Conquering the last mile on e-commerce delivery

Customers need for faster delivery of purchased items is matched with the need for more visibility and control.

The "last mile" has long been a thorn in the side of e-commerce retailers, whose brands have been bumped and bruised by third-party delivery partners. However, long overdue relief may be on its way.

As he watched the cycle courier take off from outside his Auckland shopfront, Dean Johnson originally felt a sense of hope. Johnson, owner of Delish Cupcakes, was still looking for the perfect delivery mechanism for his business which, despite two Auckland stores, did more than 50 per cent of its business online. He’d given up on traditional courier services after entire boxes of lovingly crafted cupcakes were dropped and turned upside down. Now, he was trying a new solution.

The cyclist told him he’d take great care with the box of half a dozen cupcakes as he carefully placed it upright in his backpack. Then the rider mounted his bike and gently rode away. Johnson breathed a sigh of relief, then watched as the cyclist approached a rise, stood up, and suddenly pitched his weight steeply forward to pedal up the hill. 

“The cupcakes were delivered looking as if they’d been in a blender,” Johnson says. “The person who received them sent me a photo and said, ‘Is this how they’re supposed to look?’ I said, ‘No, they’re not. I will deliver a new box myself.’”

"... one key area that hadn't changed over the last decade was logistics." Rob Hango-Zada, Shippit

It is the solution Johnson now uses on a permanent basis. Having been failed by every delivery option he has tried, he makes all deliveries himself, only sometimes trusting the odd delivery that he can’t take care of to Uber Eats (in cars, not on bicycles). Many deliveries, particularly around the Auckland CBD, Johnson makes on foot. It’s a solution that works on a number of levels.

“Every time I enter an office I’m the most popular person in the place, and at Christmas, when everyone’s putting on weight, I lose weight because of all the walking,” he smiles. “I’m old-fashioned and I like to guarantee my product will arrive in perfect shape. I’m also now able to surprise and delight regular customers by taking in a special cupcake for them, separate to their order, and say, ‘This one is for you because without you, my business doesn’t work.’”

New retail, old logistics

Johnson’s plight reflects the many and varied frustrations of e-commerce businesses of all shapes and sizes across the Asia-Pacific. They pour passion into the development, marketing and sale of their products, only to lose all control of delivery. Paul Greenberg, founder and executive director of the National Online Retailers Association (NORA), says it is a serious problem that has long been crying out for an optimal solution.

“Regarding fulfilment, and particularly that last mile, we still haven’t cracked the code,” he says. “But there has been some innovative development over the last couple of years. There are some green shoots coming through.”

The behemoths of the Asia-Pacific delivery world – TNT, FedEx, UPS, Australia Post, Toll, Singapore Post, Japan Post, China Post, Aramex and others – are still doing what they have always done, providing a reliable and age-old delivery service, while acquiring start-ups to stay abreast of the times. But “keeping up with the times” is not good enough for most e-commerce business owners who, instead, expect customer experience and ease-of-use that matches what they have built into their own processes.

“The big piece of technology that can help customers is, of course, the mobile phone,” Greenberg says. “We’ve heard people talk about the ‘personal supply chain’, where some of the technology that’s been used in the industry for a long time is simplified, so it can be put in the hands of the consumer. Mobile phones allow real-time parcel tracking and more, allowing consumers to be in control of some of the delivery processes.

“E-commerce delivery used to be one-size- fits-all. Increasingly, we’re seeing aggregated businesses using technology to optimise the cost, efficiency and capability, to match the right carrier with the right customer at the right time. Where Webjet or Expedia would help us find the best flight to Bali, there are now technology businesses that help you find the best delivery service for your needs.”

Rate and learn

Retailers such as Amazon and others are investing in drone delivery technology.

One such business is Sendle, which has implemented a process that encourages customers to rate specific delivery businesses on their service in much the same way that shoppers and sellers on eBay, or drivers and passengers on Uber, rate each other.

“That rating goes back into the system, giving us the ability to choose which service we’re going to book for the delivery next time,” says Sendle founder and CEO James Chin Moody.

Sendle has grown at 20 per cent per month over the last 30 months; such is the excitement in the e-commerce industry around its offerings.

“Our success shows how much Australian small businesses need an alternative to Australia Post,” Moody says. “When you get a functional monopoly, things slow down and you don’t innovate. We’ve been looking at solutions for that last mile, and more.”

Sendle now offers a price guarantee to the effect that any parcel sent through its service will be cheaper than Australia Post’s Parcel Post. However, great service is not all about price.

The drive towards “now” – the need for faster delivery of purchased items – is being matched by a drive towards “how”, meaning customers want more visibility and control.

“We’re making much better use of technology to keep customers informed,” Moody says. “They can find out exactly what’s happening with their parcel, where it is, what they need to do or where they need to be to pick it up. Everything is fully tracked, so you can actually watch it as it arrives.

“The second big change is about providing choice around everything from alternative delivery points to being able to change things as the parcel is in transit, such as delivery time.”

