Time for Companies to Rethink Their Customer Delivery Strategy

While couriers have long been used for local or “last mile” business-to-business deliveries in the U.S., and for consumer deliveries in densely populated areas of the world such as Europe and Asia, the average American thinks only of big name players like FedEx, UPS, or a name such as Con-way that they saw on the side of a semi-trailer truck on the highway, when it comes to delivery. How’s that possible when the local delivery and courier industry is booming in the U.S. with an estimated annual value of $46 billion and more than 4,000 companies?

It could be that packages are typically delivered during hours when you’re not home, or that you didn’t take notice of the vehicle that dropped them off. However, it’s very likely that you have received many packages delivered by courier. Amazon uses a national network of couriers for its Prime deliveries. How else could that video cable get from the local Amazon Fulfillment Center to your doorstep less than 24 hours after you clicked “Purchase” for a low, once-a-year fee?!

Couriers don’t only do next-day local delivery at rates lower than FedEx or UPS; they are able to provide a wide range of service levels for (quite literally) any product a business or consumer purchases. Because of their size and focus on a limited geography, couriers are able to do things that large national carriers cannot. First and foremost, they can tailor their service based upon the shipper’s desires, where national carriers cannot for reasons of efficiency and scale. Looking for same-day delivery of headphones from a retail storefront to a consumer, scheduled delivery of pharmaceuticals to drugstore within a thirty-minute window, or two-person delivery and installation of a washer and dryer with removal of the old one? The local delivery and courier industry has these unique service levels covered.

When asking why companies prefer to use large national carriers instead of couriers — despite the fact that couriers can provide better service levels, an end customer delivery experience tailored to the shipper’s desires, and more often than not lower rates — the answer is as simple as they come: No one ever got fired for using FedEx, UPS, Con-way, etc. It’s the old adage that was used thirty years ago to justify paying a premium for IBM despite there being better options. This response underlines the biggest perceived difference between the large national carriers and couriers— risk and ease of doing business. It’s time shippers reevaluate their delivery strategy because technology adoption and advancement have solved the local delivery and courier industry’s traditional shortcomings, making couriers a better alternative to the national carriers or even a dedicated fleet:

Geographic Coverage: With a national carrier, a shipper only needs to work with a single company to offer delivery in the top 25 markets. Since couriers focus on a limited geographic area, a shipper looking to have a national local delivery network would need to potentially work with several dozen couriers. More transportation providers means more points of contact and potential failure, parties to interface with your supply chain, and a generally more complex operation that requires more resources in every job function involved in the delivery process — from transportation and logistics to customer service to finance.

Many shippers choose to reduce what they have to deal with by working with a managed transportation services (MTS) provider that specializes in local delivery or “the last mile,” such as RR Donnelley or Ensenda. The MTS takes on everything from training each courier to auditing and paying invoices. A growing trend among progressive companies that do not want to outsource — such as Restoration Hardware, for example — is to use technology that streamlines communication and collaboration across internal teams and with their couriers, minimizing the need to scale using people. Until recently, these companies had two choices: develop and maintain software in-house, which was the approach most long-standing users of local delivery chose; or, significantly customize existing transportation or fleet management software (TMS or FMS) and integrate it with customer relationship management (CRM). However, over the past few years a segment of local delivery software specialists has emerged in the supply chain management software industry. About a year after adopting purpose-built technology, companies have seen a 15 percent or more reduction in last mile-driven expenses across their enterprise.

Visibility: When a retailer, for example, uses a national carrier, their customers get real-time, detailed tracking information throughout every step of the delivery process. Historically, couriers have struggled to provide anything other than proof-of-delivery, and even then up to 48 hours after the delivery’s completion; however, technology has enabled couriers to provide a competitive customer experience. Through the adoption of mobile technology for drivers and emergence of sophisticated dispatch software, couriers have the information to manage their business better and provide FedEx- or UPS-like visibility to shippers and their customers.

A major challenge for shippers comes when they need to actually gather and present courier-provided information to their customer, or even make it useable internally to monitor and manage their couriers. Shippers need to standardize the event because every courier has a slightly different definition for the event of, for example, “item out for delivery.” Further complicating the situation is that everyone expects information to be near real-time, and the fact is that nearly 60% of couriers use proprietary dispatch software. It quickly becomes apparent that the shipper’s IT team has a lot of work in front of them not only to build courier integrations, but maintain them on-going and monitor them for data timeliness and completeness. Fortunately, shippers can turn to traditional data integrators that have long solved this problem for other types of supply chain data, or one of the growing number of local delivery software specialists that have pre-existing integrations with hundreds of couriers and tools to monitor and drive scanning compliance (among other capabilities).

Quality: The local delivery and courier industry long had a reputation for being low quality because it operated in an extremely low-cost and unsophisticated model. Where the national carriers hired full-time drivers, and invested in training and technology to help them perform better, couriers did everything they could to keep costs low from using independent contractors, who regularly came and went while working for multiple companies, to running their business by phone and paper. It’s not surprising quality suffered. Today the industry is very different. The same technologies that have addressed the visibility challenges have given couriers information to better monitor driver performance and quality.

Shippers, however, still need to monitor quality and work with their couriers to achieve the customer delivery experience they want. Unless the vehicle has a recognizable name on the side, a customer is more than likely to hold the shipper accountable for delivery issues. Heavy users of couriers, such as Office Depot/Max, recognize this and use automated alerts and business intelligence on top of real-time information to proactively monitor quality and performance throughout the delivery process. Technology matters when it comes to driving quality from couriers: companies can reduce their shortages and damages by 20% and lower their customer service issues by 18%.

While companies such as Amazon, Restoration Hardware and Office Depot/Max may be far ahead of their competition by being early adopters of couriers, the bottom line is that technology makes it possible for any company to enjoy the advantages couriers have over the large national carriers without having to make hard tradeoff decisions. Now is the time to reevaluate your customer delivery strategy and consider couriers. As a result, you can improve customer satisfaction and have the ability to implement same-day, storefront, scheduled, and two-person deliveries — all while saving money.

Rob Howard is the founder and CEO of Grand Junction (www.grandjunctioninc.com), a software-as-a-service (SaaS) platform for managing the unique requirements of local delivery and customer-facing logistics. Prior to Grand Junction, he cofounded Ensenda, a non-asset based third-party logistics (3PL) provider focused on the last mile. Rob has a fifteen-year track record of driving innovation and leading both start-ups and nonprofits to success.