Over the last few years, e-commerce grew rapidly in Pakistan as more and more people got comfortable with the changing shopping trends. People are now trusting online vendors and shifting to online shopping because of its convenience. However as it appears, logistics companies are having a tough time coping up with this growth. A number of issues are currently being faced by both shoppers and sellers at the hands of logistics companies and payment gateways, and we are here to talk about them and bring forward some solutions and suggestions for startups who are planning to become a part of this realm.
If you are an e-commerce startup, this article will highlight the problems that you face at the hands of courier companies, and possible ways of tackling these challenges.
On average, an e-commerce business’ 45% of cash (working capital) is stuck with courier companies because of delays in payment. For small scale businesses and new startups this is a huge challenge which disturbs the whole business model because they have very limited cash to operate and this cash deprivation may lead to failure.
Courier companies often take longer than estimated time to deliver parcels. While sometimes there could be genuine reasons behind it such as weather conditions, political unrest in the country, transportation issues, distance, etc. but many times it is because the courier companies have promised an arrangement more than they can deliver. As a result, it is the e-commerce business that suffers bad relationship with customers and delays in delivery.
Courier companies often take advantage of the gap between customer and seller by cancelling orders on their own when they face difficulty finding an address. This results in huge expense for startups in the shape of sale losses, packaging, and courier costs too.
Navigating courier charges is like a jigsaw puzzle for most startups. Apart from regular charges there are unannounced charges that a startup may not have accounted for when calculating logistic costs. All courier companies have a separate section for fuel adjustment, which is never a fixed amount. This leads to major difficulties in planning cash and financial breakdowns for the startups.
These problems are an umbrella for the many minor issues underneath.
Can startups solve the problems associated with logistics entirely?
But can they reduce the extent of these problems?
As a startup, you have to be super active about the inside news of logistics companies to take advantage of what’s happening in the industry. Logistics companies often lower their prices during a recession and after reaching a cash flow balance and attracting the market they switch back to old prices and sometimes even more. This is your time to find the next best option. Don’t stick to one service provider, diversify your options based on time, efficiency, cost and your business’s needs and choose the most suitable option for your business.
Another advantage that you can take is of the growing startup culture in Pakistan. There are so many startups joining this realm everyday and among them are also courier service providers. These newcomers are usually willing to charge less and provide good service so they can build a customer base. Reach out to them and use their services for within city parcels and only go for big companies when you have to send a parcel to a long distance destination.
Results? Quicker cash inflows, better cost management, and satisfied customers!
This switching between logistics service providers might sound a bit complicated but this can save you a lot of cost chunk and speed up your cash inflows. So don’t be lazy and start acting up!
Because of cash on delivery [COD], people find it very easy to return orders. You can take a number of actions to avoid cost chunk on parcel returns such as confirmation calls and notifications. Confirm with customers in advance before giving their parcels to the courier company. These can be used as proof against fake orders to be used for documentation.
The best way to avoid parcel delays and to improve your services is to keep the whole process in your control end to end. However for a small scale startup with very limited resources it is difficult to control all aspects of business from orders to delivery. Hence, most startups don’t try to find ways to solve these issues, but we suggest that you do look into new applications and data analytics systems to ensure that courier and customer are all in constant contact.
These suggestions will help you save a lot of time and money, so what are you waiting for?