February 2002

On the face of it, parcels carriers that do home deliveries seem to treat them just likethe rest of their business, but as Marcia MacLeod finds out, behind the scenes many are now taking steps to smooth the process

Successful business-to-business electronic commerce depends on home delivery operations to a much greater degree than many e-tailers want to admit. In fact, from the consumer's point of view, the online shopping experience is only as good as the last mile.

Logically, an e-tailer would turn to those with the most experience to carry out that vital service - which means the express parcels carriers. But how good are these operators at e-fulfilment now? How far have they tailored their services to meeting the very specific needs of e-tailers and their customers? And do they treat e-tailers' orders any differently from those from other customers?

 

At first glance you might think the answer to that last question is a resounding no. Once the parcel is in their system, their warehouse and delivery staff usually aren't even aware that the item was bought online. But there is more to this than meets the eye. Take DHL (www.dhl.co.uk), for instance. It does set e-tailers' business apart, but from the strategy end, rather than the actual delivery.

"E-business presents slightly different complications and slightly different challenges," admits Manish Joshi, markets manager of DHL. "We generally try to start any e-business contract with an advisory service. If customers involve us at an early stage, when they are designing the Web site, we can help provide delivery information online. The more information the e-tailer gives the consumer up-front, the better - whether it's about the option of home or office delivery, the time of delivery and so on, information on duty and VAT payable, or details of the return process.

"For international shipments, online vendors need to take orders as late in the day as possible to allow next-day or 48-hour delivery. We try to automate this process, taking information from the merchant's system to ours to prepare necessary documentation. If we can integrate the consumer's order number with the waybill, consumers can track the goods themselves, too."

UPS (wwwups.com) has a Time and Transit tool that can also be integrated into the e-tailer's Web site, enabling consumers to key in their postcodes and be presented with a menu of delivery options. Rates for different domestic and international services are on the system to enable delivery costs to be calculated.

Providing a range of delivery options online makes everyone's life easier; but what options are being offered? For the most part, a standard service is three to five days, with next-day delivery offered at a premium price. UPS's standard service is two or three days, but it also offers next-day (in Europe) and Saturday. Reality (www.reality.com) can provide a three- to five-day standard service, 48-hour or next-day, all with or without signature. Parcelforce Worldwide (www.parcelforce.com) also offers three- to five-day, 48- or 24-hour delivery, while Geopost, which owns Interlink and Parceline, can deliver before noon, evenings or Saturdays, in addition to standard or next-day delivery.

More prevalent

Narrower time windows, evening and weekend delivery are becoming more prevalent. "We know we will have to offer am, pm, evening and Saturday morning slots," says Reality's logistics solutions director, Steve Bolton.

Parcelforce Select, launched in February 2000, offered timed delivery of morning, afternoon or evening. It was revamped last autumn to change the 5-9pm slot to 6-9pm, allowing more consumers to get home from work, and adding Saturday mornings. Securicor's standard service is a next-day 4-9pm delivery, as most people are in to provide the mandatory signature. Before 10am or Saturday morning can also be provided. Initial CityLink lists the most options: before 7.30, 9 or 10.30 am, before noon, next afternoon (noon-5.30) or next day before 5.30pm.

Surprisingly, perhaps, in view of the 30 per cent-plus average failed delivery rate, few retailers take up these options. "All of these options carry a higher premium," points out Dwain McDonald, director of sales at Geopost. "The decision surrounding delivery is driven by accountants who want the cheapest option."

Tim Smith, logistics director of Lynx Express (www.lynx-express.com) agrees. "It's a trade-off between cost and service," he says. "We can offer delivery before 10, before noon, afternoon, and so on, but so far no positive need has been shown from the retailers; no one thinks it's worth the extra money."

Instead, most carriers try to leave parcels in sheds or accessible garages or with a neighbour, rather than "yellow card" residences (leave a card informing the consumer of attempted delivery). In some cases, however, where signatures are essential, yellow cards are the only solution.

Offering two-hour time windows, or even letting consumers pick the day they want goods delivered, appear to be non-starters because of the extra cost. "Every time you close a delivery window by X, it increases the cost by X-plus," Lynx's Tim Smith points out. "So a two-hour delivery window increases the cost by many hundreds of percentage points above the standard."

Another problem comes from the e-tailers' inability to schedule deliveries outside a set parameter. For example, if all orders are delivered the next day, but the consumer won't be in the next day and wants the goods in three days, or next week, most retailers have no way to defer delivery - and neither do the carriers. Like most express companies, Parceline (www.parceline. co.uk) and Interlink (www.interlinkexpress.co.uk) operate a "clear floor" policy; every item in the warehouse is sent out every day, unless it returns as a failed delivery or is subject to a specially booked delivery. "Why should a parcel company hold an item?" asks McDonald. "The vendors should do it; it's their stock."

