The Top 7 Mistakes Transporters Make With E-Commerce Logistics Operations

So maybe you’ve heard about the e-commerce logistics gold rush and you’re excited to get on board. It’s a tough market, but the rewards can be attractive. To help you on your journey towards logistical excellence, we have compiled a list of the top seven mistakes transporters make when trying to ride the e-commerce logistics wave – avoid them at all costs!

7. Dinosaur tech in the age of the internet

“Windows 10? No thanks, Windows XP works fine for me!”

Many transporters we talk to have a very real fear of tech. We get it – paper is king. Your drivers don’t believe that technology can make their jobs easier. Your shippers don’t feel comfortable with customers signing off on screens. Your operators don’t believe a new technology can really make things easier – the current methods are inefficient and limited … but at least they work.

The truth, is a base level of technology is an absolute requirement to compete in the current e-commerce market. If you can’t provide visibility into your delivery operations, or don’t have electronic proof-of-delivery (e-POD) or e-signing capabilities, big players like Lazada, Zalora and XiaoMi are simply not going to consider you as a potential service provider.

Let’s be honest: No one likes change. It can be hard – initially – to break your staff away from the old way of doing things (no matter how inefficient it is!). The good news is many Software-as-a-Service (SaaS) companies offer a free trial period for their software, which usually includes free training and full support. Get a demo account to an easy-to-use SaaS Transportation Management Service (TMS) and let your operator try it for a couple of days. Once he or she sees how easy it is to incorporate purpose-built technology into their workflow, and how much easier their lives will become, they’ll be quick converts!

6. Trying to provide all kinds of logistics services

“All our consignees get a free coffee with their deliveries!”

This is possibly the most common mistake when you first start out. We’ve all been there – in the early days it’s pretty hard to say no, all business is good business. Quickly though, one can hit bumps as they realise it’s actually pretty costly to try and do everything for everybody.

One of our early customers started out servicing small parcel deliveries for SingPost. As their operations grew, they received requests for other kinds of deliveries. To service a contract for the delivery of bulky cargo, this customer invested in covered lorries with hydraulic tailgates, as well as several pallet jacks. He soon realised that the maintenance costs for these assets required a much greater volume of deliveries to sustain, and it strayed from their core competency. Eventually, he had to sell these assets at a loss – but he found his niche in small-parcel deliveries.

If you can find your logistics operations niche early and focus on delivering the best service to your chosen target market, it will be a lot easier to provide great value with a much smaller fleet. One example of a niche – providing home food delivery. Check out  Deliveroo, Happy Fresh, Orrell’s and Food Panda – they each specialize in one specific form of logistics services.

5. Promising the moon

“If we cancel weekends, we can increase productivity by 40% !”

Same-day delivery seems to be all the buzz. Hype aside, one cannot help but wonder how big the end-user demand for same-day deliveries really is. Marc Kuo takes us through the math and shows us that providing on-demand delivery services is not quite worth the effort in every industry. Even disruptive players in the trucking scene are recognising that same-day logistics is a losing proposition. Changwen Lai, CEO of Ninja Van, notes that you will have to “compromise on efficiency if you want to have a tight time constraint.”

In supply chain theory, there is always a trade-off between ‘responsiveness’ and ‘efficiency’, and markets prioritise each differently. To put it simply, a person ordering tissue boxes online is not as likely to want it as urgently as a gamer waiting for his copy of Star Wars Battlefront, and they each will have different thresholds for shipping charges.

When carving out your niche, make sure you find one that provides a scalable and sustainable advantage over time.

4. Racing to the bottom

The finish line of the race to the bottom is the bottom.

Seth Godin writes here about the folly of pure price competition. Underpricing is a tactic that benefits nobody. Rather than the lowering the prices, build the price into your story – what kind of reliable, quality service are you known for?

Instead of looking for how to cut corners, how about leveraging on technology to get an edge over your competitors? A good TMS automates processes, thus keeping your costs down. More importantly, it provides value-add such as visibility into your supply chain, automatic delivery status updates, and automated invoices and billing.

Instead of fighting to be known as the cheapest provider on the block, how about aiming to be the best?

3. Being the last to know the worst

“All our neighbours have moved. What’s this rumour about a meteor crashing?”

Reputation is everything in this industry – what takes years to build can be destroyed in minutes. One of the biggest customer-sided mistakes you could make is not knowing the status of your own delivery operations, and having to hear the worst from your customers. Everything that can screw up, will – that’s not the problem. As long as you are the first to know about the problem and reassure your customers that you are on top of things, you will be able to preserve your reputation (and avert disaster!).

The last thing you want is for your shippers or consignees to be the one to tell you about your problems. Make sure you have in place a system that tells you where your fleet is, at which stage their parcels are, and the status of all your deliveries automatically. Manual phonecalls and SMSes are not adequate for this purpose!

2. Over-reliance on key personnel

If you want something done, give it to a busy person.

Let’s face it – every organisation has its key personnel – that one person who seems to be able to do everything. It’s hard to find capable people, but it’s easy to fall into the trap of making them do everything. We’ve heard of how five people are required to cover one person’s job when their operator goes on leave.

As natural as it seems to build your company around your most valuable people, try to build in some redundancy in the system. Give other team members a chance to try dispatch scheduling and route planning, and try to spread out the load evenly amongst your drivers. Trust is a two-way street, giving your workers the chance to prove themselves can prove to be the best way to build their loyalty!

1. The number one mistake transporters make when tackling e-commerce logistics… trying to build it all in-house.

Investing in customised, stand-alone software is by far the biggest mistake that a new transporter can make. Just last month, yet another customer came to us after spending more than USD $50 000 for a software house to develop a customised TMS module for them. They had to pay for servers to host the software, monthly maintenance fees, and yearly upgrades. They are in the middle of upgrading computer systems, and were considering hiring an IT department to migrate the system and deal with this outdated software.

One of their partners referred them to us and over a few cups of coffee, they realised our logistics operations suite, VersaFleet™ was exactly what they had wanted, and more! That was the fastest close in our sales history 🙂

Software-as-a-Service (SaaS) is a well-established model where the service provider is in charge of maintenance. You never have to worry about data migration. Always remember that you are in the logistics business – not computers – so you should not have to concern yourself with investing in servers and software maintenance. Invest in expanding your core business instead! There’s no need to re-invent the wheel, and bankrupt yourself in the process. Tap on a proven service provider who has a product tailored to the needs of transporters just like you, and be ready to hit the ground running right from the start.

Being a successful e-commerce transporter is not easy

Don’t make it harder by repeating common mistakes. Avoid these top seven mistakes, and you’ll be taking your first steps towards managing logistics like a pro. If you’d like to explore incorporating a TMS SaaS platform into your workflow, check out our website.

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All pictures are taken from the hilarious series “Dinosaur Office” by Collegehumor. Check them out after you’ve taken your company to the next level 😉

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