Overview of Courier Aggregators and 3PL Shipping Partners
Running an e-commerce business is no easy feat. Getting it up off the ground and giving it a good push forward takes planning, time, and dedication.
Once products are stocked and ready to be shipped, you’re left with the daunting task of ensuring they reach customers in a safe and timely manner. You’re also left with immense confusion as to how to go about it.
The logistics of completing deliveries, especially as volumes increase, is not something your company may be equipped to handle. Fortunately - and please imagine these next few words being sung in the soothing tones of U2’s Bono - you don’t have to go it alone.
There are few companies like Flipkart and Amazon that can handle the delivery process internally. For most companies though, the best option is a 3rd party logistics company.
In your search to determine the best way to solve your shipping problems, you would have also come across the term “Logistics Aggregator”.
I’m no mind reader but my guess is you found yourself wondering what the difference between the two is and which would be better for your company. Don’t worry, we have the answer to both of those questions.
What are 3PL Shipping Partners
3PL shipping partners are companies that handle end-to-end logistics for other companies. From the moment an order is placed and goes through the process of manifestation, 3PL service providers are the shoulder you lean on.
You can make an arrangement with a courier company based on pre-shipment payments, or through an independent contract covering a certain volume of orders.
Either way, rates are typically determined based on the average size and weight of deliveries. Different carriers may cover a variety of services, like handling COD orders, managing Non-Delivery Reports, providing insurance for high-value orders, and even more specialized services like temperature-controlled transit.
Your choice of carrier partners will determine the potential growth of volume of orders and consequently, the growth of your business.
What are Courier Aggregators
Aggregators are essentially companies that are integrated with multiple carrier agents that your business can choose to tie up with. They further provide a uniform and streamlined platform for monitoring orders and communicating with multiple courier partners easily.
The major problems faced in times of immediate or sudden growth are managing a larger volume of orders and integrating quickly with multiple courier partners.
Aggregators help you tackle these obstacles. Basically, when the volume of orders experiences sudden growth, typically between 1000 to 2000 orders per month, aggregators come into the picture.
An aggregator provides easy and quick integration with specified courier partners through pre-existing contracts. This ensures your sales needn’t falter while you hunt for courier partners to pick up the larger volume of orders flooding your shopfront. Aggregators take care of that for you.
However, when that same volume climbs up to numbers over 2000, an aggregator, while still helpful, may not be the ideal partner for further expansions. Growth requires targeted strikes on specific problems and that requires an independently built relationship with courier partners.
Courier Aggregators Vs 3PL Shipping Partners
To help you better understand the major differences between tying up with an aggregator and contracting directly with multiple 3PL shipping partners, we’ve created an exhaustive and comparative guide to these two major players in logistics.
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Parameters |
Courier Aggregators |
3PL Shipping Partners |
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Speed of Implementation |
Integrating with multiple courier partners is a process made much easier with an aggregator. Since they have existing relationships with multiple courier partners, you simply have to determine which courier partners are within your scope of serviceability (in terms of volume of orders and pin code range) and the aggregator will handle the process of integration. |
While getting integrated with a 3PL shipping partner alone is not much of a difficulty, the case becomes a little more complicated when multiple courier partners are involved. First comes the search to determine which shipping companies are right for you. After that, terms must be independently negotiated with each before being integrated with them. |
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Customer Experience |
Courier aggregators make tracking and monitoring orders convenient but communication more difficult. As they act as a middle man, they essentially add one more layer of communication between your company and your customers. When an order is delayed, you are entirely dependent on the aggregator to update you about the issue so you can reach out to the customer. Small mix ups could result in an impatient and frustrated customer dealing with a delayed delivery either receiving too many phone calls or none at all. |
When you're contracting directly with courier partners, communication becomes a faster and easier process. When customers raise escalations due to delayed delivery or delivery exceptions, you will be able to directly communicate with the courier partner to deal with them and understand why they occurred. This transparency when dealing with escalations and customer complaints allows individual issues to be addressed much faster with different carriers and in turn helps keep customers happy. |
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Shipping Rates |
Aggregators are provided specific rates by individual courier partners. After adding their margin, they make the new rates available in standardized form to ecommerce companies. A few aggregators focus on consolidating volumes, which allows them to negotiate better rates with courier companies. However, these rates may not encompass specific services like COD coverage. |
In case of low order volumes, less than 2000 per month, your ability to negotiate with individual courier partners might be limited. However, when these volumes rise, partnering directly with a courier partner becomes more economical since courier partners will likely offer better rates and there would be no aggregator commission involved. |
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Tech Capabilities |
With an aggregator, you have easy access to a multifunctional platform for monitoring orders and returns. You can go live with this platform quickly and get back to business. This is because they have already integrated with multiple shipping partners and have created systems for handling delivery exceptions. Aggregators maintain basic systems in place for order management. |
Every carrier makes use of different tech systems and APIs. Integrating with each of these carriers and monitoring them is that it requires a significant investment of time and tech. However, once your company begins to scale-up, advanced and specific technological systems, offered by independent courier partners, will be precisely what you need to improve your delivery mechanisms. |
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Tracking |
Aggregators provide an integrated platform for tracking all orders with different courier partners in a single place. Given that each courier partner maintains their own APIs and tracking dashboard, aggregators provide this data in a consolidated view. Few even provide standardised communications to customers. |
Each carrier has its own tracking mechanism. Orders being handled by different courier partners have to be viewed from the individual tracking platforms maintained by each shipping company. To view all orders in a consolidated manner, an integration platform is required. This can hamper the process of data collection. |
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Flexibility of Terms |
