CouriersPlease delivery spike as Australia shuts down
CouriersPlease is experiencing a sudden spike in online ordering. But it comes at a cost as regular business orders plunge.
CEO Mark McGinley isn’t banking on this rise in digital delivery continuing.
McGinley told Inside Franchise Business “The volumes are really strong in some categories. People are buying home gyms and sporting equipment, pet food, toilet paper, home office equipment and alcohol. But it’s temporary.
“The flip side is fashion and other non-essential categories has fallen off and we’re expecting a drop in discretionary spending.”
McGinley said the business has already lost many customers as a result of hospitality and retail closures.
In Sydney CBD deliveries have significantly decreased to just 20 per cent of normal orders. In response, CouriersPlease has diverted their franchisees in the CBD to the nearby Eastern Suburbs where there is a rise in online ordering.
CouriersPlease delivery spike
It’s called the substitution effect, according to Dr Prashan Karunaratne, economist from the Macquarie University Business School.
“COVID-19 has had two impacts on the purchases of consumers: The first is that several Australians are experiencing a reduction in income due to the negative impact that the virus has had on their employment due to a reduction in demand.
“The second consequence of the partial shutdown affects the way consumers achieve their satisfaction in terms of their needs and wants.
“Consumers now foresee a short-term lifestyle change and have a need to find substitutes to achieve their desired level of satisfaction.”
While couriers are making the most of the spike, the franchisor’s focus is on finding new business, and keeping franchisees healthy.
The business has introduced contactless delivery and pick-ups, and couriers observe social distancing measures.
“We’re operationally strong at the moment but as the coronavirus impact spreads it will lead to delays. Things change on a daily basis. Once that surge of buying dissipates, and there’s a new normality, it could impact on franchisees.”
McGinley is focused on spreading the work around existing franchisees and asking couriers to be flexible in their approach, helping out fellow franchisees if necessary.
“If a suburb goes into lockdown, that could potentially severely impact a franchisees’ earnings.
“Safety of our staff, franchisees and customers is our number one priority. From an economic angle, we’re only successful if our franchisees and customers are, so our intention is to support them through this period of uncertainty.”
“We have a safety net already however there’s a limit to how much financial support we can give. The idea is to spread our volumes across existing franchisees. We just don’t know what the volumes will be.”
CouriersPlease is actively looking for new services and markets to support franchisees businesses.
However McGinley said it is hard to plan for future orders because government restrictions are quickly escalating.
“We don’t know what industries the government will deem essential tomorrow. A lot of businesses will close but will try to transition online. We want to be able to support them in any way we can.”