DIY logistics is more expensive than you think
SMEs trying to cut cost by managing their own delivery processes could be jeopardizing their growth.
Engaging a logistics provider can reduce the time and effort spent managing bad deliveries and smoothening customs processes, thus improving customer satisfaction.
Some Asian SMEs, like Malaysia’s Creativize, have boosted sales by up to 200% after employing best-in-class express services to support their international shipments.
How do you run your business not just profitably, but in a sustainable and cost-effective way? Most SME owners try to do so by taking as many aspects of their business as possible into their own hands. It is not uncommon to find business owners juggling their company’s finance, marketing or logistics operations, as these areas usually incur high levels of expense. If business owners think they can lower costs by doing it all by themselves, why shouldn’t they?
“Striving to handle all aspects of trade may render SMEs master of none,” says Christopher Ong, Managing Director, DHL Express Malaysia & Brunei. “As their business grows, owners may struggle to find the time to cater to surges of unpredictable demand especially when shipping overseas, potentially compromising the quality of their parcel deliveries in the process. And every mistake puts current and future sales at risk: botched or missing orders cause 38% of customers to never buy from the business again.”
Delivering for the long-term
Business owners adopting a do-it-yourself approach to logistics may also find themselves biting off more than they can chew. Joachim Sebastian, founder of Creativize, was one of them. When the Malaysia-based sticker and decal business started offering their range of products online, Joachim experienced first-hand the mounting complexities of shipping overseas.
“Our orders kept coming from all sorts of different places, even obscure areas like Madagascar and Alaska, which created huge challenges for us in handling the various customs requirements and regulations, both in Malaysia and of each destination,” says Sebastian, whose customers include both casual and professional motorcyclists looking to add extra zest to their bikes with Creativize’s decals. “On average, two out of 10 deliveries we sent out weren’t meeting customs requirements putting additional burden on us to handle returns even as we dealt with increasingly displeased customers.”
Realizing that he could only grow the business once he streamlined the delivery process, Sebastian decided to take the leap and partner with DHL Express to handle his deliveries. After doing so, the rate of failed deliveries fell to 5%, which in turn created happier customers, and more sales. Soon after DHL Express came on board, Creativize’s orders quadrupled from 15 to 60 a day on average, leading to a 200% year-on-year jump in its total sales in 2016. To date, Creativize has fielded more than 12,000 orders from around the world, earning Sebastian’s business a reputation amongst motorcyclists worldwide for high-quality decals that go beyond more generic, less durable offerings.
“Logistics isn’t a ‘fire and forget’ part of an SME’s business; the need to manage import-export licenses, track customs documentation, calculate duties and taxes and understand customs procedures often requires a large amount of time and resource to ensure these are done well,” says Ong. “While partnering with a premium logistics partner to courier orders may require business owners to reallocate finances at the start, the benefits of doing so will multiply significantly as time goes on.”
Ensure you have the right partners
Of course, not all SME business owners face the same problems as Creativize. Some may struggle to fulfill on-demand deliveries or process returns. The primary point of consideration for Asian SMEs when shopping for logistics is to find a partner that can support rising order volumes, with a range of delivery options, such as parcel tracking and customs services, that’s needed to seal the deal with picky consumers.
“We chose to partner with DHL because they were able to scale their solutions to cater to Creativize’s future growth plans. Access to their extensive global delivery network and other services such as customer support, managed customs clearance, and delivery options to a variety of drop-off points and times, means that we can focus on keeping the quality of our products high and in line with what the motorcycling community wants,” says Sebastian. “These services aren’t just nice-to-haves: customers expect them from online businesses. If you don’t keep up with those demands, your hopes of surviving, let alone growing, are slim indeed.”
Logistics isn’t a ‘fire and forget’ part of an SME’s business.
It often requires a large amount of time and resource to ensure it’s being done well.
Sebastian’s next expansionary push – into decorative wall stickers for homes – will see Creativize tackle a far larger group of consumers than the niche markets it has succeeded in so far. However, the business’ strong customer loyalty and scalable express services have given Sebastian the confidence to make the leap into mass-market sales, without fear of his supply chain crumbling under the added pressure.
“We work closely with thousands of SMEs like Creativize to tailor our approach based on their needs, but one thing remains constant amongst with almost every small business – a desire to grow,” says Ong. “To do so, they need not only a global logistics network on tap for their orders, but also an expertise in entering new markets and insight into how they can best meet the unique needs of those markets. If you’re running your own SME, don’t feel like you have to do it alone; the right partners can help you expand well beyond what’s possible with a DIY approach to business and logistics.”