We Discontinued Cash on Delivery Option for Our Brands; Here’s Why!

We Discontinued Cash on Delivery Option for Our Brands; Here’s Why!

The scope of digital businesses and online shopping is increasing globally. According to a recent statistic, nearly 8 out of 10 shoppers are now buying online around the world. With digital businesses and D2C brands taking much more space than they previously were, online brands must revisit and improve their delivery services. The online shopper, especially in Pakistan, is very impatient. They expect their order to arrive quickly and in good shape and it becomes a huge problem when their expectations aren’t met. Digitally as well as physically, the options are many and the consumers are quick to jump ship over to the competitors in case of delivery issues.

The Importance of Courier Services for Digital Businesses

Since delivery is one of the most common and basic pain points for consumers that shop online, it is understandable just how important courier services and delivery is for businesses. Working with the wrong courier company can create long-term problems for businesses, but the issue digital businesses in Pakistan face is not of choice but of every choice being the wrong choice.

We have been one of the first few companies that started operations and services online and over the years, have tried almost all courier service providers including Leopards Express, TCS, and Trax Express. While we have pushed forth somehow but the issues have been many!

Issues Faced with Courier Services

There are several problems, but we decided to list down some of the major ones backed by the data we have collected over the course of the last few months. Some of the major issues that have had deep negative impacts on our digital businesses are:

1. Order Cancellation or Failure to Deliver  

Order cancellations are problematic for both the recipient and the sender.

If we look at some of the most common reasons for order cancellations, we see that:

  • 23% of the orders are canceled due to late delivery &
  • 17% are canceled because customers changed their mind due to the long wait
  • 5% are returned because of damaged goods

The period between placing the order and the delivery of the product is crucial for online businesses. According to data (Figure 1), deliveries are successful only if reached within a certain number of days. In case of a long wait or the days exceeding the limit (Figure 2), the customer either changes their mind or does not want a long wait for their order especially when the alternative is physically getting to the shop and purchasing the product at that very instant! At this point, when the courier companies fail to adhere to the promised timeline, angry customers and bad reviews are especially damaging for the company.

When we look at the data for TCS, we see that their delivery success rate is barely 67%! This, in simple terms, means that for every 100 orders, 33 are not completed or canceled, as shown in Figure 3! This number is huge for a brand because not only do we lose the customer, but also bear the cost for the return of the order back to the company and in cases of abject pleading with the customer, the cost of sending the order again!

Most online brands already suffer to keep their costs low while still offering free delivery to all its consumer and frequent delivery issues and added delivery costs only end up adding to the problems! But it is just not TCS that suffers from this low delivery ratio. The delivery success rates for Trax & Leopards Express are 23 and 56 percent respectively!

2. Failure to Adhere to Timelines

No matter what the promised time for delivery is, the delayed delivery issue persists for most orders and across all courier companies, as shown with Figure 4. With TCS, the mean delivery time for same city deliveries is seen to be 7.5 days and for different cities, it is 17 days! The same trend is also seen for Leopards & Trax whose mean delivery time for the same cities is 3 to 6.5 days and for different cities, the mean delivery time is 8 to 10 days!

No online business can hope to retain its customers on this timeline. Delayed deliveries are seen as a sign of disorganization by consumers. When businesses contract with a specific courier service, we expect that the packages would be delivered at the promised time and we intimate customers accordingly but delayed shipping makes the business look like they can’t keep their promises because that is whom the customer has a relationship with!

3. Damaged Packages & Products

Another issue widely faced by businesses is the damaged packages. When companies dispatch products, we want the customer to receive the goods in the condition we have originally sent them in! No brand wants their recipients to contact them, saying that items are broken or unfit for purpose. In case this happens, we have to send replacement stock and it’s our business that loses out. While the ratio of this might not be very high, it is still one of the reasons that lead to customers’ waning trust in a brand.

