Updated: Oct 4, 2020
When you're setting up an e-commerce business, identifying the most suitable courier service is one of the most important aspects in ensuring customer satisfaction, optimizing operational cost and scaling your business.
While setting up, startups often are focused on selecting solutions and associations which support multiple parts of their sales and distribution functions. Shipping is factored into the variable costs of an e-commerce PnL sheet and hence minimizing costs here would translate into significant margin improvements when scaled up. Furthermore, the last mile touching the consumer are the delivery services and hence these form an important part of the consumer experience and impact their opinion about the brand as well.
Therefore, identifying a shipping partner that not only meets cost considerations, and has a variety of features, but also ensures a certain level of experience at the point of delivery is essential.
Key parameters while evaluating courier service partners
With several logistics players in the Indian market,one can look at an array of relevant parameters and choose one that best fits the specific needs of the business based on the product category, level of urgency and brand expectations.
1. Delivery Speed:
This refers to the time taken for the goods to be delivered to the customers. This aspect needs to be selected based on the brand promise and product category. It has a direct bearing on the perception of the brand in the minds of the customer and can make or break the customer experience and hence the brand reputation. A timely delivery could be the key factor in driving repeat purchases and positive reviews for your brand.
It is important to review the delivery speed committed by the courier partners which could be one of the below:
1. Time definite deliveries : Here the partner will commit a certain no. of days that would be taken to complete the delivery. This is one of the most often used options.
2. Same Day Delivery / Next Day delivery : Some partners offer same day or next day delivery guarantees in specific pin codes which could be a requirement for some product categories eg. essential goods like food, medicines, health and personal care products
3. Estimated Delivery Date: In this option, courier service providers will commit an approximate idea or a range of dates between which the product is expected to reach. This is a slightly less rigid commitment and hence is likely to be appropriate for non essential items. This is also likely to be the cheapest given all other parameters like pin code eight etc. staying constant.
“To differentiate themselves, many e-commerce players and start-ups are offering ever-faster delivery, such as same-day and instant delivery enabled by improved fulfillment processes. In fact, 20 to 25 percent of consumers would pay significant premiums to receive their items on the same day.” - McKinsey & Co
2. Shipping Prices :
A key variable cost for any e-commerce player, shipping prices efficiencies are essential to maintain profit margins. Look for courier services that offer competitive prices given all other factors are fitting well within your brand's needs.
A McKinsey survey of 4,700 consumers found that 70% were looking for the cheapest form of home delivery.
3. Pin code coverage:
Based on where your target audience is, geographically, pick a courier delivery service that delivers to all the required pin codes.
4. Tracking capability:
Some time ago, tracking information was considered as a value add for courier service providers. Today it's a given. However, here are a few questions you should get answered before you zero in on a courier service-
How do you track an order once it's shipped ?
How often do you need updates - at every action and checkpoint ? Or simply at the shipping point and point of delivery?
Each courier partner will have their own policy and process for tracking updates and it's essential to be aware of the level of tracking offered.
5. Consignee Experience:
This is a very important aspect to be considered while selecting a delivery partner as the experience of your customers is paramount to driving repeat sales and positive word of mouth to reduce customer acquisition costs as well as higher Average User Value(AUV). Some of the key features you should check for are:
1. Customized order tracking page - Consignees can track shipment status updates on a page that is branded with the seller logo.
2. Automated alerts - sellers can enable automated alerts for their customers at key stages in the shipment journey.
3. Branded Package Labels - Sellers can choose to include their branding on the shipping labels
Some important features businesses must consider while choosing a delivery service are :
1. Cash On Delivery Remittance Cycle - The duration of COD remittance offered by delivery partners varies from the standard 14 days to same day remittance. Choosing a partner who offers quicker remittance could be essential for a seller to manage cash flows effectively.
2. Automated Non Delivery Report (NDR)- This report enables sellers to manage failed deliveries so that they can plan for the next actions to be taken for the order.
3. Multiple shipping modes - Sellers should be able to choose the mode of shipment based on their needs using a single account. It could be surface for an order which is heavy and is time insensitive
These factors when considered in the context of your specific business needs would help you effectively drive your business by picking the most suitable delivery solution.