Your average order value has been drifting down for eighteen months. You can feel it in the loads — trucks going out half full, drivers doing the same runs for lighter drops. But revenue hasn’t collapsed, so nobody is panicking. They should be.
The Creep Nobody Flags
It starts when a few key accounts shift from weekly bulk orders to twice-weekly smaller ones. Or when you pick up a batch of new customers who order frequently but lightly. The top line holds. It might even grow. But the cost to fulfil each order stays almost identical — same truck, same driver, same fuel, same route time. Your delivery cost per dollar of revenue quietly doubles. In most distribution businesses, nobody tracks average drop value against cost-to-deliver at the individual customer level. The P&L just shows rising freight costs, and someone blames diesel prices. The real problem is structural: you are running a delivery model built for $1,200 drops on customers now averaging $640. Until you see that clearly, you cannot fix it.
What It Actually Costs You Per Stop
Most distribution operators know their total monthly freight spend. Very few know what a single stop costs them. Not roughly — precisely. You need to break it down: vehicle fixed costs per hour, driver labour per hour, fuel per kilometre, and the time each stop absorbs including unloading, waiting, and paperwork. When you run those numbers, a metro Perth stop typically lands between $45 and $110 depending on your setup. If a customer orders $300 worth of product at a 25 per cent gross margin, that is $75 of margin before the truck even leaves. One stop at $80 and you are underwater on the delivery. A distribution business CFO Perth engagement starts here — not with the P&L summary, but with the unit economics of every drop you make.
Minimum Order Values Are a Strategy Decision, Not a Sales One
The usual fix is to set a minimum order value. But most owners either set it too low, set it without data, or let the sales team override it within a week. This is not a sales policy. It is a margin architecture decision. You need to know exactly what drop size covers your cost-to-serve at each margin tier. Then you build your minimums around that, with clear rules for exceptions — maybe a surcharge for small orders, maybe consolidated delivery days for lighter accounts, maybe a different service model entirely. CFO services Perth work should give you this framework: a minimum order threshold backed by real unit cost data, tested against your actual customer mix, with the commercial logic to defend it when a rep pushes back.
Redesigning the Drop Before It Eats the Business
This is not about cutting customers. It is about matching your delivery model to how customers actually buy today, not how they bought three years ago. That might mean route consolidation — fewer days, tighter zones, fuller trucks. It might mean tiered service: next-day delivery above a threshold, scheduled windows below it. It might mean partnering with a last-mile carrier for your smallest drops instead of sending your own vehicle. At 360 Fox, this is the kind of structural margin work we do with distribution operators across Perth. Not just spotting the problem in the numbers, but building the operating model and pricing logic that stops it from recurring. A distribution business CFO Perth engagement should leave you knowing exactly what each stop earns, what each customer actually costs to serve, and where your delivery model needs to shift. That is the work.
Your trucks are still running. Your drivers are still busy. But if the average drop keeps shrinking and your cost per stop stays fixed, margin is leaving every time a tailgate opens. The question is whether you see it before it becomes a crisis — or after.
Want eyes on your numbers before the next big decision? 360 Fox is a boutique CFO practice for owner-led businesses in logistics, importing, warehousing, distribution, manufacturing and trading. Book a chat.