4. Devil May Care Attitude

No business can survive without an abject focus on human resources and our list of issues with courier service companies is incomplete without mentioning the horrible management we have faced at the hands of their HR departments! It wouldn’t be wrong to say that they just don’t care!

Regardless of us providing them sizable business through our various digital ventures, their response to our complaints has been next to none. The whole process has not just been tiring, but also completely fruitless in all aspects!

The Result of Sub-par Services by Courier Companies

These are just three of the ways courier companies end up adding to business losses and while this data gives us a good look into the situation, the impact of these three problems is far-reaching! Online business doesn’t just end up losing loyal customers and trust over delivery issues, we also incur heavy losses especially when the order is a cash on delivery one! Due to astronomical losses over delivery problems, online business seems just not viable!

While the customer might be justified in refusing to receive a late order, the company bears the cost of sending and then receiving back the product while losing business at the same time. With almost 40% of deliveries failing, the margin of losses is a huge one, making online business impractical for most.  

Commi Services: Our Solution

Courier Services that keep up with the latest technology, are usually the ones that experience the fewest issues. Not only does their innovative system help them manage their everyday operations efficiently but it also allows them to take a proactive approach that means they can deal with problems before they become too serious. While we had hoped for this very kind of deal from at least one courier service, we were majorly disappointed!

After repeated losses incurred due to courier services, we softly started Commi, our own non-commercial and internal delivery service that is now delivering in seventeen major cities in Pakistan! We promised same-day delivery for our customers and had to take the active initiative to fulfill our promise.

While we had expected that the results would be drastic, but no one could have predicted just how much it would contribute to better services. Some of the ways that Commi helped are:

1. Delivery Speed

One of the biggest benefits that we enjoyed is the delivery speed. Simply using our fleet of vehicles was a game-changer as the average rate of successful deliveries in the 14 cities Commi delivered, increased to almost 80%! Using our service also ensured that our item never changed hands during the delivery process, increasing not only speed but safety as well. It also didn’t sit for days on end in a warehouse waiting to be delivered!

2. Reliability

While courier services should be known for their reliability and treating our package like it’s their own, the opposite was seen in most cases. With Commi, it was ensured that the package got to the destination without being lost or broken along the way. We didn’t just ensure safe delivery; we also kept the consumer engaged and informed throughout the way as the package reached its destination. This did not just help decrease the return rate by almost 15%, it also managed to increase the reordering ratio by up to 20% for consumers in these 14 cities!

3. Affordability

When it comes to shipping a package of documents, courier services, mostly due to the high return & canceling ratio, were costing us astronomically! The data we have concluded that the losses we incurred due to issues with Trax were 62% out of our total losses and with Leopard, the number is 32%!

The cost to manage delivery using our fleet of delivery vehicles for the company proved to be much more economical, the service ensuring competitive per miles rate and better service throughout. On average, using Commi reduced the losses incurred due to returns and exchanges by almost 10%!

The Adaptation: Cash on Delivery for 14 Cities

The purpose of this write-up is not to bash any of the courier companies, but to list down the reasons why we, for all our digital ventures, have decided to switch courier & delivery operations to Commi in the 14 cities that we can currently cover!

These are also the 14 cities that we will be offering cash on delivery to, keeping our consumers facilitated to the best of our abilities.

As for the rest of the cities, bank transfer and pre-pay orders will be the only option available. This might seem drastic to some, but upon closer inspection, we have data that suggests that we barely have a 5-7% customer base in cities not covered by Commi. While we will still be delivering in those locations, the orders will have to be pre-paid.

Keeping this situation in mind, it would also not be amiss to say that the courier service companies need to get their act together! The situation is such that these companies are just a startup away from complete disruption unless they improve both their services as well as their customer management.

 We recognize the trust our customers’ place in us when they order online and to maintain the standards of our services, countering the delivery issues with these steps seemed imminent. It was, therefore, important to keep you informed on the actions we are taking, while also opening our doors for any suggestions or feedback that you might have. 

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