Thursday 12 December 2013

Courier selection logic: How to decide the right courier company for your shipment - part-1

In the shipping process being frugal, prompt, secure and correctness( on delivery)  directly correlates to your good service and  success. We briefly discuss how to choose right courier partners for the shipments. You can consider choosing courier company which is specialized in e-commerce company products.


One for all does not fit

One courier company does not matches all your requirements, so tie up with as many as  courier companies as possible. Courier company  which  provides you cheaper pricing may not deliver at all destinations. Similarly the company which will deliver the  product at required locations may not deliver within the given time. For every shipment, you may have to decide on beautiful tradeoff - price, quality, SLA. You can leverage on each companies pros and  creates a eco system to be frugal and efficient. As a start up you cannot tie up with  many courier companies, but start with few and keep expanding. Your software should be flexible to add and delete the company and should consider the optimal choice for shipment automatically.

Agree on terms and Conditions

Each courier company have their terms and conditions to accept the shipments. If you comply with those rules then only they accept your shipment for delivery.  Each and every company have different set of terms and conditions. For example, DHL may not accept few of your shipments but FedEx may accept and vice versa. We will  briefly list sample terms and conditions.

Suppose you had tie ups with 20 courier companies, then depending on your shipment only 8 companies can ship the package. So the first step is to filter the companies which cannot ship the package based on their terms and conditions. These are the preliminary steps in deciding the right courier companie.

1. Filtering the courier companies based on terms and conditions

  • Maximum weight of the shipment to accept
  • Maximum volume of the shipment to accept
  • Maximum Number of shipments to accept in a day
  • Serviceable area
    •  List of zip codes or pin codes where they deliver the items. If you do not have proper data then the courier company returns your shipment and you have to send it through another courier company causing falling out of customer delivery SLA and extra cost.
  • SLA number of days
  • Number of days to deliver the item depending on the geographical location
  • Pricing   
    • Pricing determining factors - weight, distance, international
    • COD pricing
    • Pricing for bulky shipments depending on the volume
    • Transit insurance is covered or not? 
  • Type of products
    •     What kind of products they accepts. Few do not accept electronic, and few domestic liquids
  • International shipping is allowed or not?
    •     If you are shipping to international customers it matters a lot.
  • Will they accept cash on delivery(COD), if so
    • What is the the pricing (2% of collected amount) 
    • When they will return the cash (daily, weekly, monthly)
From above basic terms and conditions,  from total set of  courier companies, per shipment you will have list of filtered set of companies which can deliver your package. The next part is to select the company from this filtered  list - aka courier selection logic. We briefly mention these optional parameters.


2. The optional parameters for selection

  • Are there any conditions on How to pack?
  • Delivery times
    • What are the delivery timings. Do they accept the special request to deliver at the stipulated time that customer asked
  • Number of retries before returning the item
  • SLA for returning the item in case of not able to deliver
  • Pick up facility
    • Do they pick up from your warehouse
    • Track Shipment facility
      • Do they have web portal to track the shipment by entering the tracking id
      • Will they provide API to you so that you can track the shipment progress
    • Priority shipment
      • Do they accept priority shipment (delivery in one day)
    • Notification
      • Will the notify the customer about the status or progress of the delivery, so that customer need not call you for the shipment status, thus decreasing the volume of the customer calls. We will discuss more about in the CRM posts.
    • What if the package is lost
      • What is the compensation?
      • Do they provide transit insurance?

    In the next post we will discuss the logic to decide on shipment.

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