Buying logistics technology is complex, difficult and often a complete gamble. Yes, there’s testing completed (comprehensive in fact) but once it’s released to production it’s literally ‘out of your hands’ and over to users and customers.
So what happens if it doesn’t work? Well, simply put, it costs you money, you may miss delivery SLAs, lose customers and more importantly spend time to find a fix or in the worst case, find a completely new solution. So how do delivery companies get around this problem to maximise the return on investment while not stifling innovation?
Success based pricing for Last Mile Delivery: pay only if the technology works
The answer is a new commercial model called success based pricing. Meaning, if it’s not successful then you don’t pay for it. Welcome to the future of technology. Normally technology is priced via long term enterprise agreements with minimum commitments, charged per request/API call or even charged in projected buckets of utilisation tiers.
With success based pricing, a singular goal is established as the ‘end game’. And if the goal is achieved then a single cost is charged to you, the customer. So the service requests, API calls etc are all inclusive and consolidated into a single cost per goal.
Last Mile Fleet Solutions & On Demand Rides and Deliveries
A shining example of success based pricing is Google’s new mobility program: Last Mile Fleet Solution and On Demand Rides and Deliveries. Both solutions are centred on solving specific industry challenges around mobility and delivery. Moving away from providing an ambiguous set of technologies, to offering a platform-based solution of SDKs and APIs built to solve specific challenges: from address verification to route optimisation, navigation and even customer transparency. The success based pricing for customers within the program is simple - if that end user doesn’t reach their destination or that package doesn’t get delivered, then they don’t pay for the technology.
This is an example not just in the confidence Google has with their technology but also in the concept that success in business technology must be mutual. If you as the customer are successful then so are we. No more blowing budgets with new technology that doesn’t provide a solid return on investment.
Written by Martin Tiekle, Last Mile Delivery Specialist & Global Head of Partnerships
Martin has been at Oni for the past 10 years, originally from our ANZ office, he started our Asian business in Singapore and is now based in London working with our largest customers globally. Martin leads our commercial consulting team specialising in logistics, first and last mile delivery and telematics.