Contracting with an aggregator usually comes with predetermined terms. These usually specify the courier partners, volume of orders to be fulfilled on a regular basis, remittance cycle, pricing and payment options, among other important details. The aggregator accordingly discusses these terms with the courier partner to ensure fulfillment. |
While it is a more cumbersome task to tie up with multiple courier partners separately, it allows you to develop independent relationships with each partner. You can maintain a unique contract with each carrier you select, ensuring optimum utilization of the various resources they may offer. This also allows you to request added services like express delivery or returns management at more cost-effective prices. |
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Ease of Implementing NDR Management |
Some aggregators have fully-implemented NDR management systems in place. These help to deal with delivery exceptions and in ensuring smooth return operations. However, having a courier aggregator limits the transparency you would have in NDRs, since an aggregator may not want to highlight multiple misses during delivery exceptions. Still, aggregators allowed NDRs to be managed from a single platform. |
Every courier partner has its own NDR management system. To handle NDRs (Non Delivery Reports) with independent courier partners, you would have to communicate with each of them separately to address the issue, either through their respective platform, their dashboards or through emails. This essentially means you'd have to repeat the same process multiple times with each courier partners just so you can effectively handle RTOs arising out of NDRs and delivery exceptions |
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COD Coverage |
Aggregators like ShipYaari and ShipRocket offer COD coverage as a base service for 10,000 to 20,000 pin codes. Though not all courier partners offer COD, the role of the aggregator is to allocate COD orders to an appropriate courier partner to ensure fulfillment. |
When it comes to COD coverage, given its important role in the Indian e-commerce market, it's basically a numbers game. If you have partnered up with multiple shipping companies, you will definitely have access to COD-based services, as per your requirements. There is minimal difference to COD services when tying up with an aggregator or tying up independently with carriers. |
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Enhanced Performance |
Transparent feedback is an essential part of helping courier partners improve their performance. On ground delivery performance can only be improved if there is free communication between you and a courier partner. Unfortunately, that is made difficult by the presence of an aggregator that adds an extra layer of communication between companies and carriers. While the performance of courier partners can be monitored, there is minimal scope to demand improvement in certain areas and renegotiate terms accordingly. |
By building independent relationships with courier partners, you can gain a closeness that allows you to identify to each respective courier partner what their problem areas are and how they can be improved. Based on the pooled resources, terms can be renegotiated at any agreed upon point of time. The difficulty arises when it comes to discussing these terms of improvement with each courier partner separately. But it is also a necessary part of the process as each carrier may have distinct challenges to overcome to improve overall delivery performance. |
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Value-Added Services |
NDR management, returns management and COD coverage are often seen as additional services that may result in you incurring hidden costs. While some aggregators are equipped to handle these major services, few are enabled to offer services like temperature-control, specialized handling, security and insurance. |
As mentioned before, different courier partners offer a wide array of options from payment, pricing and services. While aggregators contract with large and reputed courier companies, it may be the more niche shipping partners that provide the value added services you need, like same day delivery, hyperlocal delivery, or specified instructions for handling orders. |
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Scope For Expansion |
The focus of an aggregator is on access and volume, i.e., providing you easy access to courier partners that are equipped to handle a large volume of goods. However, over time, your company growth may face other challenges not related to volume of orders, like a high RTO percentage or low customer satisfaction. Aggregators are not typically equipped to address these types of difficulties. |
When contracting separately with a courier partner, you are more likely to be granted access to professional expertise in supply chain management. Maintaining an independent relationship with a courier partner allows you to directly address how to improve performance and meet certain shipping related KPIs head on. While high volume of orders can be handled by an aggregator, courier partners focus more on the core competencies. |
If contracting with a single carrier is phase 1, and then dealing with multiple carriers through an aggregator is phase 2, phase 3 would be directly tying up with multiple courier partners on your terms.
This is because, once your base orders are being fulfilled with the aid of an aggregator, you can analyze and strategize: Analyze your existing shipment process and strategize how to overcome individual challenges that address KPIs and maximize customer satisfaction.
Essentially, you can plan out and determine which courier partners, based on what services they provide, would enable the best outcome in what areas. Then you can select courier partners that are the ideal fit and place them together like a perfectly arranged puzzle.
Given the limited number of courier partners that aggregators contract with, your choices for the same would also be limited and, in the long run, your puzzle could end up looking more like a Picasso painting. Wonderful aesthetically but not ideal for a business model.
Also with an aggregator, the entire relationship between you and a courier partner will lack depth. If the relationship between the aggregator and the carrier becomes strained, your business will likely suffer the consequences of the same.
Even for day-to-day communications, your business will be heavily dependent on the aggregator to communicate with the courier partners.
While this system may work (sometimes!) in the case of arranged marriages, from the business perspective it can be the ultimate downer. Having an aggregator over a long period can hamper your ability to create a truly strong relationship with a courier partner.
This relationship could mean the difference between stability and success. While maintaining efficiency is important, it is equally important to continue to develop your operations, address major problem areas, and keep reminding your customers why they should always come back to you.
Final Words
To summarise, e-commerce businesses handling between 1000-2000 orders, looking to scale up fulfillment rapidly would benefit from the use of an aggregator. They would enable you to tie up quickly with multiple carriers in different locations, and handle a larger volume of orders.
However, if you’re doing more than 2000 orders a month, have steep volume projections or are in an industry or product category where customer experience and RTO% have become extremely critical, you need to have direct relationships with courier partners.
This enables you to determine and address specific problems areas with each carrier and perfect the shipping process. It can seem perplexing to have to coordinate with multiple courier partners, so platforms like clickpost can help you keep track, monitor and enhance courier performance and customer satisfaction to the max.