Chapters

Summary

This episode goes through the many changes in the logistics space and how ecommerce has played a role in it. Our guest, Rienzie Delilkan, will guide us through this history with his over 20 years of experience in logistics.

His story started in 1998. At the time, consignment notes were still handwritten. People had to scan through the notes manually with their own eyes. In 1999, intelligence hubs started to emerge. The growth of information technology was changing the world of logistics. The earlier days of manual processing were gone. Information technology turned into the most crucial component in logistics.

In 2003, Rienzie was assigned to the first pilot team to sell and provide ecommerce solutions in Asia. The group had the most experience in transportation for small packages. Since it was in the international realm, they had to deal with various customs and procedures. The pilot team also provided online solutions such as tracking and processing. This business rapidly grew during its second and third years.

Simon asked about the share of ecommerce orders within Australia’s logistics network. In 2007, the ecommerce order volume was around 5-10% of the domestic volume. Rienzie said it hit the 50-60% mark at the time of this podcast (2019).

Next, Simon asked about the top three logistical challenges in Australia. Rienzie raised the following.

1. Multi-national businesses coming into the domestic/local market
2. The last-mile delivery in rural places (as the sixth least-populated country)
3. The ability to correctly facilitate the delivery in last-mile delivery

Simon also asked about the logistical advantages in Australia. Rienzie said it is the connection with the southeast Asian market. It allows Australian businesses to tap into the ASEAN market with free trade agreements.

The next topic was about logistic issues for ecommerce businesses. Rienzie said finding a logistics provider with the best costs for a business is critical in the B2C sphere. He advised the audience to always look at the price of goods versus the price of freight. A specific issue in Western Australia would be the delivery speed to get across the east coast. But the most general problem was the ability to fulfil and end the delivery.

Sometimes, the receiver is not ready to accept the parcel, and the seller fails to make the correct arrangements for that situation. Rienzie recommended utilising an alternative delivery point (ADP) such as PO boxes. But moreover, the seller must educate the receiver to have more responsibility in indicating their availability. Rienzie also said to provide real-time alerts, such as parcel tracking and order status.

Rienzie repeatedly made his point about the significance of last-mile delivery. It is only a portion of the entire online shopping experience. However, how a product is delivered powerfully affects the customer’s perception. If your ecommerce products don’t arrive on time, it can easily connect to the downfall of your brand’s reputation.

Lastly, Simon asked for Rienzie’s guidance on first-time freighting. Rienzie suggested keeping your goods small and light if possible. He said it is best to keep the goods within a 1 – 5 kilogram range. Rienzie gave an example of how costs could look with heavy and bulky goods.

Let’s say you have a 300-kilogram pallet to ship. It costs 25 cents per kilo to ship goods. 300kg times 25 cents equals $75. There will be a fuel surcharge of 10%, which totals around $80. Your pallet could get on a tail lift for the last-mile delivery and incur $70. Even if you charged a base of $10 for your shipping, it could cost around $140 for this delivery. It’s not a reasonable price for your business model.

So, make sure to calculate your product margins v.s. the shipping fees.