Hermes UK is examining whether to change its delivery information model, which currently relieson couriers’ personal knowledge of customer preferences, into a more ‘formalised’ model offering
online delivery preferences in order to meet the needs of an emerging new generation ofcustomers.CEO Carole Woodhead said Hermes’ current system of local knowledge meant the company had beenachieving 95% first-time delivery success without a need for complex delivery-preference matrices,but revealed that Hermes UK was now looking at whether this was sufficient as consumers’expectations evolved through their experiences of online retail.
“One of the interesting considerations for us is, do we keep this wonderful local arrangementthat has worked for a number of years, or do we formalise it?” observed Woodhead. “Do we give aconsumer an online access portal that allows them to tap in and say my first choice is this, mysecond choice is that, my third choice is that?
“That is the kind of debate we are having, and that is why we have got to listen to differentgroups of consumers, and understand whether the emerging 16- or 17-year-old consumer is going tohave that kind of relationship or do they want to just do things online? And maybe we will have achoice of those things going forward.”
Gary Winter, Hermes UK’s sales and marketing director, observed that end customers wanted arange of services, even if they seldom used them. “For our retailers to be successful, they need tohave a range of delivery and return options on their website,” he said. “People will not besatisfied with the only option being delivery to home.
“Even if they only use the other options one time in a hundred or two times in a hundred, thefact you have a next-day option, a same-day option, a sign-for option, is important, because theywant to know that the option is there if that need arises.”
Nevertheless, the company believes that delivery companies should not try to cover every area ofthe market, but instead should specialise and focus on what they are able to do cost-effectively.Woodhead said that the e-commerce delivery market had evolved into one in which retailers usedseveral carriers to fulfil their requirements, often with complementary areas of specialisation,perhaps using carrier-management platforms such as Metapack or GFS. “There is less of retailersopting for one carrier supplier, and less of courier companies trying to be all things to allpeople,” she said.
Hermes UK last week published its third annual survey of the UK e-retail parcel market, in whichcustomers expressed ever-higher expectations of delivery services, but also demonstrated anincreasing unwillingness to pay for premium parcel delivery services. While this remains the case,Woodhead and Winter said Hermes UK would continue to focus on its core, value position in themarket.
Reflecting this position, the company had been looking into running trials of eveningdeliveries, but was no longer pushing this. “We have stepped a bit back from it, because not a lotof our retailers are saying to us that they want that to be in place,” said Woodhead. “We nowunderstand more the costings of it, and it is not a cheap service to run.
“And if we go back to our service proposition, we are successful 95% of the time with first-timedelivery, so there are not a lot of problems that we are wanting evening deliveries to fix. So, weare conscious of it, we will have another debate around that, and we will prioritise our productdevelopments for the year and two years ahead. But I sense that evenings as a specific requirementis going down the list in the main,” Woodhead observed.
“The other point is that we have now got ‘ParcelShops’ and because of the opening times ofthese, if someone wants to get in touch with their parcel at 8pm, we will say you can pick it upfrom a ParcelShop at that time in the evening.”
She said one in 10 of the company’s ‘MyHermes’ C2C customers were already using one of HermesUK’s 1,000 ‘ParcelShops’, an option launched in June to allow parcels to be delivered to orcollected from selected retailers that offered early-morning and late-evening opening hours.Woodhead said the service is mainly being used by customers dropping off rather than receivingparcels – perhaps in part because it offered a faster delivery time than for parcels collected fromthe customer’s home.
Hermes UK is launching the ‘ParcelShop’ option to B2C customers early next year. Woodhead saidthis was likely to be mainly initially used for returns, but said she expected that the take-up fordeliveries would also grow.
Winter commented: “The number of people that say they are interested in evening delivery and thenumber that are prepared to pay the necessary premium for evening delivery are vastly different; itis about a 60:1 ratio.” He said a typical online buyer will buy 100 online items a year, andprobably one or two of those would be worth over £100, and one would be extremely urgent.
“So there are three chances in 100 to sell someone an uplifted delivery service, be itguaranteed next-day, evening, Saturday or Sunday, or whatever it happens to be. So, in terms ofwhat we are chasing as a mass-market delivery company, we have got 97% of the market available tous, and we will leave that 3% to someone that has got a more premium-based proposition.”
