to continue to invest in the business and our software platform for customers and independent drivers.
"During 2019, we grew revenue aggressively. But with the investment in the fleet, we were operating at close to break even from a gross profit standpoint. Following the exit of the fleet, we are now generating gross profit of more than 35 percent on our deliveries,” said Matt Ouska, former Dispatch CFO. With this growth, we were able to expand the platform and add new service offerings for customers. One of which is Dispatch Connect. Dispatch Connect is our solution to delivery management. It’s a holistic software that helps you connect the dots between your business, your drivers, your customers — and your bottom line.
If an owned fleet was inefficient for a technology-based delivery company like Dispatch, then it might not be the best road for your business either. Let Dispatch Connect help manage your delivery ecosystem. Or, if you don’t have an in-house fleet and are looking to fulfill your business delivery needs, use the Dispatch Marketplace to complete deliveries. To learn more, connect with a Dispatch team member today!
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