Delivery matchmaker

The ever-increasing demand for food delivery has lead to the launch of numerous new delivery services, including Uber Eats.

Another of Greenberg’s “green shoots” is Shippit. Co-founder and joint CEO Rob Hango-Zada was once immensely frustrated with the delivery of several items he’d ordered, so he started a business that would do the job better.

“Will On, the other co-founder, and I were talking about the [sub-standard] delivery experiences we’d had,” Hango-Zada explains. “I’d had five deliveries in a particular week and none of them worked out. I had to go down to the post office for all of them. Will was having a vacuum cleaner delivered to his home, but worked in the city. We realised e-commerce was growing at such a fast rate, but the one key area that hadn’t changed over the last decade was logistics.”

Customer experience in the delivery process, the entrepreneurs realised, was an afterthought and therefore nobody took responsibility for owning the experience.

As with Sendle, Shippit is a technology rather than logistics business. It harmonises the languages between various courier and postal businesses to form a cohesive, customer-centric tracking experience that offers choice and cost-effectiveness.

“To achieve some negotiating power, SMEs [small and medium-sized enterprises] typically put 100 per cent of their volume with one courier company,” Hango-Zada says. “But one courier company cannot be an expert in delivering all things. Shippit allocates the best courier for every delivery, depending on where the delivery is going, how fast it needs to get there and who’s the better performing courier. We allocate based on quality, with an appreciation of cost.”

Customers know when to expect their delivery and can often track it on a map, in real time. They receive notifications at key stages of the process and delays are identified and communicated proactively. The tracking link, sent to the customer at purchase, takes the customer to a web app that can be viewed on a mobile device or desktop and which can also be branded to look like the retailer’s brand. For the merchant, it’s a simple plugin to their online shopping cart.

“It makes everything easier and smoother, for everybody,” Hango-Zada says. “For example, these days when you order something and it doesn’t arrive within one day of the ETA, you flick off an email to the retailer. The retailer then emails or calls the courier company, where staff have to chase down the package. If the retailer doesn’t respond to the customer quickly enough, the customer sends another email. It all kicks off a giant process. Being proactive, we allow the customer to be informed and the courier to launch an investigation before anybody even knows the package is late. It’s detected a lot sooner and resolves quickly.”

A way to go

All these developments add up to a more advanced and positive user experience for the e-commerce business and its customers – a sign of rapid advancement in an area that has been largely ignored. However, for those who place great importance on ensuring their brand is protected end-to-end – such as Johnson from Delish Cupcakes or John Winning from Appliances Online (see below) – the solutions are still not at a stage where control of the last mile can be handed over to a third party.

“We haven’t looked into drones or anything like that,” Johnson says. “The biggest change we might make over the next few years is to employ a student to do what I do, to make personal deliveries. The personal contact, for me, is very important. I never say never, but it will be a long time before a courier company will convince me they’re going to offer the authenticity and integrity that is so important in my business.”

Professional Development: Creating and sustaining a customer-focused organisation: create stronger, more valuable, and lasting relationships and experiences for your customers.

If you want something done right…

Appliances Online has won numerous awards and widespread customer loyalty for its delivery of electronics and white goods. CEO and founder John Winning explains how.

What does delivery success mean to Appliances Online? 
Retail is not just about selling, it’s also about service. Our mission is to provide the best shopping experience in the world and we can’t meet that goal unless we provide an exceptional delivery service. We use Net Promoter Score (NPS) as a measure of our success. Every customer-facing role, from the person answering your call to the person physically delivering to your home, is measured by NPS. With scores of seven and below, we reach out to the customer to ask about the experience, to get their input and create a better experience next time, which is something they really appreciate. Our NPS is currently 81.5, while the retailer average is 12.

How do you manage e-commerce deliveries?
We have our own fulfilment service called Winning Services. The level of care and efficiency that our service team takes to deliver, install and handle bulky good replacement items is like no other. It was recognized recently at the Retail Fulfilment Awards, where Winning Services won Best Overall Fulfilment Retailer for 2018.

How is this high-level care achieved?
The customer places their order online and is given the option to pick their delivery day, including Saturday. When the delivery day comes, the customer is notified in the morning and given a two-hour window in which their product will be delivered, through a mobile app that we developed in-house. The customer has the option of delaying the time or choosing their preferred two-hour window at checkout. When the driver arrives, they will take the product out of its packaging, install it, teach the customer how to use it and dispose of the old product and any waste. Our focus isn’t just getting the product from A to B. We focus on delivery when it’s convenient to the customer. We keep them informed, leaving them feeling comfortable about their purchase, knowing it’s installed and how to use it and that it all works as it should.

Why is a good delivery function so important?
Post-sale satisfaction is a defining factor in achieving loyal customers, as it is the last point of contact. We believe that our service offering – free delivery, connection and removal of old appliances – provides us with an advantage. However, it’s our interaction with customers that sets us apart.

Read next: The science whiz challenging the parcel delivery business

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June 2018
June 2018

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