What’s driving the courier market and who’s cashing in?

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Inside Franchise Business: Spotlight on couriersToday the marketplace is not only diverse, it’s been upended by a revolution in customer expectation - driven by a demand for convenience, speed and flexibility.

Global behemoth Amazon has launched its online marketplace here in Australia as retail increasingly finds value in digital trade. And while Foodora is leaving Australia, Deliveroo Uber Eats and Menulog continue to disrupt the food delivery scene.

On the courier front, two major businesses - Toll Holdings, and DHL - hold almost a quarter of the market. But that leaves 75 per cent of pick-ups and deliveries to be handled by smaller firms. With a low barrier to entry the courier segment is highly competitive. That’s where franchised networks can make a difference: providing the investment into essential technology that keeps the brand ahead of the pack.

Check out these statistics from the IBISWorld report Courier Pick-up and Delivery Services in Australia, from March 2018.

Inside Franchise Business: Courier industry results Australia 2018

Inside Franchise Business: Australian couriers products and services segmentation 2017-28

Inside Franchise Business: Australian courier major market segmentation 2017-18

The market

Online shopping has been the big influence on the courier pick-up and delivery industry as the focus on smaller parcel delivery from wholesaler/retailer to customer shifts the business away from mining and manufacture transportation.

As online transactions increased between businesses and between consumers and business, the markets for industry services have expanded.

Report author Hayley Munro-Smith, writes “The growing diversity of major markets is likely to insulate the industry from future shifts in demand, helping to limit revenue volatility to a degree. Over the next five years, revenue volatility is expected to decrease, as online shopping becomes more commonplace and as the industry continues to expand into new markets.”

IBISWorld points out that significant investment in automated systems that provide clients with up to date information about their consignments is essential.

“To grow to a large interstate or international business, good freight forwarding skills or access to international transport networks are required. Larger industry participants are also required to have a large customer base, substantial investments (diversification) and volumes to reduce risk,” the report reads.

Looking at 10 year growth from 2012-13 to 2022-23, IBISWorld predicts an annualised contribution to the economy of 2.8%, that compares favourably with an annualised GDP growth of 2.5%. The industry is growing faster than the overall economy and more operators are expected to join the sector over this decade.

In the logistics and delivery market

Australia Post owns StarTrack Express and has recently invested in a parcel processing machine at its Strathfield, Sydney facility as part of a $300 million national investment over the next 18 months. The new equipment will process 10,500 parcels an hour, significantly increasing parcel processing numbers for New South Wales residents.

Australia Post group chief operating officer, Bob Black, said the investment is part of the company’s ongoing efforts to meet continuing parcel growth, with Australians spending $21.3 billion on goods online last year, up 18.7 per cent on 2016.

Fastway Couriers is now part of the global Amarex logistics business which has provided the Australia and New Zealand operations with scale and innovation investment. Andrew McKenna, GM franchise and business development, says “Our customers and our franchisees are expecting us to innovate. Our franchisees are excited about new ideas.”

CouriersPlease’ Jessica Ip, head of commercial and transformation at franchise business, says customer concerns have all been about same-day, after-hours and weekend delivery.

"A few businesses are starting to offer these services in some capital cities and Amazon is working on bringing its Prime services here, but the key point is that it is for a price. Whether these services are scalable, so that retailers and consumers are okay with the price points, is the question."

In shipping software business Temando’s most recent report, an equal 68 per cent of Australian online shoppers revealed they want express (one to three days) delivery and standard (five to seven days) delivery, compared with 41 per cent of shoppers that want same-day delivery and 37 per cent that want hyper-local delivery.

Sarah Stowe

Sarah Stowe heads up the editorial in the Inside Franchise Business group at Octomedia. Sarah is a hands-on editor who has worked in consumer and B2B titles in UK and Australia and she has been editor of the View More...
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