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Toll Holdings move into online delivery highlights opportunity in shipping market

Monday, 31 October 2011 | By Patrick Stafford
More businesses are starting to identify a gap in the market for quick delivery of parcels purchased online, with the number of Australians buying digitally continuing to grow and Australia Post suffering under hundreds of parcels it can’t keep up with.


Toll Holdings has announced it will start developing a strategy and delivery service for products purchased online, while some start-ups, such as Mail Call Couriers, have identified a similar opportunity.


Both companies say they believe Australians are fed up with inadequate delivery from local retailers, with many customers having to wait several days for items they could buy overseas and receive in a shorter period of time.


Toll incoming chief executive Brian Kruger told the Australian Financial Review that it will start looking at how it can corner the online delivery market.


“Our strategy will be about minimising the number of failed deliveries to the home,” he said, touching on a sore spot for AusPost. About 70% of the national carrier’s parcels come from online shipping, and it’s hard to experiment with new methods of delivery due to the sheer logistics of all the packages.


AusPost has complained it has nowhere to put them. But Toll says it will start looking at new features such as SMS notification services and even delivery on Saturdays to get packages to their customers.


Toll Holdings was contacted for comment but no reply was available prior to publication.


These comments come as one start-up, Mail Call Couriers is adopting a similar strategy by working with retailers to include their payment option in online shopping carts. Joint managing director Emma Cronin says the idea is to provide a separate payment system and ensure delivery within one or two days.


“Traditional post isn’t set up to do this. We look at this like any customer would – what’s best for them? You want to know exactly when something is going to be delivered, not within a 12 hour block.”


“I think Australian retailers haven’t had many quality partners, and we’re positioned to take advantage of that.”


Cronin says Australians are keen to buy online from local retailers, but are attracted to overseas ventures because they can get products here faster. Delivery, she says, is the key.


“I think retailers just need to prioritise what they’re doing in the online space. I certainly haven’t had a lack of interest from any large retailers, and we’re currently discussing potential work with of the larger retailers in the country. It’s all a matter of when they want to move.


Forrester Research analyst Steven Noble suggests this area is ripe for exploring, but also warns Australians aren’t necessarily as keen for quick delivery as American shoppers may be.


“Nobody likes waiting, that’s a given. In any geography, no one likes waiting for products.”


“But it weighs less heavily on Australian consumers than it does consumers in comparable markets,” he says.


Noble points to research that shows out of all Australian adults who don’t shop online, just 18% say it’s because delivery costs are too high, compared to 29% of US online adults.


“It’s still important. Just not as important as it might be in the United States,” he says.