Thomas Hagemann and Johannes Plehn on the complexity of shipping – and how to meet its challenges – Interview: Ina Kaifi
Why is the “last mile” such a central topic for e-commerce?
Johannes Plehn Because e-commerce is becoming increasingly complex and this complexity is reflected in the last mile. Somewhat generalized, we are dealing with two types of merchants: The first is senders who want to build high customer loyalty through a very strong brand and a corresponding brand experience. Examples include Zalando and Foodspring. The second group are retailers where the brand plays a subordinate role, often because sales to customers are made exclusively via platforms. It is not the brand that is decisive for the customer’s purchase decision, they are simply looking for a certain product such as a mobile phone cover. Accordingly, the price for the shipping service plays the central role for the retailer and not so much the service. Of course, the retail trade cannot be represented in such a black and white nature, i.e. the service on the last mile must be coordinated with the dealer’s strategy. The stronger the company wants to retain its customers in the long term, the more it should invest in high service quality and short delivery times.
“E-commerce is becoming increasingly complex and this complexity is reflected in the last mile.”
Johannes Plehn, Co-Founder SEVEN SENDERS
What does this look like in practice?
Johannes Plehn Some parcel delivery staff differ greatly in their service. This is reflected in varying delivery times, in the number of delivery attempts, but also in the time at which delivery attempts are made. In addition, carriers often have very different numbers of so-called PUDOs (Pick-up & Drop-off Points). At such stations, shipments can be picked up conveniently, but above all returns can also be posted. If, as a retailer, I want to offer my customers a unique shipping experience, it makes sense to connect different delivery agents in the respective region and thus meet every type of customer requirement, whether it be the fastest possible delivery or the most efficient possible delivery.
The ability to offer the specialist delivery to a PUDO. A successful shipping experience will not only satisfy the customer with regard to the product, but also bind him to the shop in the long term. For the retailer, however, who sells mobile phone cases in large quantities, it may be sufficient to order a carrier who delivers sufficiently quickly and cheaply and delivers the parcel to the neighbour if the customer is not at home. And that will also be enough for the customer – and even if not, they will probably order their cell phone case elsewhere next time.
What innovations on the last mile do these developments bring with them?
Thomas Hagemann The emergence of innovative service providers on the last mile is a more recent and probably ongoing development. The Swedish delivery service Budbee has specialised in same-day and time-window delivery. It cooperates with a courier network and provides courier services to dealers over the last mile. Another example is the Dutch start-up Picnic. At the food delivery company, customers supplied with food can already give returns to the deliverer on the same day. Picnic’s approach is a perfect example of how start-ups can establish themselves on the last mile through the innovative use of data and technology in the field of transport and route planning, and by linking different services on the last mile.
And classic delivery services, such as DHL & co – how do they react?
Johannes Plehn The big carriers are often unable to keep up with the strong growth of e-commerce. Their problem is that they have invested insufficiently in infrastructure in recent years. They are not in a position to meet the ever-increasing demands – such as growing parcel volumes, requests for pick-up and drop-off options, and time-definite delivery windows. From the customer’s point of view, they are reacting absurdly with price increases right now.
“There are currently only a handful of players among the largest dealers and platforms who could seriously compete with the delivery services on the last mile.”
Thomas Hagemann, Co-Founder SEVEN SENDERS
What efforts are there on the part of large companies, such as Amazon, to deliver their packages on the last mile with their own assets?
Thomas Hagemann There are currently only a handful of players among the largest dealers and platforms in Europe and the USA who can compete seriously with the delivery services on the last mile with their own parcel volumes.
The reason for this is that none of them is strong in all European countries. Amazon, for example, is not a substantial trader in the Netherlands, nor is it in Switzerland. And on the last mile, for example, Amazon is not active throughout Austria, but currently only in Vienna and there is a lot of movement here as well. Very high volumes are required in order to deliver your own assets and employees. It remains to be seen whether Amazon will open up to other dealers on the last mile and include parcels in the delivery. In the sense of lively competition, which is generally always a good driver of innovation, this could be advocated from the dealers’ point of view. A contrary trend can be observed at Otto, where the sale of the subsidiary Hermes is expected for the end of 2019 – the European carrier market remains exciting.
In any case, dealers should perform well on the last mile in order to remain competitive.
How do you support them in this?
Johannes Plehn We deliver solutions that meet the diversity of the market and, above all, customer requirements. The question is always: Which carrier or carrier mix is the best one for your specific requirements in the respective country or even in the respective region of a country? Here, we offer the respective solution. The second important point: We manage the complexity out of the process for the retailer. For the dealer, everything comes from a single source. We turn a hundred interfaces into one. SEVEN SENDERS‘ one-stop solution is an optimal enabler for implementing innovations on the last mile in Europe and offering them to consumers.
Thomas Hagemann A market in which new innovations are regularly emerging and which is driven by global competition remains very challenging for retailers. You have to face this challenge to be successful. The key is technology. Used correctly, it ensures transparency and, above all, enables the best delivery services to be developed in every country – an immeasurable treasure for retailers. Because shipping today must be adapted to the target market in such a way that retailers leave the same impression on customers as local market leaders – and that’s exactly what we make possible.