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Shutl & Co. – a headache for traditional delivery companies but a great opportunity for retailers

Stefan Schmidt

I guess it’s one of these images that impacts on every Westerner who travels for the first time to Asia – a bicycle or motorbike overloaded with goods. By Stefan Schmidt, VP of Product Strategy at hybris, Hybris

An almost impossible load, gracefully balanced on a moving vehicle. Many of us struggle to get our dinner home from the supermarket in one piece!
When someone told me that one of our Chinese customers uses bicycle couriers to deliver electronic devices (i.e. amplifiers) ordered by customers online – I smiled. When he told me that they can be tracked via Google maps and GPS devices on their bikes – I was amused. I thought what improvisation, how primitive. I should have known better.

Not long ago we were forced to sit around at home all day waiting for our online orders to be delivered. Now, we can circumnavigate this by having them shipped to our offices. There is even the promise of delivery within 90 minutes. Amazon is experimenting with it in the US and to some extent here in the UK. And currently Shutl have an exciting new service in the UK, offering 90-minute delivery in some of the larger cities. Both companies have the potential to severely disrupt the traditional carrier market in urban areas.

How can they achieve what UPS, DHL & co. have always maintained they cannot do? The answer is simple. Most of the world’s large cities have networks of couriers, mainly bicycles, motorbikes, sometimes taxis. Unlike traditional carriers who operate a fleet of delivery vans that leave the depot in the morning and come back in the evening after delivering each parcel, they operate point to point. While a traditional carrier may have a few hundred vans in an area, there are thousands of smaller, nippier, private couriers.

What they have lacked so far is the infrastructure to form a network – basically a centralised switchboard that gives them the coordinates of their next pick-up and delivery and a single point of contact for the customer. This is where Shutl comes in.
Shutl has created a marketplace - a single switchboard from which independent couriers can offer their services. However, Shutl doesn’t let the caller choose which courier to use and then engage individually with him (as you may have done in the past with a bicycle courier). They hide that relationship behind a single service agreement, cutting out the administrative overhead.
It’s a win-win situation. The courier keeps its independence, but more importantly can easily fill slots of idle time with deliveries they get from the Shutl marketplace, this makes the day more profitable. Shutl does not have to invest in expensive infrastructure, i.e. depots, vans, and drivers. Their efforts are mainly in building the platform, then acquiring couriers on one side and merchants on the other, a far cheaper exercise.

And how can retailers profit from it? Well they can significantly improve the biggest customer-facing element to cause cart abandonment – delivery. Not only can customers have their purchases in their hands much faster but retailers free up one of their most valuable commodities – time. And that is a differentiation much more powerful than a 5% discount.

Retailers with brick & mortar stores may achieve additional benefit from a more efficient stock management. How? Imagine there is stock surplus in one of the stores and a stock deficit of the same item in the store a customer has chosen for Click & Collect. In this situation the retailer has three options: 1) Tell the customer there is no stock and leave it at that. Accept the loss of a sale. 2) Tell the customer that the item is not in stock in his preferred store but in another store further away and then hope that the customer will go out of his way to get it.

It’s 50/50 whether the sales will be won or lost. 3) Despite the item being out of stock in the customers preferred store, they can do Click & Collect. Once the customer has placed the order you rush the item, with the help of a service like Shutl from your store with a surplus to the store preferred by the customer. The customer may have to wait slightly longer, but probably not much more than 90 minutes. The cost of the service is marginal compared with the loss of the sale.

I’m not sure whether we will see a lot of overloaded bicycles on our streets soon (that might remain peculiar to Asia) but don’t be too surprised if your next online order is delivered to your doorstep by a friendly bicycle courier.