Removing Middleman: Why E-Commerce Companies Are Moving Away From Shipping Aggregators

Top 5 Reasons Why eCommerce Companies are Moving Away from Aggregators (Shipping or Logistics or Courier)

When your monthly order volume goes over 3000 a month, having a middleman between you and your carriers can be a real hindrance.

Growth can be stunted by constantly having to communicate and operate with courier partners through a logistics aggregator. Here are the reasons why many online businesses are taking more steps toward partnering directly with shipping companies.

#1. Poor Customer Experience 

Once an order is placed, you can update customers about the status of their order based on the aggregator’s communications with courier partners. But these communications can sometimes be delayed, or worse, go unnoticed. This is especially so in the case of failed and fake deliveries.

Aggregators do not typically have the tech capabilities to identify supply chain exceptions. They additionally may struggle to bring them to your attention in a speedy manner. This is problematic as couriers have only a limited time frame within which a failed delivery can be successfully fulfilled.

You will eventually receive multiple calls from customers that have not received their orders. You will be entirely dependent on the aggregator to reach out to the courier partner to determine the status of the order.

 Only after the aggregator receives information from the carrier and then passes it on to you can you update customers. However, these are not Olympic level relays, so it could be days before the information reaches you.

By then, your ability to complete a failed delivery has become entirely restrained by time, having crossed the 36-hour limit. The result is that you’ve likely lost the loyalty of a customer while waiting for the middleman to fill in a communication gap that he created - one between you and your carriers.

#2. Delayed Tracking Updates

The role of an aggregator comes into play from the time of order manifestation. The order is allocated to a designated courier partner and monitored through a tracking page provided by the aggregator. Both you and your customers are dependent on both the aggregator and the carrier to ensure that this page is kept up to date. Most customers prefer real time tracking until the last mile of delivery. 

While aggregators provide an integrated view of tracking across couriers, their tracking mechanism is often delayed. This is because aggregators focus on operations and not technological advancements.

Getting near real-time tracking from integrated courier partners involves building extremely advanced and scalable systems. These systems must be equipped with numerous exception-handling capabilities, something that is beyond the scope of aggregators.

Then begins a whole new process of following up with the aggregator to make sure they follow up with the courier partner. Meanwhile, your customer is left with severe anxiety and early symptoms of Buyer’s Remorse.

#3. No Access to Niche Carriers

Aggregators typically tie up with around 10 to 20 courier partners at most. Some tie up with fewer than 5. However, there are over 120 courier companies available across the country. They cater to a variety of locations, both heavily populated and remote ones in Tier II and Tier III cities.

Many also offer added services that can make the delivery process more efficient like customized packaging and shipping labels, choice of mode of transport, security and insurance, returns management, RTO management, and even in-transit temperature control.

Express and hyperlocal delivery services are steadfastly becoming necessary to offer to customers. Providing these services requires a system that functions like a well-oiled machine. Courier companies that specialize in this service will have such a mechanism available.

When you tie-up with a logistics aggregator, a significantly smaller scope of shipping companies (and therefore shipping solutions) are made available to you. As time passes, your need for these niche services in remote locations will become much more urgent.

#4. No Carrier Relationship

The job of an aggregator is to place themselves squarely between you and your courier partners. Of course the initial reason is for ease of integration, but it’s an unnecessary obstacle to your relationship with your courier partner.

It’s like placing an extra slice of bread in between a peanut butter and jelly sandwich. There is no greater travesty to sandwich-eating than the loss of those two iconic ingredients mixing.

Similarly in the case of e-commerce companies, ensuring you stay close to all your carriers is absolutely vital. Contracting with them independently gives you transparency regarding on-ground logistics challenges.

It’s an effective way to monitor your carriers performances and ensure their services are being optimally utilized. It’s also how you can address recurring problems faced during delivery. Solving common delivery-related issues will benefit both you and your carrier.

Pooling in resources can help make coordinated efforts to find shipping solutions. As seen with the farmers of Kolkata, failing to build and maintain lasting business relationships can put a strain on profits as well.

For online merchants, courier partners play too great a role in provision of services to be kept at a distance. Keeping a close relationship with your carriers allows you greater room to negotiate costs as order volume increases.

#5. Limited Scope For Improvement

Working together with a carrier lets you push forward innovative improvement initiatives. Combining your resources and those of a courier company, which can come in the form of tech, industry experts, and strategic efforts, allows specific issues can be dealt with.

They say insanity is doing the same thing over and over again and expecting a different result. When your customers face certain problems repeatedly, not doing everything you can to change the outcome is sheer madness.

Consider the wide range of issues that can occur from the point of manifestation, like delayed pickup or prolonged in-transit storage. A joint effort can be undertaken to perform a root-cause analysis.

Once the cause of an issue has been determined, you can collaborate to identify the most effective way to ensure the issue is resolved. Speedy resolutions will keep both you and your courier partner growing and thriving.  

#6. High RTO%

One of the biggest problems faced by all e-commerce businesses is a high percentage of RTOs. The best way to handle them is to have an advanced NDR management system in place, which only some carriers may be equipped with.  

As we mentioned before, aggregators may not always be able to keep you informed about fake or failed deliveries. This itself contributes quite drastically to the number of RTOs.

Let’s take into consideration a few best courier aggregators or shipping aggregators in India that may have NDR management systems in place, or have tied up with carriers that do. We would also have to consider the delayed pace of communication between aggregators, carriers and e-commerce companies.

In case of non-delivery reports, reaching out to customers immediately is of the utmost importance. This is the only way to understand why the delivery failed and how it can be completed.

Our research has shown that a majority of customers are inclined to cancel an order if it isn’t fulfilled within 36 hours from the time of the first delivery failure. Tying up directly with courier partners firstly allows you to select those that will help you address specific issues that have been contributing to a high RTO percentage.

But more importantly, it gives you access to carriers that have efficient NDR management systems in place. Closer proximity to the courier partner also leaves you room to suggest enhancements for the system based on common challenges faced. 

Final Concluding Note

This decade has seen the explosion of the e-commerce marketplace. For any successful online business to stay afloat in this competitive industry, they need to stay ahead of their customers needs. One of the key elements of maintaining customer satisfaction is to ensure a smooth delivery experience.

Add to that the importance of low prices and real-time tracking capabilities, and you can win their hearts over easily. However, for businesses dealing with order volumes of over 100 on a daily basis, aggregators can be a hindrance to providing a streamlined delivery experience.

Firmly planted between you and your carriers, these middlemen act as an unnecessary intermediary for communications that become delayed as a result.

Your ability to interact with courier partners becomes severely limited, affecting order visibility, performance monitoring, and the development of more efficient and strategic solutions.

When an e-commerce company reaches a certain level of growth, the time comes when the middleman has to be removed. Reaching out directly to the partners providing these services gives you more room to negotiate costs, enhance delivery mechanisms, and reduce your RTO% by actively addressing NDRs.