Trust the Carriers. Do not squeeze them.
The importance of delivery can be sometimes understated, especially in e-commerce. The final Customer's experience is influenced by both the product and the delivery. A poor delivery experience can tarnish the overall perception of a brand. Therefore, e-commerce platforms that neglect delivery quality may struggle to succeed in the long term.
When we discuss excellent customer experience, it extends beyond the delivery price and speed. This is because the world of e-commerce, along with carriers, e-commerce, and customers, must work in harmony. Today, we're going to explore how e-commerce platforms address delivery services. Broadly, there are three models used globally for this purpose.
First, there's the "included delivery" model, commonly seen in the UK, where the cost of delivery is embedded in the product price. This doesn't mean delivery is free; rather, the e-commerce platform covers delivery costs through their product margins.
The second model involves charging for delivery separately. In this scenario, the e-commerce platform selects the carrier, but the delivery fee varies with the speed of delivery—faster delivery costs more. This model, used in places like Australia, focuses on customer service while keeping the delivery's financial and operational responsibilities behind the scenes.
The third model, prevalent in the Nordic countries of Europe, allows customers to choose both the carrier and the delivery method at checkout, offering more flexibility and potentially different pricing options based on the delivery method selected.
Each model has its implications. For instance, in the UK model, where delivery costs are included in the product price, shops are in charge of arranging deliveries and negotiating with carriers, often leading to competition primarily based on price. This can impact the quality of delivery services and limit carriers' investment in their own development, as their profit margins are squeezed.
The challenge then becomes how to encourage carriers to enhance their services and invest in development. This involves ensuring carriers have a stake in the customer's satisfaction, even to the extent that customers know which carrier is delivering their product and what to expect.
Few companies can manage both e-commerce and delivery efficiently; Amazon is a notable exception. The advice for shops is clear: if you can't match Amazon's understanding of delivery, rely on professional carriers. Choose the best ones and reward them for their exceptional service.
Moreover, fostering competition among carriers is essential for market development. This approach, seen in the Nordic model, encourages innovation and service improvement, benefiting both customers and the market as a whole.
In summary, understanding the different models of e-commerce delivery, their implications, and the importance of delivery quality is crucial. Shops need to work with professional carriers to ensure the best service and competition among carriers should be encouraged to drive market development.