Home delivery – in association with HSBC

Home delivery is the business of taking goods directly from the retailer’s warehouse or shop to the consumer’s dwelling. The sector has grown considerably in the last ten years due to the advent of internet shopping through online stores such as Amazon and eBay. The supermarkets, such as Tesco and Sainsbury’s, also have dedicated fleets for delivering food ordered online.

Companies involved in home delivery

It is increasingly difficult to separate home delivery companies from other road transport operators and many logistics firms are now involved in this sector. Indeed it is likely that this sector will see greater consolidation and the dominance of the large players will increase. For regional companies to remain involved, networks may emerge along the lines of the pallet networks allowing each to handle specific postcode areas.

Home delivery companies are closely allied to the parcels companies which emerged after the deregulation of the postal service when Royal Mail lost its 350-year monopoly. Home delivery is now carried out by such companies as Amtrak. Home Delivery Network (HDNL) claims to be the largest dedicated home delivery specialist in the UK, working for over 120 retailers and delivering more than 300,000 parcels and large consignments daily. It services accounts which send more than 500 units a week.

Other significant road transport operations involved in home delivery are:

• Sprint GB
• Nightfreight
• Lane Group (now owned by Wincanton)
• DHL Exel Supply Chain

The technology behind home delivery

Keeping track of parcels, known as track and trace, is a vital part of the home delivery business. As for the pallet networks, a lost consignment risks money and reputation. Companies are increasingly using technologies such as RFID – radio frequency identification devices – to mark and monitor deliveries, although this is still relatively expensive. Most parcels and home delivery firms use bespoke software systems with barcode scanning of consignments.

Challenges for the home delivery sector

Challenges include:

• Urban congestion, which delays deliveries.
• The price pressure which makes it hard for delivery firms to maintain high standards and make a profit. This pressure comes from the retailers and the consumers.
• The increasing demand for timed services – consumers resent staying in all day awaiting deliveries.
• Drivers are customer-facing and so need good consumer service skills.
• Delivering inside homes can cause damage, carries a health and safety risk and can have awkward and narrow spaces.

The future of home delivery

HDNL says Christmas 2007 saw 61% of homes online, mostly with broadband, a fact which led to £10bn of pre-Christmas online sales. As broadband take-up increases, the home delivery sector will grow massively – some pundits say by up to 300%. Although some environmentalists claim that trucks contribute to congestion and pollution and the growth of home delivery will exacerbate this, government reports suggest the opposite. The Department for the Environment, Farming and Rural Affairs (Defra) stated that 40% of urban congestion was caused by consumers going to and from the supermarket – a figure that would be considerably reduced by supermarket home delivery

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