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Guest Post: Quality vs. Price in parcel delivery

By Dan Wilson March 6, 2014 - 4:51 pm

This is a guest post from David Grimes, Managing Director of My Parcel Delivery

It might sound like a contradiction in terms, but what is the cost to eBay sellers and other e-commerce businesses of a continuous push for ever-cheaper costs in parcel delivery?

Plummeting costs in any industry are seen, at least initially, as a triumph for consumer choice. But companies offering a “stack ‘em high, sell ‘em cheap” approach tend to neglect what the customer often values more than simply paying less: good customer service.

When online sellers are managing their overheads by always choosing the lowest cost delivery option, there is a risk that customer service for the buyer will be sacrificed. And the money the seller saves by opting for the rock-bottom delivery price can end up leaving their wallets in other ways.

Don’t get me wrong – My Parcel Delivery is all about parcel senders getting the best value for money and providing access to a range of courier companies, prices and services. However, something sold dirt cheap doesn’t necessarily mean what you’re getting is good quality, especially in terms of after sales care.

And quality matters when your business relies on getting the goods to the customer. For eBay sellers, whose lifeblood is Feedback scores and Detailed Seller Ratings, the last thing you want is to put your online reputation at risk with a cut-price service. The business offering a highly discounted cost may well be operating at next to no margin – consequently, customer service levels can suffer.

Your happy customer may never be moved to praise your fabulous delivery service, but the angry customer will almost certainly choose to be both negative and vocal about it!

It was with dismay that I read the recent Tamebay story, in which another parcel delivery comparison company described a looming “price war” as “great news for the consumer”. On the contrary, I concur with the Tamebay reader comment that a price war is a “race to the bottom”.

Personally, I can’t see the sense in a price war that will ultimately result in customer service becoming secondary and de-values delivery services that are the final, essential piece in the jigsaw for e-commerce businesses satisfying and keeping their customers.

While professional e-commerce sellers are clearly keen to protect their margins, it should be the right delivery service rather than the cheapest that they select when building long-term customer relationships and protecting their seller ratings. And the right delivery service incorporates a level of customer service that means if things go wrong, there is someone at the end of the phone, or an online chat, to put it right.

So, before you opt for a delivery cost equivalent to the lowest common denominator it’s worth thinking about spending a bit extra:

• Don’t send valuables via an economy service offering delivery in 3-5 days: the increased transit time is putting that parcel at risk. Valuable and/or fragile goods should be sent Same Day or Next Day to cut down time in the carrier network.

• While economy services tend to put parcels through multiple depots and handling points, a Next Day service provides a more secure, automated conveyor belt system that protects the package’s journey. Better still, Same Day delivery sees your parcel collected by the same driver who chaperones it in one vehicle to its ultimate destination.

• Paying for Next Day services also affords extra protection for the delivery audit trail, including first-rate tracking, SMS and email delivery confirmation plus a doorstep signature. Economy services simply don’t give you that level of customer care or peace of mind.
Are price wars good for the consumer? As with anything in life and business, you get what you pay for – and if you need to get the goods to the buyer “as sold”, it’s simply not worth doing it at just any price.

  • Mark
    3 years ago

    Most likely to deliver my parcel in a fit state = Royal Mail. Least likely = Yodel (shudder).

    Having my parcels thrown over the customer’s back fence into the rain isn’t acceptable to me – maybe if I sold widgets I might feel different.

  • admiralhardinge
    3 years ago

    To me this is always a straight forward calculation. What is the rate of loss versus the extra cost of a better service? If complaints of loss or damage are few and far between and you handle them well anyway, it just is not worth the extra cost. The vast majority of customers accept occasionally something goes wrong, and just look to the seller to put it right.
    Just calculate how many claims you get, make an assessment of damage to your business reputation as a factor, and see if it is worth the on-cost of doing something different.
    There is really only 1 game in town for smaller parcels – Royal Mail. Problems are rare, and service good. Why would you pay more for slower delivery, and dodgy delivery practices, for no conceivable advantage?

  • 3 years ago

    SO agree with the other comments here. Parcel Force are hard to beat overall but I also use TNT especially for overseas shipping of smaller parcels where I don’t need the generous 30Kg allowance PF gives me. TNT have a great booking in system and superb tracking. The unit next to mine uses another courier chosen just on price. I have seen the driver stand a good 6 foot from the back of his van and just fling the parcels in. I wouldn’t trust him with a bag of tatties never mind my orders. A price war can only be bad for sellers and customers but in the end quality will win out.

  • 3 years ago

    This is a really interesting read as everything seems to come down to price in our modern society, or certainly the belief of the lowest price. That is why Amazon & Ebay are so successful as it is perceived that sellers are bidding to be the cheapest so the user will always get the best price – often very true too.

    When it comes to couriers, I like many use RM for the small packets an low value items. However, for items over £30 or 1.5Kg we use a courier and have just recently changed to Interlink for the very reasons mentioned here – we were very happy with Fed Ex and have only moved because the technology used with Interlink is nothing short of amazing. Three weeks ago we changed and since then we have not had one call asking when or where the item is – Interlink communicate with the customer instantly and continuously. This change was never about price but completely about the level of service and I think that the change will just add that extra tick to our customer service and make people come back to us.

    As for the mention of Yodel above – all I ever hear about is poor service, so tell me why are companies still using them and why are they so busy – I just don’t get it.

    • northumbrian
      3 years ago

      “why are companies still using them and why are they so busy – I just don’t get it.”

      the same reason people eat at macdonalds
      rather than 5 star restaurants, it all comes out the same way and macdonalds is much cheaper lol

  • Gary
    3 years ago

    Who pays for shipping? The seller or the buyer?

    The only guaranteed certainty is that the seller pays for loss and damage. The biggest factors that influence this are packaging and address labelling not the courier.

    Tracking and next day services provide a comfort factor but if packaging and address labelling is poor then it does not matter which service is used.

  • Dom
    3 years ago

    Amazon Logistics is what you get as a result of a continuous push for ever-cheaper costs in parcel delivery now that Amazon are increasingly using their own in house courier service. I have had my moans about most couriers but Amazon Logistics are in a league of their own, they make even Yodel look good. Every order delivery using Amazon Logistics has problems, making the Amazon Prime next day delivery promise even more of a joke. I repeatedly tell Amazon that it is clearly a business address but they continue to ‘attempt’ delivery at 9.30pm but never actually leave a card. The increasing use of Amazon Logistics for deliveries make me increasingly reluctant to order from Amazon, I would rather pay a bit more and order from a retailer that uses reliable couriers such as DPD, Interparcel or ParcelForce

  • james
    3 years ago

    as much as we sellers would all love to use the best service for our needs, we sell on eBay. if we have a great product, a great service, a great courier, but the listing under us is 10p cheaper even on a £100+ item, we all know where the vast majority of sales are going.

    that said, the cheapest courier may well cause you to have increased costs, increased returns, increased negative feedback, and a lot more angry customers screaming down the phone. we dont go for the cheapest courier, we use DPD for almost everything, but the guys under us keeps offering things 10p cheaper on some Yodel / shipped from China / graded / non-returnable tatt.

    eBay is a race to the bottom, they force us to race there for them, then disqualify the winners for being TOO close to the bottom.

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