With Amazon’s recent announcement of Shipping with Amazon, in which the company will pick up and ship packages to customers, effectively removing the need for third-party carriers, there’s no doubt this will have an impact on the tech-resistant shipping industry.
If Shipping with Amazon is able to grow into a true UPS and FedEx competitor, it would provide a much-needed injection of technology into an industry resistant to change.
“We give everyone equal access to holding carriers accountable,” Sriram Sridhar, tells FreightWaves. Sridhar is CEO and co-founder of LateShipment.com, a software company that tracks companies’ carrier packages.
With many of its other tech-based shipping services, such as Amazon Prime Now and Amazon Key, Amazon has used technology to remove the need for a shipping carrier for last-mile delivery. From a merchant perspective, Shipping with Amazon would provide increased competition in the shipping space, while also providing Amazon with more data about the products people are buying.
At the same time, this is what a company like LateShipment is trying to do right now.
According to Digital Commerce 360, and IR Research, who conducted a survey with web merchants last week immediately following the Shipping with Amazon announcement, sellers are more than willing to work with Amazon as their carrier if the price was right.
Over half (57%) of respondents strongly agree (27%) or agree (30%) with the statement: "I would trust Amazon to deliver products to my customers," while 23% said they strongly disagree (12%) or disagree (11%). Only 20% said they neither agree nor disagree.
More than half (55%) said they would consider switching carriers, while 20% said they would not, and 24% said they didn't know if they would. Price is the most important factor in choosing a delivery carrier, according to 66% of respondents, while 30% prefer reliability and 4% touted quality customer service. On price, 55% of respondents said Amazon's fees would have to be 10% to 20% lower to consider switching, while 21% said they would consider a switch if the price was 1% to 9% lower. A small amount (8%) said they'd consider a switch with no savings and 12% would not consider switching.
Terry Beasecker, marketing manager of Mor Electric Heating Assoc. Inc., writes, "For survival we are embracing anything that strengthens our value in the changing distribution channels. Amazon does everything well and we would trust them to do it better than UPS and FedEx."
Meena Pandaya, e-commerce research analyst of Ax Jewelry, “I currently use USPS but if the package gets lost in transit, it's a black hole. I can't do much about it realistically other than swallow the loss. On the other hand, Amazon will likely have systems in place and will work out on the best rates. It’s an e-commerce company. It will only make things better.”
LateShipment.com holds a unique position in the space. Formed in 2012, and first getting customers and generating revenue in 2014 after a series of beta-testing, the company helps merchants of any size in getting the valuable and necessary data they need from carriers in order to perform at a higher efficiency.
Currently, for most merchants, when they enter into a contract with the duopoly of UPS-FedEx, they enter into a contract. The merchant (or seller) has no power in the relationship. The merchant is essentially forced to accept the terms of the contract. Even for smaller sellers, it isn’t realistic to track every single package and review whether it made it on time – much less tracking down how and where the problems occurred, and what their recourse might be either from the carrier or for the consumer/purchaser.
The arrangement with government-run USPS is similar, only when a package gets lost with them it can be like falling into a black hole. Recourse is difficult and unsustainable.
According to Sridhar, merchants/sellers are led to believe from carriers that they’re always on their side. In the end, however, the carriers have all the power. “About one-third of customers won’t re-purchase from a merchant that has a late delivery. They need to know what’s happening on the other end, and what they can do about it.”
The contract that merchants sign turns out to be anything but what’s really in the contract. For instance, the carriers typically guarantee immediate payment upon delivery, but it turns out there are almost always delays. Currently, it’s hard to tell what they’re paying compared to what others are paying, and when mistakes are happening in transit. This new transparent data collecting and aggregating helps to fix the power imbalance.
LateShipment is a software-as-a-service (SaaS) company, not a hardware product. “We’re completely cloud based,” says Sridhar. “The merchant creates an account with us. The second step is that they give us the shipping accounts that they work with. We’re able to pull out the data. We also have our own proprietary data.”
“We collect about 130 points of data, and track every single shipment for our customers,” says Sridhar. “From weight to when and the points of where the package is going, the discounts, conventional weight of package, etc. Basically, everything you could possibly know about each and every package from point to point. As a merchant we believe you should be able to know if there are mistakes in the supply chain in the last mile delivery.”
A better last-mile experience. That’s what the e-commerce game has become, and all logistics services across the supply chain are clamoring for opportunities and efficiencies to squeeze the blood out of the turnip. It’s the democratization of data, documentable and transparent.
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