Whether it’s the announcement from Amazon of its Flex service, or part of an ongoing conversation about innovation in delivery, the Uber name casts a long shadow. While some see the sharing economy as an inevitable part of the future of delivery, Patrick Gallagher, CEO of CitySprint, remains unconvinced. All that glisters is not gold, he warns. While sharing economy brands like Uber and others may have shaken up some business sectors, there’s more to success in delivery than eager amateurs, he argues.
Patrick Gallagher, CitySprint
Technology has changed every day-to-day task, from booking a handyman to planning a holiday. Every day new companies clamour for our attention, eager to outsource our every task to those with spare time or an empty car seat. This has led to sky-high valuations for the likes of Uber and Airbnb, as well as constant speculation about which industry will be disrupted next.
Some consider the delivery industry to be ripe for disruption, and it is easy to see why. Millions of journeys take place every day, so why not use these to make a delivery on the way? Companies like Uber can draw on 200,000 drivers, twice the number of employees at UPS. A large part of the supply chain already exists.
Expertise
One area where the “sharing economy” models can run into trouble is when specialist skills are required. Casual workers can bring a pair of sneakers from London to Brighton without too much difficulty, but the service may run into problems when transporting items that require careful, specialist handling. This could be the professional standards needed to make time-sensitive drop-offs, the technical training required to carry laboratory samples or medication, even the insurance requirements of taking fragile and high-worth items.
The traditional model also provides a clear chain of responsibility. If any issues arise with a delivery then customers can expect a well-established standard of care and training, as well as a clearly-defined process to rectify problems. Couriers can flag delays or damages and be accountable for their work in a formal review process. An informal system puts the onus on the customer to report any issues, which further muddies the water around standards and consistent expectations.
Importantly, introducing someone to a doorstep or a business reception area cannot ever be taken lightly.
Retail
This is not to say that innovation is not critical to the changing success of the logistics and distribution industry. In retail the rules have already been rewritten thanks to the latest technology and digital disruption. We live in an “always on” world, where we can do our banking at midnight, the weekly shop in the park from our smartphone and pick a new outfit from our office desk. Retail has changed profoundly, calling time on fixed opening hours, traditional marketing and cumbersome delivery methods.
The choices available to a consumer means that they are more fickle than ever with their custom; this has led to intangible assets, particularly trust, becoming more important selling point for brands. Domestic deliveries are often the most frequent physical interactions that customers have with brands and one billion of these are estimated to take place in the UK this year. While some retailers will be tempted to save margins by outsourcing delivery to casual workers, this can have a big bearing on trust. Research from YouGov has showed that customers would frequently blame a retailer for delivery problems, even when the fault may have lain with the carrier.
The digital age has empowered consumers. Convenience is now king. Carriers can facilitate this by offering services that are demanded by customers, like timed-deliveries or secondary drop-off points. But this increased demand for convenience requires carriers to hold themselves to higher standards than ever. That’s why we have developed On the dot, our delivery service with one-hour timeslots chosen by the consumer and backed by our CitySprint national network. We have tested the technology with a London pilot before launching our API and retailer portal to the market this week.
Decentralising delivery to an army of untrained people might help the bottom line initially, but you could be risking something more important: your reputation. Unpredictable service, ambiguous chains of command and the shadow of regulator scrutiny may make it too big a gamble for retailers looking to protect their hard-earned brand value.
I am, of course, not advocating that we should reject change, but that we should analyse what “progress” really means.
