14 minute read
DELIVERING A DIGITAL DOLLAR
Logistics franchises deliver the goods in a fast-changing and challenging industry.
By Sarah Stowe
Logistics and distribution is all about speed and service. But today the sector is under constant pressure to deliver a better service at an even lower cost, suggests Mark McGinley, who heads up CouriersPlease. Here, four franchise leaders in the logistics and distribution space share where they believe change will lead.
“Consumers expect choice of where and when they can get a delivery. They want twilight, weekend, four-hour deliveries, they want to be informed where their package is. The one thing they don’t want to do is pay for it.” CouriersPlease The business faces two crucial challenges: 1. Franchisee earning potential becoming increasingly jeopardised in a commoditised e-commerce landscape (e.g. retailers offering free shipping, the need to return products) 2. Urbanisation and the lack of government planning for parcel hubs. “The strength our business has to tackle these challenges is the ability to ‘transform through partnership’. This means we are leveraging the strengths of businesses who can assist with reducing delivery costs and create a better experience for customers,” says McGinley.
But what is a seamless experience for the customer can be much less so for the courier. The logistics and delivery business is being pulled in opposite directions, with a resulting stretch in profits.
It’s particularly true at courier level. “Historically couriers have done pickups and deliveries. Now with e-commerce there is the rise of residential deliveries. So two things have happened. There are all the problems of redelivery, really low productivity, zoning difficulties, traffic, people not being home and apartments that are hard to access,” McGinley explains.
“Retail value is more or less halved. I’ve seen statistics globally that the cost of logistics is up 17 per cent but retail value is down 4 per cent. But that’s magnified more in Australia where there is a race to the bottom. Consumers expect choice of where and when they can get a delivery. They want twilight, weekend, four-hour deliveries, they want to be informed where their package is.
“The one thing they don’t want to do is pay for it. It’s a double whammy; franchisees are working harder for their dollar.”
The good news is that solutions are on hand at CouriersPlease, which is actively addressing these major concerns to franchise profitability. “So what are we doing? We’re investing in technology, we’ve just released a new driver app that can do real-time traffic updates, there is AI [artificial intelligence] attached to it around delivery addresses, route optimisation and prioritisation.” This means consumers can be kept informed about their parcels in transit, and given delivery alternatives.
CouriersPlease has also partnered with Hubbed, a collection point network of 1700-plus locations such as BP service stations and 7-Eleven stores, which allows franchisees to deliver parcels to secure lockers that can be accessed by the customer 24/7.
“Instead of delivering to 10 addresses we can deliver 10 packages to one spot. It’s an increasing trend and the more savvy consumers are selecting these locations, they are so convenient.”
Additional benefits include a reduction in carbon emissions and an easy, safe parking option for franchisees who would otherwise be delivering to hard-to-access residential addresses like high-rise apartments.
“The partnership is very successful and we’re looking to develop new premium products in a move away from the race to the bottom. We want to focus on a higher yield for franchisees,” he says.
The business is based on a hub-and-spoke model, which provides a centralised delivery and collection spot for franchisees. CouriersPlease has invested millions into automating the traditionally manual sorting process. Newer developments include the introduction of a series of micro hubs where the franchisor brings the freight to franchisees; and leveraging partners facilities, such as Border Express warehousing, is one way to overcome the obstacle of finding appropriate sites.
“Australia Post has 80 per cent of the e-commerce market but we’re developing partnerships to compete,” says McGinley. “Technology and partnerships are what we are trying to develop so we can scale the benefits. It’s just not sustainable to deliver a parcel every 20 minutes.”
Looking ahead, the prospect of a weekend franchise looms for this traditionally business-tobusiness operation.
“We’ll use a different model,” says McGinley. “We’re working with a range of crowdsourcing companies because you don’t have scale when you launch a new product. We will partner with them, and they can scale up and down [according to demand]. So if we did develop a weekend franchise it would be different.
