Home delivery expectations drive a fifth of e-commerce deliv

[TrueBlueTerrier]

Home delivery expectations drive a fifth of e-commerce delivery companies to the wall

http://business-reporter.co.uk/2015/01/ ... nies-wall/" onclick="window.open(this.href);return false;

According to research by accountancy firm Moore Stephens, 221 delivery and logistics companies went out of business in 2014 compared with 184 in 2013.

Customer expectations of e-commerce deliveries helped drive companies such as City Link into administration on Christmas Eve. Smaller logistics companies have been unable to invest sufficiently in their IT platforms and operations to keep up with larger rivals. City Link, for example, had problems with its IT system following poor integration after absorbing smaller businesses. Many firms are not able to offer the flexibility required in today’s e-fulfilment market, creating a gulf between the “haves” and “have-nots”.

This is despite online spending jumping by 14 per cent to £104 billion last year, according to the Interactive Media in Retail Group (IMRG). Shoppers spent £810 million online on Black Friday alone, 50 per cent more than had IMRG had predicted. Yodel, the UK’s second-largest parcel carrier, was forced to suspend parcel collections for two days as retailers overwhelmed the company with 500,000 more parcels than forecast.

Yet Jeremy Willmont, head of restructuring and insolvency at Moore Stephens, says: “The traditional courier and haulier model is now under threat … the accelerated growth of e-commerce has boosted the fortunes of some logistics companies but left others struggling to keep up … smaller, weaker players are being forced out at a faster pace.”

Many younger consumers now expect to have eight to 10 items delivered per order and send several back, and they do not expect to pay extra for that service. And this all happens within smaller time frames than the past.

And the oil price crash has not benefited courier companies either: many delivery contracts are on an “open-book” basis, which means that any cost savings generated by a drop in fuel prices are passed on to customers through reduced delivery costs.