We’ve got a problem

Australians have developed a massive appetite for online buying.  Many people only occasionally hit the shops these days.  Instead, they much prefer the ease, precision and solitude of online purchasing.  This trend has flourished in recent years.

Research from December 2015 from Roy Morgan showed that Australians spent an estimated $37.8 billion over the internet, with around four in ten people buying at least one product online during an average four-week period.  That’s a pretty significant number when you note that our population then was under 24 million.

The momentum has grown exponentially over the last four years.  The development of smart shopping apps that display goods in a mobile phone-friendly way,  with options to save payment data securely has made shopping online incredibly easy.  That little device that so many of us carry around in our handbags and pockets has become the most popular marketplace tool for online sellers.

Australians have developed a new acceptance of using the internet for everyday tasks like banking and bill payment, contributing to our trust in systems that work for us.  We share our activities, calendars, find partners, ask questions, watch TV, arrange meet-ups, find transport, research everything, make travel plans – it is difficult to remember a time when we didn’t use the internet to run our lives.

This has created opportunities for businesses small and large to disturb the markets in which they operate.  For small to medium companies it makes sense to engage a third party logistics provider, so they can focus on investing their time and money into their product and marketing.  However, there is a problem that they may face over which they have little direct control.

So what is the problem? 

It’s all about the courier delivery driver – the last person to hold your customer’s online purchase in their hand before it is delivered.  If the correct address is not showing on the freight label, the online purchase cannot be delivered.  It is incredible how many people don’t remember to include all of their address information when purchasing online.  Some incomplete address data slip through all of the detection software, because it is not quite wrong, simply incomplete.  Also, if you want a signature at the delivery point, it follows that the recipient of the parcel needs to be physically present.

To quote David McLean, who is the founder and CEO of Hubbed “A major thing that all courier companies and logistics companies out there deal with when it comes to e-commerce is trying to solve that last mile problem.”  

Courier and logistics companies strive for an excellent DIFOT score (Delivered In Full On Time).   The challenge that a lot of software solutions have is that they rely on Australian address data, often supplied by Australia Post.  You’ve got to make it easy to capture the full address into whatever online platform you are using.  If they want it delivered to their home while they are at work – and therefore cannot provide a signature – the RRDN (Returns & Redelivery Nightmare) begins.

There are some smart solutions to the ‘delivery failed’ show-stopping clunk.  David McLean’s take on this: “The costs are really high particularly as sometimes up to 30% of people aren’t home when their parcels are being delivered and there is a great amount of dissatisfaction from the consumer’s perspective when they receive those failed delivery cards.”

David and his team’s solution at Hubbed is to arrange a secure place to leave the parcel for collection. They leave a card for the recipient with details of where to collect their parcel, having arranged for local businesses to receive the parcel.  It could be at the local newsagency, or the petrol station down the road.  There are plans afoot at Hubbed for even more consumer-friendly ordering and return options at the collection point.  Collaboration and systemising something that didn’t exist before is the key here — making it easy for the courier driver, the consumer and the supplier.  Plus, a little bit of ad hoc extra income for the petrol station and the newsagency.  Smoothing the way to a smile is how I think of it.

There are questions you should ask before engaging a 3PL provider.

For example; how does their system handle addresses?

Consider what might happen if your 3PL provider’s system cannot accept long addresses, international addresses or unusual addresses.

To illustrate, did you know that ‘Cnr of Smith and Jones Streets’ does not meet the acceptable standard as an address any more? What if the integration of the 3PL software system and your website drop off the unit numbers in multi-story apartments? It’s the same street address, but you’d better get your unit/level information correct, or your delivery may not happen. Does your 3PL provider’s system have this problem?

You might also ask what courier companies does your 3PL provider use?  Do they have a creative parcel delivery option in place?  Even if they do, wouldn’t it be better to capture exact address information at the source so that these options do not need to be activated?

If you are a small to medium business and you want to join what is now the online norm, don’t let last mile delivery problems ruin an otherwise efficient order-to-consumer experience.

Choose your 3PL partner carefully.

I saw a story about success

It was a great story about a couple of smart young guys who found a gap in a market.  They went up against some major companies with a product differentiation that people love. They have developed a great, fast-growing business to consumer online business.