Drop boxes

Consignia (www.consignia.com) is looking at developing databases of consumers' preferences "to take the hassle away from the retailer," says Nigel Moore, marketing director home shopping. But he adds that this is a few years off yet. In the meantime, Consignia is one of the companies pioneering various other methods of delivery, such as drop-boxes and collection points. It is currently trialling home drop boxes and secure access with Homeport and BearBox in south-west London, Secure Storage Solutions in Bristol and Bath, and Home Delivery Access services in Solihull.

Drop-boxes are secure boxes placed on porches, in sheds or garages or even on the side of a house, accessible by padlocks, combination locks or computerised codes, to which driver and consumer have the key or number. In the US these may be temperature-controlled. Secure access delivery involves drivers gaining access, again through a security code, to garages, lobbies or other areas cut off from the main house.

Reality is also looking at home drop boxes and secure unattended access, although, as Steve Bolton points out, money raises its ugly head again. "Who pays for the secure box or the kit on the wall with the key code? Who pays the transaction charges for computerised access?" But, he adds, drop-boxes, or locker banks, could solve the very difficult problem surrounding delivery to blocks of urban flats.

Locker-bank trial

The idea of lockers is being extended to remote drop-off/collection points. Consignia is piloting the use of ByBoxes at Milton Keynes General Hospital and elsewhere. Parcels for both staff and local consumers are dropped at the boxes; consumers are sent an email or SMS message notifying them of the delivery, which can be collected at their leisure.

"We think drop-boxes would be good for transport terminals, too, such as railway stations; at university campuses; and at large business parks," says Moore. Bybox locker banks are already on trial at a business park in Wantage, as well as at a retail store, where they can be used by staff, customers and workers at other nearby stores. Consumers provide an access code and delivery instructions when they order.

These trials are an extension of Consignia's Post Office Local Collect Service, in which parcels are left at post offices for consumers to collect. Introduced as a trial in September 2000 with 1,000 outlets, the service is now available in 16,000 post offices, some of which are open until 7.00pm. Retailers are provided with a database of post offices so they can publish opening hours. "The service has proved very popular," says Moore. "In the run-up to Christmas, 45,000 packages were picked up from post offices."

Reality also likes the idea of locker banks, prototyping left luggage lockers with smart technology to track events surrounding the locker. Steve Bolton explains: "For example, a customer could say 'I'll pick up the goods from X railway station' and the item is delivered accordingly; the consumer is emailed or sent an SMS message with an access code, and when the parcel is picked up, the time of collection is recorded."

UPS's drop trials are with Texaco (the Texaco Relay Star Service) and Mailboxes Etc. Many Texaco garages are open 24 hours a day, giving "any-time" access, while Mailboxes Etc - packing and mailing service franchises - are open until 7.00pm. This also encourages consumers to drop returns at Texaco, Mailboxes or UPS depots.

Lynx Express is also looking at collection points, hoping to pilot a scheme in London within the next couple of months. But as Lynx works primarily with retailers of high-value goods, it has developed a number of extra services. For one mobile phone customer, for example, it obtains proof of identify and address of the consumer, carries out credit card checks, and asks for documents to be signed when the phone is handed over.

Another mobile phone company uses Geopost's value-added service. If a consumer is "carded", staff phone the individual that evening to re-arrange delivery. It has just launched a new service under which it emails the consumer as the parcel is shipped, providing parcel identification details to enable consumers to track their own goods. UPS already sends email alerts when the shipment leaves the merchant's warehouse.

Better communication is key to achieving successful delivery, but however much carriers try to improve their service options, any drive for improvement really has to come from the e-tailers and their customers. And, as GeoPost's Dwain McDonald points out: "Vendors still don't care when the goods are going to be delivered; they just hand them over to the parcels company and tell us it's our problem - and they want us to solve it at the lowest possible price."

Spotlight: John Lewis Direct

John Lewis Direct bucks the e-tailing norm by offering a named-day delivery, with the chosen day being up to eight weeks in the future, as well as standard three- to five-day or guaranteed next-day delivery.

"The named day service is important for the customer," emphasises supply chain manager James Easterbrook. "But in order to manage that process, we hold the order back in our system, send it to the fulfilment warehouse (run by iForce) the day before the consumer wants it, and then treat it like a next-day delivery" - at the next-day premium charge of £4.95 instead of £2.95.

So far only 8 per cent of customers use the named-day service, but the proportion growing fast. Another 12 per cent opt for next-day. Initial CityLink carries the next day/named day deliveries, Parcelforce the standard drops.

Spotlight: The Book People

The Book People uses Parcelforce Worldwide because of its reliability of service. It charges consumers £2.95 for a standard delivery, £4.45 for evening and £4.95 for next day. So far, 5 per cent ask for next day - rising to a much greater proportion before Christmas - and only 1 per cent request evening delivery. Evening drops are still relatively new, and take-up is growing. "We are now looking at alternative delivery options," comments finance director Jane Stanley, "such as collection points."