“I see a time when we will separate small residential economies leaving our franchisees the core pickups and B2B deliveries. There’ll be a time when we will syphon off residential e-commerce deliveries and find different solutions.”
WHY COURIERSPLEASE IS A GOOD OPTION FOR FRANCHISEES The business takes a clear view about franchisee revenue. “We have a safety net we won’t let them drop below, so if income falls below a certain threshold we top it up.”
The franchisor invests in sales and marketing to help its 140 franchisees and uses its buying power to provide discounted rates on vehicles, tyres and petrol. The financial benefits all return to the franchisee.
“In our business we’re a network, so we’re motivated to make sure all franchisees have to be successful. We all rely on each other.”
Franchisees can increase their delivery run to two or three and build up a partnership model where they are managing the business.
Innovation continues with a software as a service (SaaS) shipping technology called PACK & SEND Live, which enables customers to create consignments, labels, and manifests in bulk from their own premises.
It reportedly seamlessly integrates with a wide range of e-commerce platforms (eBay, Amazon, Magento, Shopify, WooCommerce, etc.).
In addition to improved convenience for customers, the new technology enables franchisees to earn a recurring residual income stream from regular sender e-commerce clients, no matter how big or small.
Paul says investment to capitalise on future trends is crucial. “In looking at trends, you have to predict as best as you can where businesses will spend their money in the future.”
Pack & Send
Michael Paul heads up Pack & Send, a business he founded in 1993. E-commerce has been a focus for the network for years and in FY2018–19 it achieved record sales. The current financial year saw 12 per cent same-store sales growth through July to October.
Because Pack & Send now both sends and receives, Paul explains, there has been a lift in business.
“We handle both outbound and inbound deliveries which has increased substantially our income growth. For example, our network acts as an alternate drop-off delivery point for people that buy goods online and we undertake substantially more import delivery jobs for customers.
“In order to capitalise on the rising growth opportunities in e-commerce, we have become a technology-driven logistics company.”
So how does the business maintain a competitive edge? In part it’s through a massive capital investment (more than $5 million) to support the digital strategy, says Paul. “Digital transformation begins and ends with how we think about and engage with customers – with technology on our side.”
As a result, growth is strong and the business agile and flexible. Providing customer solutions has brought in increased revenue and franchisee profits, he says.
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He points out that increasing numbers of online sellers want their stock positioned as close as possible to their customers, in order to provide a quicker delivery or instant collect options. To answer this, the technology at Pack & Send will provide the capability to transfer stock between locations and optimise order processing.
Paul believes the company has a competitive advantage with the extensive service centre network, which is set to grow from 105 to 150 outlets in order to accommodate growing customer demand.
“Our biggest obstacle is perhaps internal – where there can be potential to become complacent – as complacency usually sets in, when everything in a business is going extremely well.
“However, when you believe the future will continue ‘as is’, then you will start to lose your competitive edge, and then lose customers. Complacency shows itself up in phrases like ‘this doesn’t apply to us’, or ‘we don’t have to provide this service’,” he points out . “We have proven that our model is capable of franchisees operating multiple units with multi-million-dollar sales income.”
InXpress James Buck is country manager at InXpress Australia and New Zealand. He agrees the online retail industry is expanding at an incredible rate. “In 2018, Australians spent a total of $28.6 billion on online shopping. This huge increase of an already booming market translates into rapid growth of the courier sector. And it shows no sign of slowing down.”
In response, shipping and logistics network InXpress has committed to doubling its business in three years.
The InXpress customer is a small- or mediumsized business seeking a personalised approach with their logistics service and great value from a long-term business partnership.
“These businesses don’t just ship with us once, they keep coming back to us, because we consistently save them time, money and hassle,” says Buck.
Franchisees provide expert advice, and help their customers find solutions to freight and logistics problems.
In addition to the usual logistics challenges around delivery expectations, the logistics and freight sectors are in a state of continual evolution. This is never truer than in the digital and technology space.
Buck says the company’s adoption of an inhouse cloud-based technology-enabled shipping solution allows it to evolve and respond to tech developments.