The story focused on the two young men, then on their marketing team.  There was a video showing their marketing team members happily smiling, standing at a long bench near where their desks were, packing products into post-bags.  ‘We are so successful, we can hardly keep up with demand!’ they proudly announced.

It occurred to me that if they continued to use their marketing team to pack their orders they would possibly not hold on to their success for very long.  Before you give me the talk about everyone needing to jump in and help out and how small business demands this kind of flexibility, I hear you!  I do, really.

But here are a few things to think about when you have a company that has a great idea/product, but doesn’t have a sustainable order fulfilment system:

• What helped guide the company to its current place in the market?
  • Answer: Marketing.
  • Of course, without a good and relevant product, developed by the two people at the helm of the company, the marketing would not have helped.
• What was the makeup of the team who achieved this?
  • See description of people at the long table in the video, above
• If the marketing team are busy with the picking, packing and shipping, who is doing the marketing?
  • Insert answer here
• Are marketers good at inventory management?
  • Generally not, in my honest opinion (gained during twenty five years of working with marketers who need warehousing, fulfilment, order picking and packing. Believe me, I know).
• Is the office a good place to house inventory?
  • Not usually. A big pain is that there is often insufficient space.  I have been into marketers’ offices where they sit sideways at their desks because they have so much stock sitting underneath it that their legs don’t fit!  Throw in a slow lift or a set of stairs and you’ve got an annoying situation.  Is there a decent trolley or any shelving to house the stock once you do get it into the office?  This article is about an online company, there is probably not a lot of warehouse-style hardware and equipment present.  Also, I could be wrong, but there would not necessarily be expertise in safe materials handling procedures and safety procedures/work wear.
  • Can the couriers deliver easily? Is the office on a main road or in a busy city office block?  Is there a loading dock?
  • Expense of office space being used for storage?
  • Ease of receiving/shipping – does someone have to carry the parcels to the post-office?
  • Is there a cost-effective courier solution in place? Is there an automated software system encompassing all carriers or does someone need to flick between various online courier options, depending on which carrier is being used?
  • How can you easily compare costs between carriers?
• Is it a good idea to have expensive staff members who are trained in something else, and have proven themselves to be very good at that something else, doing this kind of work?
• What happens to the marketing if the marketing staff members have all become pickers and packers?
• What happens to the job satisfaction of the marketers if they are expected to spread themselves a little thin and into a work space they didn’t sign up for?
• How much is your successful business really worth, without a robust logistics solution in place?
• Will you lose customers because your success overcame your systems?
• Bottom line question is – How much money/value does the company stand to lose?

Outsourcing, a benefit, not a cost

What is your occupation?

Business owner, designer, entrepreneur?

How do you value your time?

Try to find out the industry standard pay for your job description.  It’s difficult, but you can probably come up with a vague hourly or yearly value without too much trouble.  Keep that in mind as you read on.

If you are busy designing or improving your product, that’s great.  Also great if you are applying your mind and actions to strategy and obtaining market share.

What if you have a great product that is now selling well, but it is taking over your life and all of your space?

I once had a lady call me to beg me to take her products out of her living room.  She said ‘My husband will leave me if I don’t get these plastic tubs out of our apartment.  You’ve got to help me!’  Does this sound familiar?

This lady’s business swamped her.  She had a child, too, as well as her long-suffering husband.  She had ‘no time to pick and pack orders and get to the post office or be here waiting for the couriers, no time to properly manage my inventory, no time to work on the business.  One day I lost my little boy – he had crawled behind the boxes!’ – her words.

What is wrong with this story?

How do you value your efficiency?

Once your business reaches a certain critical mass, you need to change the way you do things.  Your success can so quickly overcome your buoyancy at the beginning. The logistical challenges that start to take over your life are very real.  They can ruin the very success that you have worked so hard to achieve.

If you are the one picking, packing and shipping orders, is that the most efficient way to run your business in the long term?

How do you value lost opportunity?

Now that you are a scurrying, overwrought, overworked, possibly frantic individual who has no time for self-care or even a hairbrush or a clean pair of trackie daks – what next?  Opportunities for growth?  Not only are you too busy to be open to a discussion about growth, but your progress can also quickly leave you short of competent staff and space.  Just imagine if you had the scalability you need.

Get your life back.

Get a 3PL partner.