How cheap are the cheap parcel delivery services?
In these times of recession, where every business, and every customer would like to save every £ possible, every cost is under examination to see if it can be reduced. Included in this many businesses will be examining their delivery prices particularly now, as the New Year has seen parcel service contract prices increase quite substantially, particularly by DHL, the traditional discounter in the parcel market.
One option for businesses, and for consumers arranging their own deliveries, is to downgrade the delivery service, from a Next Day 24 hour delivery, to an economy parcel service, where delivery can be 2-4 days. The savings here of maybe £2 or even £3 a parcel are a prime choice for cost cutting.
However, many of the cheaper parcel delivery services don't just take a day or so longer, many include other small print, which one way or another may end up costing you extra in time, effort, and delivery costs. We have noticed over the past few weeks that these small print surcharges are the areas that some parcel companies are targeting to increase their revenues, whilst trying to maintain their top line cheap parcel delivery price.
Sending Parcels; Here is a checklist of parcel small print for you to think about;
(1) Re-deliveries;
The cost of re-deliveries to the parcel carriers are substantial, which is why many of them have invested heavily on postcode checkers etc on the on-line booking systems so that they can identify at booking the parcels which are most likely to result in a non delivery, or a re-delivery. At present, we don't know of any parcel carriers that are surcharging for a first redelivery following a failed delivery attempt. However, we have noticed that the numbers of re-deliveries offered as part of the price has fallen. Around a year ago, most of the parcel companies were offering up to three delivery attempts included in the contract price. This has fallen to 2 with many of the carriers, and with the economy parcel services we are now seeing only one redelivery, and even no re-deliveries.
This means, that if you send a parcel to a customer and there is no redelivery attempt, then you customer is not going to be best chuffed when they have to drive perhaps 40 or 50 miles, across a city centre to collect a parcel from a depot. If your customer lives outside of the main UK cities (and most people do!) then the depots are covering increasingly wide areas. Particularly now, as DHL is closing the smaller local depots around the country.
Do you think that your customer is going to have a favorable impression of your business if they have had take time off work, to drive long distances to get a parcel from a depot during normal working hours? Do you think they are likely to re-order from you? and most importantly, what about those people that don't have a car - parcel depots are rarely built with are good public transport links.
(2) Lost Parcels;
Following on from above, as re-deliveries cost the parcel delivery companies a lot of money each year, there is pressure on the delivery drivers to make a first time delivery attempt. This means that some drivers may end up leaving parcels in insecure locations, over Christmas there were a number of reports about parcels left in Wheelie bins, and the age old problem of parcels being left with either unknown or untrusted neighbours.
Lost parcels cost you twice, they cost you for the duplicate cost of the goods ordered, and the duplicate cost of delivery, but they also cost you in terms of lost future business. Again, think carefully, your business is being assessed by the delivery companies performance, if your delivery company delivers to an unknown neighbour who runs off with the parcel, who do you think the customer is going to be on the phone to looking for answers. Do you think that they are likely to re-order from you?
(3) Insurance Claims;
There are a lot of resellers out there offering very cheap economy parcel deliveries. However, should anything get broken in the delivery you have a very very slim chance of being able to claim on the insurance. Firstly, you need the parcel reseller (who will be making a profit margin of pennies on your job) to bother themselves to process the timely paperwork, to follow up the stalling and delays from the parcel carrier, and to take the time and effort to keep in touch with you. Parcel2go and Inter parcel are frequently lambasted in money saving forums for the length of time that it takes and the difficulty in making insurance claims. And the reason for this is simple maths, they make very little profit on your parcel delivery, and processing the claims can be timely, and therefore expensive.
(4) Food;
No matter how tempting, never put food deliveries onto anything other than a next day parcel service. Even if the food is non-perishable, or not immediately perishable. Think about the message you are sending out to your customers, people want food to be fresh, edible, in perfect condition. An economy service where it's been hanging around the depot for 3 or 4 days if the delivery is over a weekend, is simply not appetising.
