It’s roots might be in a traditional business sector but Parcelnet has found success with an innovative approach to home deliveries. Managing director Carole Woodhead explains her strategy to Malory Davies.
We call it the “last mile” problem – a term borrowed from the cable television industry. But actually, the biggest problem in home delivery is the last few feet, in other words, getting the parcel into the recipient’s hands.
The reasons are all too well documented: the recipient is not at home to receive the delivery, there is no one else to leave the parcel with, or there is nowhere safe to leave the parcel . . .
The costs of failing to deliver first time are high and are a brake on the development of the industry. But, if you could get a neighbour to be responsible for the delivery it would solve a lot of those problems. A neighbour would know when the recipient was likely to be in to receive the delivery, which other neighbours could hold onto it if the recipient was out, if there was a safe place to leave it and so on.
It’s this kind of thinking that is proving successful for Parcelnet, the home delivery business of the Otto Group. Ironically, it is an approach that has its roots in the very traditional methodology of the home shopping catalogue.
The Parcelnet system, says managing director Carole Woodhead, is based on a network of some 8,000 lifestyle couriers to make the final deliveries. Typically, they live in the areas where they are delivering and are encouraged to get to know their customers so that they have a better chance of success first time.
Parcelnet is the delivery business of the Grattan and Freemans catalogues. The catalogues have traditionally operated through large networks of local agents who would sell to their neighbours. Woodhead points out that the first couriers were recruited from these agent networks back in the 1980s at a time when the post office, which handled most of the deliveries, was embroiled in industrial strife.
Parcelnet came into being as a result of the merger of Speedlink and Direct Line in 2000.
Testimony to the success of the concept comes from the growth of third party users which now account for some 75 per cent of the 90 million deliveries and returns collections each year. Work for Grattan and Freemans makes up the remainder. Third party customers include: Damart, Boden, Lakeland, Next Directory, Reader’s Digest and Mothercare.
Returns are one of the elements of home delivery that make it unattractive to operators whose main focus is business-to-business. The Parcelnet system allows customers to phone up their local courier directly to arrange a collection.
But a system that relies on 8,000 individual couriers presents its own range of management challenges. Some 40 per cent of the goods are delivered from the sortation hub to a sub-depot where a number of couriers can then pick them up. The remainder are taken direct to the couriers who load up their cars and go on to do their deliveries. Typically, a courier will have 45-50 deliveries but this depends on geographical factors.
The couriers also have to cope with a range of service options from the standard two to three days to overnight. Woodhead points out that internet customers are increasingly demanding in terms of the service offering – particularly track and trace.
Selection and training is key to ensuring that couriers meet the quality standards set by the company. Woodhead says that Parcelnet has 100 field managers responsible for the courier network. A key part of the job is to assess the delivery round and fix the pay rate for the courier. Rounds can vary from high density urban areas, through the suburbs to rural areas where there is a significant distance between delivery points. Clearly, the rates paid have to reflect the different circumstances.
Woodhead has been responsible for a series of deals with other carriers to help expand its home delivery operations. In 2006, Parcelnet became the home delivery partner for DPD (formerly Parceline) adding some 600 parcels a night to its traffic. Last year Parcelnet acquired the Redcats UK courier network operation which provided a home delivery service for La Redoute, Empire Stores, Vertbaudet and Daxon.
And in June, it took over the courier business of TNT Post which was handling some 12.5 million parcels a year which included the home delivery contract for catalogue and online retailer JD Williams. It has also just won a £1m contract with J Parker Dutch Bulbs, the mail order plant and bulb specialist.
The next phase in its growth involves integration into its parent company’s international logistics strategy. Otto Group distribution companies handle over 22 per cent of all consumer deliveries across Europe, Woodhead points out. Since June Parcelnet has been managed as part of a new European holding giving customers access to a pan-European approach.
Woodhead says: “Our vision is to be the first to offer a pan-European parcel to consumer network, and we are already piloting a cross-border service with a number of clients and hope to go live with this unique service by the end of the year.”
1987 – 1990 controller, customer services for Grattan.
1990 training and quality control manager, customer services for Grattan.
1990 – 1994 packing department manager for Grattan.
1994 – 1996 returns department manager for Grattan.
1996 – 1997 change co-ordination manager for Grattan.
1997 – 2001 senior manager, warehouse outputs for Grattan.
April 2001 operations director, Parcelnet.
June 2004 to date managing director, Parcelnet focusing on strategic development and growth of the business, including two acquisitions, to create the largest courier home-delivery business in the UK, handling in excess of 120 million units a year.