The Human Cost of Faster Delivery

The Human Cost of Faster Delivery

Just imagine, you ordered a couple of T-shirts when browsing a website that offers 24-hour delivery with an extra shipping charge. You went for it, and the next day a delivery guy came over with the item. You are happy to get your stuff in the quickest turnaround time, and the website is happy to have kept its promise.

Now, imagine again that in a country like India where the logistics infrastructure is struggling to cope with the ever-growing population, receiving your product in 24-hour is no less of a magic. You can call it exemplary customer service or delivery. You may also call it a “way of pushing human abilities.” There is, however, a stark difference between “using humane abilities” and “at the cost of humans.”

The retail landscape has gone through a massive overhaul once e-commerce has stepped in. Not getting limited to the digital platform, numerous eTailers across the world are also opening physical stores to fill the void of ‘touch and feel’ experience that customers missed when buying.

Despite many revolutionary changes around the retail industry, one thing remains static, which is shipping. Here the term ‘static’ refers to the approach when it comes to shipping as it still largely depends on human intervention. As the competition got intense, and strategies like ‘same day’ shipping have been implemented, it triggered a new retail war in North America and Europe. The result? All hell broke loose for delivery personnel. During holiday seasons, things turn out to be even nightmarish. Similar scenarios replicate in India during pre-Diwali shopping frenzy.

Fast Shipping: Pushing Humane Boundaries

This write-up is not just about the plight of the retail delivery guys but also about the e-commerce businesses that simply got caught up in the whirlwind. It is always fair talking about the two sides of a story.

Even though the retail bubble is growing too fast in India, the reality is, even top-tier e-commerce players are running on slim margins due to increasing logistics costs. Absorbing these costs is particularly challenging for eTailers that still lack a robust supply chain and streamlined logistics. It is simply because only bigger players with large-scale presence can negotiate and get delivery service at discounted rates. So, things again boil down to courier-based deliveries.

Due to the fact that shipping has become a major determinant of competitive difference in the e-commerce, the logistics is getting hard pressed. Many retailers are offering various delivery options including standard, next day, and same day to acquire or retain their customers. It often turns out to be a herculean task for delivery people to keep up with multiple delivery formats. The major anomalies are remote addresses, traffic issue, clash of delivery times and so on. On top of it, if a delivery gets delayed and customer refuses to accept the item, it adds more to the already spiking logistics cost. America’s National Retail Federation’s data shows that almost 60 percent of online transactions in the US contain free shipping. In India too, customers get free shipping with a minimum order value. For consumers, this racing against time by eTailer is offering benefits such as cheaper products and convenience. The cost is, however, too high compared to their profit margin. It is a catch-22 situation for retailers as by providing faster delivery at lower prices, they are now bearing the heavy cost of these services. The contracted logistics services are feeling the heat too.

Home Delivery or Store Pickup: The Obvious Dilemma

Retailers can’t brush off the fact that they are facing a constant dilemma between sticking to the home delivery method or introducing store pick up option like Amazon or some omnichannel giants. Home delivery is more expensive than sending it to a store for pickup by customers. A report by LCP, a global supply chain management consultant reveals home delivery accounts around 20 percent of the total item value, whereas delivering to a store constitutes only five to seven percent. However, not all e-commerce players are in a position to open their physical stores due to numerous infrastructure costs involved in the process.

Faster home delivery, on the other hand, even with an additional fee is a loss-making operation. Absorbing the logistics cost is manageable for luxury retailers as they usually operate at higher margins. Customers of luxury products are also aware that they need to pay significantly higher than the average products. From retailers’ perspective, as the selling prices are way higher than the costs of delivery, they can still operate at a good profit margin.

Even for other retail products, many consumers are willing to pay an additional shipping fee since they consider convenience as a key factor other than product quality and pricing. But, as said before, even additional fees are not going to help retailers recover losses or reach breakeven, let alone increasing revenue margin. With no obvious solution until recently, things again trickle down to cost of human or carrying on operation at the cost of humans. According to an article by ‘The Economic Times’ published in June 2016, many delivery persons are getting back to fast food chains and brick-and-mortal stores from where they came. The reasons are breakneck schedule, long work hours, increasing physical ailments like backache, and job insecurity. Not an encouraging news for the e-commerce industry.

Cost – Convenience – Faster Delivery – Zero Stress: How to Keep a Fine Balance

To retain the delivery workforce, the retail and logistics industries need a solution where four major factors – logistics cost, customer convenience, faster delivery, and zero stress (for delivery personnel) can easily be achieved.
Investing in cutting-edge yet cost-effective technologies sounds like a realistic solution. Technologies such as robotics, drone, and locker systems are bringing along silver lining and smile to retailers’ face. While robotics and drone, to a large extent is still in the experimental phase, parcel lockers are already making waves all over the world.

Automated parcel lockers with modern technology can be a perfect fit when it comes to streamlining logistics and increasing customer convenience. This mode of delivery is getting increasingly popular due to hassle-free delivery, password-based operation, on-the-spot payment through debit/credit card, and complete security. Most importantly, there will not be instances of missed deliveries anymore. If you have an e-commerce or omnichannel business, and wish to streamline your delivery process at a significantly lower cost, call us at +91-8882-760-760 or send an email to info@smartbox.in, we would be glad to assist you.

Smartbox

This entry has 1 replies

  1. Roy says:

    Interesting perspective. Thanks for sharing your thoughts on the subject.

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