(5) Excess Weight;
Some of the parcel carriers have recently DOUBLED the per kilo charges for excess weight over the 30kg, or other maximum weight specified in the contract. This can be a nasty surprise. It is an easy way for the carriers to get that extra revenue they so desperately need without increasing those top line prices. Watch out for this one.
(6) Third Party Addresses;
If you have a parcel contract, then you will probably have used it to arrange collection of customer returns, and/or for your own purchases. This is another less obvious way for the carriers to increase their revenues. Check the price of the surcharge from collections from third party addresses, read the small print, frequently the surcharge can be more than the cost of the parcel delivery itself.
(7) Non Deliveries;
If you live in a rural area, then you will probably get a much higher incidence of non first time deliveries. This is because the Parcel business is a volume game, carriers and in particular the contracted drivers, don't make profits on individual deliveries, on large volumes. If you live in a small rural village, about 5 miles or so from the nearest next village or town, and your's is the only parcel on the van for that village that day do you think that the delivery company will be encouraged to deliver it. Think of the Maths, it costs around 80p a mile to run a transit van, and that's before taking into account the owners time. It will probably take up about 20 minutes of their day, driving out those five miles, delivering the parcel, and driving back those five miles to their next drop. The total price you've paid for that economy delivery is probably around £6 or £7, and the driver will be getting a tiny slice of that price. Will he deliver it, or is he likely to leave it on the van, take it back to the depot, and hope that there is another parcel due for delivery tomorrow to make that Mile drive up the road more worthwhile.
The cheapest delivery prices are obtained by the parcel carriers processing and delivering a large amount of parcels. As we've said, it's a volume game, you can't offer cheap prices across a lower volume, everyone needs to make profits. This means though that the drivers for the cheaper parcel carriers and franchises have to deliver perhaps 10 or 20 more parcels on every daily trip than some of the other parcel companies.
If parcel delivery driver has 70 parcels on his van to deliver, then bearing in mind he'll probably be spending about half his day picking up parcels, that gives him around 3 minutes for each delivery, and that includes traveling between each delivery point. So, if the driver gets stuck in traffic, that's one parcel bumped off to the next day. If a customer dithers at the door for a few minutes keeping the delivery driver waiting whilst they answer the phone; that's another parcel bumped to the next day. What's he supposed to do if the customers left a "back in 5 minutes" note on the door, wait and risk the fact that that's another couple of jobs bumped, or leave?
And the drivers can't just carry on driving and delivering until they reach the end of their route. They will have parcels on their vans that need to be at the local depots for 5-6pm, so that the parcels they've collected can be sorted and send out on the HGVs to the national sorting hubs for processing and overnight delivery. At a certain point each day the driver will need to draw a line under the undelivered items, and just get back to the depot.
If you are going to use the cheapest parcel delivery services, then you need to think about how the parcel carrier is able to offer those cheap prices. The more items loaded on the van, the higher the chance that some of them simply won't be delivered that day.
Save Money in your Parcel Deliveries
Cheap parcel services are a very important service offered by the parcel carriers. There are customers who are simply not prepared to pay that extra few pounds to ensure that they get a next day delivery. And we have seen ourselves that an important requirement for a parcel to "must be there the next day" soon turns into a "oh, 2 days will do fine" when if give people the chance to save a couple of quid.
What we are saying, is be aware of the TOTAL costs of delivery, don't just look at the top line price that you are paying, but think about the whole process, time and expenses, for you and your customer. Sometimes cheap isn't always cheapest.
All businesses and buyers need to save money at the moment, just do it the right way, and think about the total impact of what you are doing. Is it worth losing a customer for the sake of P on the price of the parcel delivery. In our next posting we will be giving you a few pointers on aspects where you can save money on parcel deliveries, without having to drop to the most basic of services from the cheapest providers.
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