Local Couriers Vs National Providers

October 22, 2016

The $46 billion local delivery and courier industry is booming in the US, with more than 4,000 companies. While couriers have long been used for customer (or “last mile”) delivery in densely populated areas of the world such as Europe and Asia, it seems that when the average American thinks of delivery, they tend to only think of big name players like FedEx and UPS. Why? It could be that your packages are delivered during hours when you’re not typically home, or that you didn’t take notice of the truck that dropped them off. However, it’s very likely that you have received a package delivered by a courier — even when you order that package from Amazon. Yes, even Amazon employs a national network of couriers for its Prime deliveries. How else did you think that video cable got from an Amazon Fulfillment Center to your doorstep less than 24 hours after you clicked “Purchase”?! 

 

Couriers don’t just deliver small packages. On the contrary, couriers are able to provide a wide range of service levels for (quite literally) any product a consumer or business purchases. Because of their size and focus on a limited geography, local couriers are able to do things that FedEx, UPS or the semi-trailer trucks you see every day on your commute, cannot. First and foremost, they can personalize their service based upon the shipper’s needs. Looking for same-day delivery from a retail storefront, scheduled delivery with a one-hour window, or two-person delivery and installation with packing material removal? Check! Have a delivery that requires a pickup truck, cargo van or box truck (like those you can rent from U-Haul)? The local delivery and courier industry has you covered.

 

When asking why companies prefer to use FedEx or UPS instead of local courier companies — despite the fact that couriers can provide greater flexibility, faster service, and competitive rates — the answer is as simple as they come: No one ever got fired for using FedEx or UPS.

This underlines the biggest perceived difference between the large national shipping companies and local couriers — the customer experience. According to a CEI report, 86% of respondents would pay more for customer service and quality, however, only 1% of customers feel that vendors consistently meet their expectations. This is a particularly startling statistic for any type of company performing a customer delivery because they have two customers to keep satisfied: The shipper who has contracted the courier to deliver its products, and the shipper’s customer (or, the person or company receiving the product.)

With all of this in mind, let’s take a closer look at how couriers “stack-up” against the UPS’s and FedEx’s in the customer service race.

 

Lap One: Visibility

 

When retailers use FedEx or UPS for deliveries, customers get real-time, detailed tracking information and deliveries are consistently made on time and without damage. So how do couriers compare? While historically couriers have struggled to provide the same level of quality, recent technology has enabled couriers to build a competitive customer experience. Through the adoption of mobile technology and the use of full-feature dispatch software, couriers have the information to manage their business better and provide FedEx or UPS-like visibility to shippers and end customers. 

 

The major challenge for shippers comes when they need to actually present the courier’s information to the customer. Shippers need to standardize the events that its customers see. For example, the event of “item out for delivery,” has a different definition for every courier company. Add to it that all information needs to be presented in near real-time and that about 60% of couriers use proprietary technology and it becomes all too clear — the shipper’s IT team has a lot of work in front of them.

 

Fortunately, shippers can turn to traditional data integrators such as SPS Commerce, who have long solved this problem for other types of data, or local delivery and courier industry software specialists such as Grand Junction, who have pre-existing integrations with over 90% of courier companies in the U.S. and Canada.

 

Lap Two: Serving Multiple Markets

 

Serving multiple markets may be seen as a challenge to those who are unfamiliar with the local delivery and courier industry. Since couriers focus on a limited geographic area, a shipper with a national local delivery network covering the top 20 markets would need to work with dozens. With FedEx and UPS, a shipper only needs to work with a single company to gain the same level of geographic coverage, requiring fewer resources in areas from transportation management to customer service. Many shippers choose to work with third-party logistics providers who specialize in last mile, and take on everything from management in the field to payment, while others like Restoration Hardware have taken a technology-based approach so that they don’t need to staff-up.

 

Lap Three: Cost

 

An important aspect for any company evaluating customer satisfaction is cost.  When comparing costs for couriers against its better-known competitors, the shipper is the party that is primarily affected by a change in management and execution delivery costs.

 

After the implementation of the appropriate local delivery software combined with utilizing local couriers, retailers have seen up to a 15% reduction in last mile-driven expenses and an 8% savings in transportation spend.

 

Lap Four: Quality Control

 

Quality control issues throughout the delivery process – including factors such as the timing of a delivery, a driver’s overall performance, and providing responsive customer service ­– have a massive impact on the customers’—both shippers and recipients—overall experience. Quality control is a specific area in which couriers who utilize local delivery software are able to provide a competitive advantage to customers.

 

Local delivery software provides couriers and shippers with real-time visibility into the entire delivery process, enabling the shipper and its couriers to act fast in a scenario where a customer might be less than fully satisfied. As mentioned previously, while UPS and FedEx certainly have a high standard of quality control, the development of technology designed specifically for couriers has enabled shippers and couriers to work together to resolve all quality before it ever even affects the customer –– a feat that neither UPS, FedEx or the USPS can boast.

 

Leading the charge in quality control are major organizations like Amazon, which has invested millions in the development of its delivery software and a dedicated team to give customers a competitive delivery experience or Cardinal Healthcare, which has a longstanding history of using couriers and utilizes advanced software and tasks resources in each market to work with local couriers. These key players, among others, make it clear that with the right technology in place, a better customer experience can be achieved no matter how robust your local courier network and/or consumer demands are.

 

The Finish Line

 

While companies such as Amazon and Cardinal Healthcare may be winning the race to leverage the time-to-market, service level and cost advantages of couriers over better-known national transportation providers, the bottom line is that any retailer can not only join in the race—but also win. Now is the time for retailers to reevaluate delivery strategies and consider couriers. As a result, retailers will improve customer satisfaction and have the ability to implement same-day, storefront, scheduled, and two-person deliveries that provide couriers with the tools to self manage quality –– all while cutting costs.

 

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