What are the Cons of Using an eCommerce Aggregator?
While they have played a major role in paving the road for online merchants to trudge onward, it’s a very bumpy road that has been paved. While courier aggregators provide a quick solution for meeting scaled-up order volumes, long-term use of them can be detrimental to customer experience and overall supply chain control. That’s why most e-commerce companies opt for direct carrier integrations after reaching order volumes of 3000-5000 a month.
1. Poor Customer Experience
The first priority of any online business is to keep customers informed and satisfied with not only the product but the entire delivery process. Customers have been known to experience extreme buyer’s remorse when delivery is delayed, or when they are unable to effectively track their order.
At the end of the day, even the most patient customer would lose their cool if they repeatedly received no answers to simple questions like “Where is my order?”.
1.1) Delayed tracking updates
While aggregators do have integrations in place that allow them to take information from courier partner websites, they aren’t equipped to notice when updates are being delayed. Without intimation from you, an logistics or shipping aggregator wouldn’t likely be aware of an order status that has remained static for a prolonged period.
1.2) Slow communication
Once you inform the aggregator that a customer has raised a WISMO (where-is-my-order) complaint against an order with a particular courier company, a new relay race is entered. This may well be one of the slowest relay races in existence.
The eCommerce aggregator will then reach out to the carrier, and wait patiently for their response - while your customer grows increasingly impatient. It can take up to 2-3 days for couriers to respond to aggregators and for aggregators to accordingly update you.
1.3) Increased Delivery Exceptions
One very important part of reducing delivery exceptions is knowing why delivery failed in the first place. A slow process like the one mentioned above can result in buyer’s remorse and a high likelihood of cancellation.
In case an initial delivery attempt fails, information can be collected from the customer to ensure successful delivery in the next attempt. However, delayed communications can hinder this process immensely.
2. Limited Supply Chain Control
At the end of the day, you are answerable to your customers for any delayed or unsuccessful deliveries or other difficulties that arise in the fulfillment process. But with an aggregator, your control over the supply chain reduces.
This consequently reduces your opportunities to make improvements to the system and gives you minimal control over customer experience. Top-rated eCommerce shipping aggregators also typically follow predetermined processes that limit the power they have with respect to their own operations.
2.1) No Direct Access to Courier Partners
Typically, you’re unlikely to be constantly watching the status of each and every order. So when the status of an order is not updated, customers will reach out to you with queries and you can confirm the status with the respective courier partner.
However, when using an aggregator, you are provided no avenue for directly contacting the courier companies for eCommerce that are handling your orders.
2.2) Limited Scope For Improvement Initiatives
Now when you can’t even speak to your courier partners, it makes it exceptionally difficult to make suggestions on how to deal with recurring issues. However, with a middleman handling all communications, such collaborations become impossible.
2.3) Heavy Reliance on Aggregator
It can sometimes feel like a blessing not to have to monitor each and every stage of the delivery process. However, the result is that the aggregator maintains full control over shipping rates, shipment tracking, and carrier communications.
So the longer you wait to take back the wheel, the more reliant you will be on an aggregator to operate.
3. Low Carrier Performance Visibility
How your courier partners are performing is a huge part of building brand loyalty and streamlining the service you provide. Repeated delivery failures or high RTO% can impact your bottom line.
Addressing specific causes for concern is vital to improving functionality. With aggregators, the scope for monitoring the performance of courier partners is limited. And a working relationship with courier partners is required to fix systemic problems.
3.1) Limited Growth of Carrier Relationships
Few relationships in this world can survive without communication and your relationship with a courier partner is no different. When every complaint, query or concern has to first go through the aggregator to reach a carrier, the final message conveyed can be similar to a game of Chinese whisper.
E-commerce businesses have very little opportunity to build and grow alongside their partnered courier companies and therefore maintain very little room for improvement
3.2) Limited Monitoring Capabilities
There are numerous important aspects to carrier performance that need to be regularly monitored, analyzed and addressed.
These include metrics such as RTO% in delivery orders, number of delivery exceptions, number of successful/unsuccessful deliveries following reattempts, causes for delivery failures, customer feedback and many others.
However, with aggregators, few of these parameters are tracked regularly and without a carrier relationship, there is no scope to track them in the future.
4. Limited Flexibility and Scalability
It’s important to stay ahead of market trends and that goes doubly so for e-commerce, where customer satisfaction is so heavily linked to delivery services. Accordingly, you would want to be able to expand the reach of your courier partners, optimize their delivery mechanisms, and make use of specialized services like NDR management, Quality Checks, product insurance and many others. These specializations rarely come under the purview of an aggregator.
4.1) Limited Access to Niche Services
City A is a metro city with customers that frequently demand same-day and next-day deliveries. You also receive a high volume of orders from City B, a Tier 2 city, located in a region that isn’t typically serviceable. This requires you to have access to 2 courier partners, 1 that can provide SDD and NDD to City A, and another that maintains serviceability to City B.
This may seem like an easy task, but aggregators typically aren’t equipped to negotiate such specific terms and requirements with courier partners. In fact, many niche services like these are specifically provided by fringe carriers that prefer to operate independently.
4.2) Hidden Costs
While aggregators offer seemingly simple shipping rates, they maintain all power to negotiate with the courier partner. This also means that hidden charges and fees can be levied on you at a later date, as per the requirements of both the courier partners and the aggregator.
4.3) These costs can include:
Fuel surcharges, COD handling, NDR management, returns labor costs, handling fees, packaging charges, security or insurance, restocking fee, reverse logistics costs, government or customs fees, value-added taxes, later delivery penalties, invoice errors, profit margin/broker fee, increased rates.
5. High RTO%
One of the biggest problems faced by all e-commerce companies is a high RTO percentage. Once a delivery exception occurs, multiple attempts can be made to ensure the order is delivered successfully. However, time is of the essence in these cases to avoid bumping up your RTO%.
5.1) Inefficient Courier Selection
An aggregator's primary concern is to keep their costs low and your operations moving. When they select courier partners to tie up with, it is usually on the basis of cost, and not overall performance. So a carrier that offers lower rates is more likely to be selected than ones with low RTO numbers.
5.2) Delayed Carrier Communications
When you get wind of an NDR, the reaction has to be quick. First, you reach out to the customer to understand what happened. You would then find out another time to complete the delivery and get any corrected information as needed.
The next step would ideally be to pass the message on to the courier partner in question. However, with an aggregator, the message must first go to the middleman before being conveyed to the courier partner.
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