The Single Vs Multi Carrier Dilemma
Is the Number of Carriers Consignor Customers use on Average for Their Shipments
The Cons of a Single Carrier Strategy
You may choose to stick with as few carriers as possible in order to get a fixed price and achieve a volume-based discount from them. However, sticking to only one or two carriers can cause problems. Here are a few reasons why:
1. All your Eggs in One Basket
It leaves you overly reliant on one carrier. If their network goes down and you have no alternative in place, your orders are delayed, which leads to increased costs and ultimately, upset customers.
2. Poor Customer Experience
If you only offer delivery services where customers have to be at home to sign for their parcel, this can lead to missed deliveries, potentially adding 2-3 days delay to receive their order.
3. Limited Delivery Options
End consumers like choice and will ultimately go elsewhere if they are forced to pay a higher price for delivery or choose an inconvenient option.
4. Increased Shipping Costs
If you ship parcels of different sizes or weights, but use the same carrier every time at a fixed rate, you’re probably spending more than you need to. Automating carrier allocation based on rules such as parcel weight or size can help you get the most value for money.
Luxury fashion retailer Harvey Nichols previously used a premium next day delivery service for all parcel sizes but realized it wasn’t suitable:
“When you’re sending a mascara or a lipstick by itself, the next day parcel service is not optimal because you have to be in to sign for it. If our customers missed deliveries, it would add 2-3 days delay to receive their order.
"Also, because the average selling price of those items is fairly low and a high percentage of the actual total order value is delivery costs, it was starting to eat away at our profit margins, especially when you include subsidized deliveries.”
James Henry, Head of Multichannel Operations at Harvey Nichols.
See our case study from leading UK retailer Harvey Nichols as a good example of the large savings that can be made from utilizing a multi carrier strategy.