How Logistics Companies Can Kill E-tailers' Reputation

20 Apr, 2012

Over the last few weeks, we came across a string of news pieces where a consumer had ordered some product online and received something else. While it is one thing for an e-commerce player to ship a different brand or a book which appears to be have cropped edges, we have also spotted some shocking news (rather tweets, although we got it confirmed from both the parties) about a consumer getting a stone after ordering a BlackBerry handset, literally!

If this is the state of things with some of the top names in the business (we are not naming the firms but the above-mentioned cases involve a few among the top 5 e-commerce sites), we can only wonder what's actually happening where lesser-known e-com brands are involved.

The founder of one of these e-commerce portals (which apparently shipped a stone instead of the handset) said, "Although it's a mistake on the part of the logistics partner, the e-tailer has to take the responsibility as it has appointed the courier company." According to him, action has already been taken action against the logistics partner; it has been blacklisted and the e-tailer has also asked for compensation.

Indeed, logistics is the backbone of any e-tailer's business. One can come up with the best of marketing, technology support and products, but all can go in vain if shipping has not been handled well.

K Vaitheeswaran, founder and CEO of Indiaplaza, pointed out, "Last-mile deliveries is the most important part of the user experience for an online shopper and a poor performance can certainly damage an e-tailer's reputation and result in loss of repeat business."

Logistics has always been a sore point with e-commerce companies and their customers. So much so that it has prompted some large e-commerce firms to develop their own logistics. Even the world's largest e-tailer Amazon is in the process of setting up its own logistics network much before it can launch its e-com business in India. Having said that, owning a backend always minimises shipping errors (the 'cropped edges' example at the beginning is of one such firm).

The challenge quadruples for those depending solely on third party logistics. According to Sandeep Singh,co-founder of Freecultr, "One needs to hold courier companies accountable because ultimately, we are giving them the business. But then, we keep a constant and close watch on each of the logistics partners' efficiency metrics."

E-tailers maintain an elaborate process to track the delivery status of goods at every point by integrating with logistics companies and proactively addressing any mistake.

"This requires a deep understanding of the process of each logistics firm and tracking its performance by zip codes across time," said Vishal Mehta of Infibeam.

"As much as they help improve the reputation of e-tailers by delivering most of the packages on time, a small miss can also hurt our reputation. Customers directly interact with the website, customer service and the delivery person. So all these three touch points are super important for overall experience," he added.

So what should be the most crucial parameters for choosing a courier partner? One should essentially find out whether a company is dependable, its reach and its flexibility to adapt to the needs of an e-commerce venture. "We don't mind paying a bit extra to get the best service provider on board as we don't want to compromise on the customer experience," said Singh.

And what do the logistics players have to say to that?

According to Navneet Singh, co-founder & CEO of Chhotu, a last-mile delivery company for products purchased online, "There are a few extreme cases. But it's very true – more than the logistics company, an e-tailers' reputation goes for a toss."

Percy Avari, country manager of Aramex, said, "Although we cannot eliminate all mishandlings, thefts and breakages, the company supervises things with caged, close circuit TVs and physical security guards. Also, delivery officers, who are involved in theft cases, are put behind bars."