WHY PACK & SEND IS A GOOD OPTION FOR FRANCHISEES Franchisee costs have been stripped back because of boosted productivity caused by technology enhancements. That means increased profits for franchisees, says Paul.
“One example of that is our investment in a proprietary point-of-sale (POS) technology system. Our POS technology (known as GMx) has not only improved customer service, but has also automated a lot of operational functions, allowing franchisees in some cases to more than triple sales revenue on their existing labour cost base.
“We are seeing very significant sales increases with franchisees on their existing labour cost base – which we were not able to achieve before. The magnitude of the sales increase would typically require extra labour to help – but with our technology we’ve taken that cost out.” The tech investment also resulted in new income streams.
“The outlook for the brand is very positive with our transition to a technology-enabled logistics company, which has resulted in more Pack & Send franchise stores opening and an increase in existing franchisees purchasing their second and third stores as multi-unit owners.”
WHY INXPRESS IS A GOOD OPTION FOR FRANCHISEES InXpress works with couriers such as DHL, TNT/FedEx, UPS, StarTrack and Toll, providing the sort of cost effective shipping normally accessed by larger corporations.
“Our customers experience the convenience of using our tech-enabled, award-winning shipping platform WebShip+ to compare multiple premium carriers, services and prices,” says Buck.
InXpress can also harness its technology to gain further business insights into customer buying patterns, market trends, business development and to boost sales.
“Our award-winning WebShip+ shipping platform has evolved over 20 years in the global express freight industry and is now helping customers ship around Australia and the world every seven seconds.”
Fastway How is this traditional business-to-business (B2B) set-up embracing the trends of online ordering, faster and more convenient deliveries?
Peter Lipinski, Fastway CEO, reports it is looking to overseas options that are starting to pick up in Australia, such as the click-and-collect method. Creative ways of helping customers include grouping deliveries and delivering after hours for a small surcharge. “It’s definitely a challenge, let’s face it, everyone wants a bargain. When they shop online they want free delivery, they don’t value the time that delivery gives them.”
Lipinksi points out that customers spend ever more time on social media and Fastway has now integrated messaging into WhatsApp and WeChat.
“Customers have a choice. Keeping them informed is important. It’s one of those industries where things can go wrong, and that can create challenges. The bushfires for instance. That puts pressure on couriers and kicks out delivery times.”
There are times when a courier’s role is both lonely and stressful. Working in a hub-and-spoke format eliminates some of the loneliness, but external stresses such as climate conditions and traffic delays can build frustration.
Lipinski says, “The bushfires, for instance, impact in a number of ways: the connectivity of states, the pollution in Sydney, couriers experiencing breathing difficulties. The pressure is on them but we work with them to relieve that.” Coaching franchisees, support processes and the choice of Beyond Blue as the main charity for Fastway indicate the concern the franchisor has about sustaining franchisees through difficult times. AUSTRALIA POST CLICKS AND RETURNS Australia Post has launched its Collect & Return service, giving shoppers the choice to collect and send back online shopping at many different locations including post offices, 24/7 parcel lockers, supermarkets, pharmacies and department stores.
It’s good news for post office licensees, who will see an increased volume of parcels cross their counters.
And helping Australia Post fulfil this is global tech firm Doddle. Boss Justin Dery says, “Pick-up services are the fastest growing delivery option globally and with 35 per cent of Australian consumers picking up an online order last year, the potential in this market is huge.”
ON DELIVERY 12,000 businesses. 5 major brands: DHL, UPS, Australia Post, FedEx and CouriersPlease, (the latter part of Singapore Post). Mordor Intelligence
DIGITAL DEMANDS According to the Australian Industry Standards Skills Forecast 2019, the logistics industry will require a digitally literate workforce skilled in cyber security and data analytics. These talents will help improve productivity and customer service.
PARCEL POTENTIAL Australians on average sent 34 parcels in 2019. Aussies will send 1 billion+ parcels in 2021.
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