Decision biases are ingrained in most of us. Behavioral science research finds that we tend to focus more intently on the first piece of information presented to us and prioritize price over value. This line of thinking is also evident when choosing a local delivery service.
Low-cost may come at a high price
A low-cost strategy is leveraged by businesses across industries and niches. However, it is difficult for businesses to compete on price and assure quality or invest in innovation. A lack of sufficient quality assurance or innovation can diminish the value proposition.
Have many deliveries going out in a month or during certain times of the year? Wish to maintain a long-term relationship with your courier? Considering value over dollar savings can be beneficial.
Say JR Semiconductors needs to deliver its products to many small engineering firms every month and to a few public colleges every quarter. The semiconductor manufacturer chooses My Local Courier for local delivery as it charges some ridiculously low price per mile, undercutting other couriers in the state.
Meanwhile, My Local Courier is targeting capacity maximization and isn’t really focused on providing the best possible customer experience. My Local Courier doesn’t have much of a tech budget and is “light-years away” from having a mobile app or a Web site to provide instant information in the event of any incident (ex: ETA).
For a lower cost per delivery, JR Semiconductors is compromising on reliability. In the event of any unforeseen incident, their package may be in limbo and inability to make that urgent delivery may affect their relationship with clients.
This hypothetical situation can play out in the real world. The cost of failed deliveries can impact you in dollar terms as you may not be refunded your full amount, and will need to place another delivery. And if you’re unhappy with the courier, you have to go back to square one and switch to a different provider.
As legacy shippers lack the capacity or network to quickly deliver parcels, you will need to fall back on a smaller player. This is inefficient and stressful if you cannot trust your existing courier any longer and need to make a quick switch.
Maximizing customer value with the right tech initiatives
Digitalization in the courier industry means that you have more options than ever before to stay on top of your deliveries. Couriers have the opportunity to offer value to both customers and driver partners while improving their competitiveness.
Before Amazon was a household name, it was already exploring ways to utilize new technology for supply chain and price optimization. Amazon’s big data systems today select a warehouse closest to the customer and/or vendor to cut shipping costs by up to 40%. Additionally, the innovative e-commerce giant uses graph theory to determine the best delivery schedule, route and product grouping, which further reduces shipping costs.
Amazon’s price optimization strategies draw more customers and help increase profits by double-digits annually. Prices are set based on customer activity on the website, product availability, order history, competitors’ pricing and other factors. Product prices fluctuate throughout the day as big data is updated and analyzed. It is why you can buy a best-selling book on Amazon at a quarter of its retail price.
Rapidus’ innovative B2B delivery solutions are value-focused. To drive improvement, we’ve identified a few new technologies, including machine learning and artificial intelligence. Our pilot ‘experimental pricing’ program is in effect for one-fifth of our customer base. We’re using artificial intelligence and machine learning to predict and optimize deliveries based on a variety of factors apart from route, including timing, service, parking, traffic and accessibility of packages.
We expect the data to help us provide more benefits, meaningful features or improve upon existing advantages/features. Our strong technology capabilities have allowed us to proactively optimize real-time routes and delivery engagements. It has resulted in a decrease in quoted costs of local courier delivery by over 26%. We expect our experimental pricing to deliver critical insights and new information. We can use it to improve our service and provide more benefits that positively impact your margins.
Operating with integrity and fairness
Delivery services have come under the public’s scanner for abusing drivers and ripping them off. Uber’s surge pricing algorithm was criticized because the company wasn’t passing on the extra earnings to drivers. It is only under pressure and criticism that DoorDash began giving its drivers tips rather than using them to drive down costs.
Rapidus’ value-driving initiatives aim to refund any savings to the company back to the customer. We don’t have any unfair tip policies that affect driver earnings. We’re committed to ensuring a win-win for shippers and delivery agents.
In contrast, a low-cost courier is more concerned with finding drivers who’re going in the same direction and provide ‘gig deliveries’ that often net drivers less than $10 for 40-mile trips. A network of drivers who ‘take anything’ is unsustainable. Sooner or later, drivers will call it quits, feel unmotivated to make the deadline, and stop caring about the customer.
Professional drivers are more likely to demand fair compensation and do their job ethically. To be able to serve drivers’ and customers’ interests without taking a margin hit, couriers need smart technology solutions. One isn’t achievable without the other.
If you need a B2B courier, resist the temptation to make decisions based primarily on the base and per-mile rates. Review the provider based on these factors to make a difference to your business:
Does the courier have a vast and distributed network of professional drivers?
- Does it provide real-time tracking and notification, and up to the minute ETA for pickup and delivery times?
- Does it have a fallback plan in case of incidents?
- Do you get real-time proof of delivery, including emails, text messages, update feeds (web and mobile), and phone calls?
- Does it offer a competitive price and flexible refund policies?
- Does it treat drivers fairly?