Finding the Right Delivery Partners for the Last Mile
The last mile (i.e., package delivery to the customer's doorstep) is a major challenge for cross-border e-commerce merchants. Most often, retailers must rely on shipping providers or the local postal service to cover this very important segment of their supply chain. Doing so can involve huge risks if the provider doesn’t fit with the merchant’s business philosophy, the customer’s expectations or both. In fact, the last mile often is a deal breaker. Here are the factors to consider when selecting partners for your last mile needs.
The U.S. delivery market is highly concentrated. There are the well-known commercial carriers plus the U.S. Postal Service, which is increasingly attempting to increase its share of the delivery pie. Package delivery is almost routine in most locales.
Outside the United States – Mexico, South America, Europe, Asia, Africa and Australia – delivery options are more fragmented. Most of the markets have several domestic players and a few regional delivery companies. Selecting a delivery partner in these areas can be a challenge for U.S. businesses, since these local players may not be well known in the United States.
Then, there's the issue of experience. Most companies typically specialize in either business-to-business (B-to-B) or business-to-consumer (B-to-C) delivery. However, the accelerated growth in e-commerce has led many to mistakenly conclude that a reliable B-to-B delivery provider can operate successfully in the B-to-C realm. Unfortunately, it's not the case. Delivering to diverse domicile types, often one-person households that can be located in remote areas, is quite different from delivering a package to an office in a business district where someone can accept delivery during regular business hours.
Then, too, there are varying cultural expectations that present real challenges to carriers unfamiliar with the B-to-C business. For example, persons in different parts of the world have different notions of what delivery encompasses. Some expect delivery to their residence while the carrier stays and awaits a decision on whether the recipient will keep some or all of the package contents. Others are content to pick up their package at a carrier center, a lockbox locale, post office, etc. Still others wouldn't dream of using their credit card over the internet, and fully expect to pay in cash on delivery of the ordered goods.
The Critical Last Mile
The last mile can make or break the retail experience for many consumers. Thus, it's critical for merchants entering the e-commerce arena to select the optimal B-to-C delivery partner.
What factors point to a good carrier? First and foremost, the carrier must understand your customers. The need for such understanding extends to every market in which you do business because no two markets – or consumer groups – are precisely the same. Also, the carrier must offer competitive pricing, an excellent customer experience and convenient delivery options that respond to customer needs.
When it comes to package delivery, a true cost leader provides the lowest total service cost, which isn't necessarily the lowest price. A seemingly less expensive carrier might offer the lowest price but then add surcharges for rural areas, multiple delivery attempts, residential delivery, shipment rerouting or address correction. A true cost leader will avoid adding extra charges, knowing that they lead to revenue loss. In fact, the optimal carrier will demonstrate high first-attempt and overall delivery rates, low loss or damage incidents resulting in fewer returns and reshipments, and lower customer service costs.
The best delivery partner for purposes of customer convenience will offer alternate delivery options to assure successful and convenient deliveries. For example, a courier might deliver to a home, safe place, neighbor or office. Likewise, a courier may offer a parcel shop that's located on the customer’s way to work, has extended operating hours or is co-located at a shopping facility.
Selecting a Partner
When looking at a one-stop parcel service, it's important to evaluate the company’s image and whether it possesses a specialized B-to-C network. Of course, its coverage in terms of regions and countries is a key factor, too.
Next, look at the firm’s pricing policies. Is its rate structure simple and straightforward? Does it charge supplemental fees? Verify that the firm is insured. Then, evaluate the services offered. Some of the key services should include track and trace and proof of delivery (signature). Real-time parcel tracking is an important feature that can minimize customer service requests. Does the firm offer SMS and email notifications? Does it have an online portal where customers can change the delivery address or indicate preferences (e.g., safe place)?
Look, too, at its first attempt delivery rate in addition to its overall delivery rate. Examine the quality of customer service functions as well. Are customer returns handled in an easy manner? Can unwanted merchandise be picked up at a customer’s doorstep? Returned to a parcel shop?
In examining a country-specific home delivery service, assure that the company will make multiple (i.e., unlimited) delivery attempts. Verify that it offers alternate delivery methods including delivery at a neighbor's address.
When evaluating its parcel shop network, check on the number of shops per square mile and their hours of operation. When do they open and close? What are the standard delivery days and times? Are Saturday and Sunday included? Does the shop provide for parcel storage over holidays? Last, will the company collect cash on delivery from customers?
One B-to-C delivery company can seldom meet all of a merchant’s needs in every market, as the area to be covered is simply too extensive. Even carriers must establish partnerships in some regions. For example, Hermes Group, a provider of delivery services to private customers, uses local partners in some regions to meet customer demand. In using their local knowledge and vast logistics expertise to vet partners, large providers can alleviate some of the burden from merchants.
Finding the right partners to fulfill your company’s last mile requirements is just as important – if not more so – than sourcing production properly and building sales channels, especially for e-commerce merchants. Consider the following: Every percentage point in the nondelivery column is a percentage point of lost revenue. Beyond the negative customer experience, each nondelivery means the merchant incurs additional delivery and customer service costs. Therefore, selecting a carrier simply based on rates is a short-sighted strategy. B-to-C expertise, especially first-time delivery, as well as speed and convenience are critical to revenue.
Most merchants lack the time and resources to investigate carriers and establish multiple delivery networks. Here, the expertise of an experienced e-commerce consultant that addresses end-to-end e-commerce concerns, including logistics, can be invaluable.
Uwe Bald is vice president of international business development for Hermes, an expert provider of internationalization services to Europe, Russia, China and Brazil.