This article on Shippit was originally run by The Australian Financial Review and can be found here.
Same-day delivery – or faster – has become the norm in Australia, as retailers focus on the “last mile” of the logistics chain and prepare for the onslaught of Amazon by teaming up with a fast-growing band of tech-based delivery operators.
Steve Orenstein, the chief executive of on-demand courier service Zoom2U, established in 2014, said in the past few months many retailers had been jolted into action ahead of the arrival of Amazon and this had been a big plus for his business.
Zoom2U is among a raft of delivery start-ups, including Sendle, Shippit and Sherpa, which emerged in this sector in the past few years and are gathering momentum.
Mr Orenstein said retailers had sharpened their approach and realised that customers wanted to be able to track the progress of their items in real-time and to have them delivered on the same day as they made the purchase online.
“Same-day delivery is going to be the norm,” Mr Orenstein said on Monday. Volumes had risen to between 35,000 to 40,000 items a month through the network of delivery drivers and subcontractors that Zoom2U had built up, with a rate-the-driver service proving extremely popular.
“The experience a person has with a driver is vital,” he said. Three weeks ago Zoom2U acquired a Melbourne-based business, Freight Match, to enable it to handle bigger items. That business operates using a similar model to ride-sharing service Uber, matching 2000 transport operators with customers who’ve bought something. Mr Orenstein declined to comment on whether Zoom2U might be working with Amazon.
But the entry of Amazon to Australia had been a big plus for the Zoom2U operations, with a substantial rise in activity. “It’s been really positive,” he said.
Exponential growth
William On, one of the co-founders of Shippit, set up in 2015 and an intermediary between retailers and existing courier companies including Australia Post, DHL, Fastway Couriers and Couriers Please, raised $2.2 million in a fresh round of funding in June ahead of the Amazon arrival.
“We’ve been seeing exponential growth,” Mr On said on Monday. The Shippit technology platform, which uses special algorithms to determine which courier is the best positioned for a particular delivery ordered online through hundreds of retailers, handled 700,000 orders last month. But that was topped again by 50,000 deliveries in just 24 hours after Black Friday sales discounts. “We effectively act as the air traffic controller,” he said, referring to the Shippit business model.
Shippit was working with around 90 per cent of Australia’s top 100 retailers, and the practicalities of having a seamless “last mile” to the customer’s house or apartment had been gaining more importance and attention.
“Retailers, they spend a lot of money on merchandise, having the right products and the e-commerce site,” Mr On said.
“Now there is a recognition that the last mile customer experience is bang-on. They’re now competing with the Amazon juggernaut,” Mr On said.
He said shoppers buying fashion and electronics items generally demanded same-day delivery, but basic items such as pet food and alcohol, people were prepared to wait a day or two, and tended not to want to pay a premium for almost immediate gratification.
Paul Greenberg, executive director of e-commerce industry organisation NORA, said on Monday that Australian retailers were getting better at the “end mile” and in an ideal world, many would like to own the delivery service also to maintain total control from start to finish.
But it was the retailer who would “cop it” if there was a poor experience with delivery because it was their brand at risk.
“It’s always the retailer that gets the slap from the customer,” Mr Greenberg said.