The carrier market has undergone major changes in recent years. Carriers are no longer the only service provider for a brand and competition is no longer based on cost but the quality of service provided. Maria Highland investigates the impact of these market changes.
The growing importance of e-commerce is changing the relationship between carriers and their retailer. The demand to employ multiple carriers continues to grow as retailers compete to offer their customers the fastest and most convenient delivery options that suit them.
CitySprint’s chief executive, Patrick Gallagher, notes that over the past five years there has been a transformation of consumer expectations of convenience. We are now “used to being able to buy an outfit, book a holiday and manage our finances at the click of a button, and we expect the fulfilment of these products to be as pain-free as the purchase,” says Gallagher.
“[Retailers] recognise that being able to offer personalised, flexible delivery is a fundamental part of the customer experience, and have made a widespread effort to up their delivery game. It’s not just about speed – although speed has its place – but about giving people the opportunity to arrange deliveries around a time that works for them.”
The result is a fundamental shift in retailer-carrier relationships. Logistics providers are no longer perceived as “simply third party suppliers”, as retailers are now taking more of “a partnership approach, reassured by the support carriers can give them in improving brand perception and, ultimately, growing customer acquisition and loyalty. After all, the delivery or return of an item is the final touch point a retailer has with a consumer,” says Gallagher.
He adds that there is a certain “pressure to compete with the extensive fulfilment ecosystems of industry behemoths such as Amazon” and it is in such an environment that a logistics partner “can give access to a comparable infrastructure without the investment.”
Tim Fawkes, managing director of T3 Logistics, points out that “the carrier and driver is often the single point of contact with your customer; they are representing your company in a very direct interface and good quality customer service is essential for any driver”.
Sian Hopwood, senior vice president at BluJay Solutions, says: “In the ‘Amazon era’ of internet shopping, carriers make up a significant portion of the customer experience. As a result, they have a major impact on brand perception. For example, next-day delivery is now a standard expectation, and it’s up to carriers to make that a reality.”
Hopwood notes that delivery speed is not the only aspect that matters, and “in the era of connected data, consumers expect up-to-the-minute updates on the whereabouts of their orders”. To cater to this, “carriers need to provide retailers with information on where packages are in the supply chain, when they will be moved and when they have been delivered. Without that information, consumers left in the dark will soon begin to lose their confidence in the retailer in question,” says Hopwood.
The carrier, as the last point of customer contact, is inevitably responsible for brand representation. Chris Hoskin of MetaPack, explains that there “has been a huge shift in the past few years in the importance that brands place on delivery management and carrier performance,” and these brands “have observed the success of retailers and how they work with carriers and emulated this in their own delivery approach”.
Towards the end of 2016, MetaPack carried out a consumer survey which demonstrated that 31 per cent of consumers rated their delivery experience with brands as ‘excellent’ – the same as retailers. The other factor is that consumers are very invested in brands, so if they receive good service from the carrier this further reinforces that investment.
“This seems to be reflected in the incidence of negative delivery experiences, with only 11 per cent of consumers saying they had had a negative experience with a brand, whereas 18 per cent said a retailer’s delivery had let them down – a clear tick in the box for carriers,” says Hoskin.
As the last point of contact with the consumer, pressure falls on the carrier to represent their customer’s brand. Richard Tucker of iForce’s Route Genie says that many retailers aren’t naming what carrier they are using as it is often difficult to predict how your carrier will represent their business. He notes that consumers dictate the carrier choice and therefore it is up to the retailer to remain vigilant and attentive as to how their carrier is performing and if they are meeting their service levels. The answer to this is having multiple carriers who can cater to various customer needs, such as next day delivery and click and collect. Carrier management software will help monitor the service levels of all the carriers via one centralised platform. For example, Route Genie allows the retailer to make carrier changes based on performance in regions.
When considering solutions to issues within carrier management, Tucker says that we currently have all the delivery options available to use, they are simply under-used. Most people tend to go for standard delivery because they don’t want to pay extra or aren’t aware of the alternatives, only to miss the delivery and get carded. The issue becomes one of education and awareness, Tucker argues.
Options
Therefore, in a time where there are numerous delivery options available to suit the needs of the consumer, the issue becomes a matter of successfully managing existing delivery methods and carriers. In such instances, an efficient and well connected carrier management system can address any issues.
Fawkes explains the key issues encountered when managing multiple carriers to “include increased complexity involved areas such as differing tariffs, different points of communication, increased invoicing administration. There is also the issue of dilution of relationship responsiveness”.
“Carrier service responsiveness is usually a misconception; diluting the activity and working with carriers on their core lanes is often a preferred approach – the carrier doesn’t particularly want to run inefficient lanes for the customer either. Spreading workload among multiple carriers actually reduces the risk because service issues can be managed while at peak times there is more than one solution to vehicle availability,” says Fawkes.
Hopwood argues that it is essential to have a unified communication and management system in place when handling multiple carriers.
“Customers want the same experience from a retailer every time they order, so it’s important that information on shipment progress and delivery time is readily available, no matter the carrier”, and this can be achieved by retailers streamlining data from all their carriers “into a platform, where they can view, search and manage information on all live shipments. By compiling data in this way, they will be able to provide customers with a standardised picture of their order status, as well as streamlining internal management processes,” says Hopwood.
Hoskin supports this, saying that an efficient carrier management system is based around good communication and planning, especially within e-commence. “If a customer has specified delivery at 9am on a Tuesday, they will not want a delivery made the day before, so accuracy and communication is essential.”
Carrier management works on a customer centric basis as the main “objective, regardless of how it is done, is to ensure that customer expectations are met, which means ensuring that carriers know exactly when a product has to be delivered,” says Hoskin.
This emphasis on meeting customer expectations and a catering to a consumer that expects fast results from its retailer can be answered through employing the services of multiple carriers. Tucker suggests that the best time to invest in carrier management is when a retailer wants to expand the range of options available to their customers or those who haven’t gone outside the UK and are looking to go international. Correspondingly, all retailers are being required to offer more delivery options to keep up with an Amazon-type market expectation.
In this instance, carrier management IT systems become a necessity. Hopwood notes that carrier management systems are no longer a choice, particularly with “the increasing complexity of global carrier networks and an ever-more demanding consumer base”. Now, “the level of insight and control now required by retailers means that automated systems are a must. Retailers should look to incorporate carrier management technology into their strategy from the word go,” says Hopwood.
When considering the criteria your carriers need to meet for your operational needs, Fawkes says that carrier criteria is rarely a decision based on price alone and is tailored to customer service needs. For example, some of 3T’s clients “have very specific standards they expect the carrier to meet,” says Fawkes. Therefore, “we look to work with carriers who are embracing systems development and the benefits that these can provide beyond tomorrow.”
This makes visibility, flexibility and scalability the main elements of a successful IT carrier management system, as noted by Hopwood. “First, companies must be able to get a comprehensive view of their entire supply chain, from warehouse to doorstep,” she says. “Then, it’s important to be able to amend shipments as required. If one carrier is over capacity, for example, a good IT system will make it easy for planners to re-allocate goods to another partner”, and finally, “a good system should be able to cope with spikes in demand – for example, during the Christmas period. It should have sufficient processing power to handle large volumes of data, and help planners to visualise their supply chain at periods of heavy demand,” says Hopwood.
