E-commerce: Couriers charge more for risky city deliveries

Municipalities and rural and peripheral areas pose unique logistical challenges that limit the growth of e-commerce in these regions.

Sometimes the distance from major centers causes the cost of delivery to skyrocket. In other cases, the difficulty of making a delivery is compounded by high crime rates.

Courier companies have now started charging surcharges to reduce logistics risks in some locations.

“Couriers add an additional fee of around R100-150 to the delivery fee to cover security costs and ensure the safety of the parcels,” said Lars Veul, CEO of collection and delivery specialist Pargo (“Pudo”).

Veul says poor addressing systems and poor mapping software in municipalities often lead to multiple delivery attempts before a package reaches its intended recipient. Coordinating deliveries to when recipients are at home is another problem.

“People aren’t sitting around waiting for a package to be delivered. They’re at work, at the doctor’s or picking up their kids from school, and uncollected packages increase costs for couriers,” Veul said.

He added that the idea of ​​free shipping for customers is giving way to paid models as e-commerce companies move away from a paradigm where they tried to show the customer the value of e-commerce to one where they want their business to be profitable.

High risk

He believes this means customers have to pay higher shipping costs than before.

Jayson Joubert, chief operating officer at Order Kasi, a last-mile logistics company specializing in deliveries to towns, told TechCentral that another reason for the surcharges in some areas is the difficulty of finding drivers — who may consider those areas too risky — without offering them additional incentives. In other cases, Joubert said, the surcharge is to cover the cost of an extra person in the vehicle to handle safety.

Customers who know they live in a dangerous area are often the first to ask drivers to meet them in a safer place, such as the nearest police station or petrol station, he added.

“We employ local drivers who are involved in the community. They also use their own vehicles rather than branded fleet vehicles that are likely to attract the attention of criminals. This reduces the risk in our operations.”

The unique challenges of city logistics have led to the emergence of a number of specialist last-mile companies similar to Order Kasi. Godiragetse Mogajane, founder and CEO of Delivery Ka Speed, in Hammanskraal, north of Pretoria, fulfils orders for Bidvest Waltons, Big Save supermarkets and Spar2U, a Spar app rival to Checkers Sixty60.

Mogajane said using drivers who live in the area helps deal with poor addressing by allowing customers to use landmarks to describe where they are. The system works so well that Delivery Ka Speed ​​has made the description a requirement on its app when customers place an order.

Pargo’s Veul said that as emerging market laggards in terms of e-commerce growth (in South Africa, around 4% to 6% of total retail sales are done via e-commerce, while in similar markets such as India and Brazil, the figure is over 15%), Pudo companies will play an important role in keeping delivery costs low and encouraging consumers to switch to e-commerce.

Pargo’s experience is that the cost of delivering parcels to rural and peripheral areas can drop by up to 80% when using Pudo collection points, depending on the volumes handled. Pudo networks also leverage existing logistics networks, meaning the risk profile doesn’t change so much as to require surcharges for different regions.

Read: Bob Group says smart lockers will drive growth in online shopping in South Africa

Veul said that in the future, the Pudo model will work with door-to-door deliveries to maximise customer convenience.

“The collection point model is much more efficient, so the price per package goes down. And it also increases convenience and optionality for the online user. It’s not about one or the other, it’s about having those two options side by side. There will still be consumers who prefer doorstep delivery and there will still be consumers who prefer delivery to a collection point,” Veul said. © 2024 NewsCentral Media

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