In its second-largest acquisition, Amazon buys the company for $970 million.
One area of operations where retailers have the least control but which is one of the most critical is final delivery of the order. Once the package leaves the distribution center, retailers have very little control over how quickly it gets into the hands of the buyer.
That`s one reason that package tracking has become such an important part of the onlne retailing world. And it`s one reason that more retailers are opting for package delivery services that allow them to see what`s happening to their orders--and why more delivery companies are offering such a service. "We provide visibility that didn`t exist in the past," says David Marinkovich, senior vice president of marketing and commercial affairs for DHL Smart and Global Mail. "From the time we pick up the package at the retailer`s location until we hand it off to the Postal Service and it`s dropped at the residence, you can see its status."
One of the most frequent calls that retailers` customer service agents receive is the WIZMO call--Where is my order? Package delivery services have increasingly been allowing agents to find out exactly where the package is. "Our system integrates with the USPS system so we can provide complete visibility from the time we pick up the package to the final delivery," says Steve Korol, president of APX Logistics.
Package delivery services increasingly allow the retailer`s customer to learn order status. Both DHL and APX offer direct links that retailers can present to consumers so the consumers themselves can key in an order number and find out where their purchases are. Such information can save retail call centers significant dollars by reducing WIZMO calls, estimated at about $3 a call.
While retailers put a lot of effort into their web site designs and product merchandising to make sure customers have a positive experience, the quality of the experience is out of their hands once the package leaves the loading dock. In fact, a survey by Chicago-based consultants The E-tailing Group Inc. shows the wide range of delivery times for online orders. E-tailing Group researchers ordered merchandise at a number of sites as part of the group`s periodic survey of online retailers. In its latest survey, they received their products in an average of 4.35 days, with the fastest arriving in one day and the three slowest in 10, 11 and 17 days.
"There will always be unique situations that will get people in trouble, like 10, 11 or 17 days for delivery," says Lauren Freedman, president of The E-tailing Group. "So monitoring becomes the issue. It makes a lot of sense to be aware of what your delivery times are."
Reducing WIZMO calls is not the only area where retailers can save on delivery of orders. By virtue of the scale at which they operate, companies like APX and DHL are able to achieve economies that are not available to individual retailers. "We position ourselves as a value alternative in the marketplace," Korol says. "We are always creating new products and services. The industry spends billions each year on shipping. If you can take a dollar out of each package that a retailer ships, there`s a lot of upside there. That`s attractive to retailers."
DHL Smart and Global Mail and APX Logistics are services that utilize the U.S. Postal Service to make package delivery more efficient. They pick up packages at the retail location and transport them to various points in the Postal Service`s delivery network, inserting packages into the postal delivery stream as near to the final destination as makes sense. Once they pick up the packages at the retail distribution center, they deliver them to either their own sorting facility, where they are grouped geographically and then sent on their way, or to Postal Service sorting facilities. They also deliver directly to local Post Offices, which are the final stops before delivery to the home.
Hopscotching the Postal Service network makes for faster delivery, the companies say, and takes advantage of the ubiquity of the Postal Service. "We are able to deliver faster than traditional ground shipments across all zones," Marinkovich says. "And the Postal Service delivers to all 140 million addresses in the U.S. every day including Saturdays, which means they and we provide 52 more delivery days a year."
The points at which the packages enter the postal stream vary depending on the size of the customer. The largest retailers, such as APX customers J.C. Penney Co. Inc., Nordstrom Inc. and Blair Corp., send trailer loads of products every day. They can be delivered intact to regional or final Post Office destinations fairly easily. Mid-sized retailers` packages may be sorted already by region, so they will go to an intermediate facility where they will be consolidated with other packages and from there be delivered to regions. Smaller retailers` packages also will be consolidated. Small retailers can also take advantage of a package management system that APX offers.
Visibility into order status via APX and DHL is achieved in a number of ways. At DHL, retailers have a number of options, starting with the ability for customer service reps to look up one customer`s order in response to a WIZMO call, proceeding through the ability to receive reports about delivery status all the way through a complete update of all orders` delivery status every few hours that can be delivered into the retailer`s order management system and other databases. In addition, DHL can establish a consumer-facing web site co-branded with the retailer where customers can check the progress of their packages. "That`s all information that can be used to improve the customer experience and create new and more effective ways of making money," Marinkovich says.
For APX, the transportation of packages doesn`t end when the orders arrive at buyers` homes; they also offer return delivery services. "We run our entire process backward for returns," Korol says. "We`ll pick up packages at a postal facility and drop it into the USPS system with coding on a label that will tell the package where to go through the system and to the merchant`s warehouse." One of the benefits of the service is that APX can report that packages are coming back to the retailer so the retailer can have the proper staffing when they arrive.