James Chin Moody, founder of Sendle, a delivery company that owns no vans. Photo: Eddie Jim
For six years chiropractor Veli Solyali has built up his business Get Well Bedding, where he designs specialist mattress and pillows for the public to buy.
He was on target to turn over $5 million last financial year when he was besieged with courier problems, which are still ongoing today.
What sole trader or small business has got the time of the day to spend at least half an hour in the post office lining up to send their parcel?
James Chin Moody, Sendle founder.
"The first courier company went bankrupt and the second courier company has been an absolute disaster," Solyali says.
"They have cost me at least $750,000 all up in damaged goods, not delivering, cancelled orders and legal fees. The stress has been so much that doctors think I have had a stroke."
Solyali says that he contracted the courier company to ensure two drivers were always employed but often clients have called saying there was only one driver meaning they had to either help carry the bed or watch it being dragged along the road.
"I was in the warehouse watching the courier company pick up a mattress with a forklift and it went straight through the mattress," Solyali says. "I have personally spoken to the courier company chief executive who denies any liability so it is now with lawyers."
Growing industry
The courier business in Australia is a $4 billion industry but no one seems to get it right and although it comprises almost 15,000 operating businesses, customer and business dissatisfaction is very high.
IBISWorld reports the estimated revenue for the sector for 2015-16 is $4.2 billion, (of which Australia Post takes an estimated $3.2 billion), which is expected to grow at 2.5 per cent per annum until 2021 to reach $4.8 billion.
IBISWorld's report, Courier Pick-up and Delivery Services in Australia released in August 2015, states "given the industry's fragmented nature, its ability to compete with logistics behemoth Australia Post in consumer-to-consumer markets is limited, although potential deregulation of reserved mail markets could benefit couriers over the next five years".
This hasn't stopped a range of new suppliers coming on board with IBISWorld estimating there are 14,953 courier businesses in Australia.
So what is the solution?
The disrupters
While the dominance of Australia Post, which purchased StarTrack Courier in 2012 to help with its delivery service, still has major appeal, newcomers to the courier business are slowly eating away at its market share.
"I co-founded Sendle due to the frustration of trying to find a courier service that would help with my previous business," James Chin Moody says. "I started TuShare back in 2013 as an exchange service between friends to give unwanted items for free.
"The problem was getting the items delivered to each other. Besides Australia Post, there were a few alternatives so I co-founded the business last year to bring the postal service into the 21st century.
"It works with courier services to pick up from your door and deliver around Australia with simple pricing and customised options for pick-up, payment and delivery. This allows small businesses to get on with the business of running a small business."
Sendle, which closed $1.8 million of funding earlier this year, says its turnover "is in the millions" with revenue growing at 40 per cent per month on month.
Industry sources suggest with this kind of funding turnover is likely to be in the $1 to $3 million range.
Although there is plenty of scope for new courier businesses to grow, it seems as though the average consumer and business still think that the post office is the best way to deliver parcels.
A survey conducted by the NRMA of its business customers last month found 85 per cent still send parcels regularly and of the 78 per cent who send 10 parcels or more a month, 73 per cent of those line up at the post office to do so.
"What sole trader or small business has got the time of the day to spend at least half an hour in the post office lining up to send their parcel?" Chin Moody asks.
"It is not time or cost-efficient."
Chin Moody, who was previously an executive director at CSIRO and has an engineering background, says his business has signed thousands upon thousands of customers and has a big advantage over his competitors.
"Our real competitive advantage is that we are a logistics company sorting out an e-commerce problem whereas a lot of our competitors are software companies trying to do logistics," he says.
With Christmas looming and the e-marketer website predicting $10 billion of e-commerce sales in Australia in 2015, a lot of small businesses, especially in the area of retail, will be looking to start couriering gifts and there are plenty of options out there.
Another new entrant is courier company Shippit, which launched this year, claiming to deliver within a four-hour time frame to your preferred destination with tracking.
"Business is going well and while we haven't reached $1 million in turnover yet, we have signed just over 200 clients including Harvey Norman," co-founder Rob Hango-Zada says.
Common complaints
Time of delivery is crucial and the most common complaint. A survey conducted by consumer research and ratings company Canstar Blue in September this year found 28 per cent of small business owners have couriered an item that was not delivered on time, while 10 per cent describe the service they most recently used as unreliable.
The survey, of more than 400 small business owners who have used a courier service, found speed of delivery to be the greatest driver of customer satisfaction, closely followed by complaints handling.
Of course Australia Post, which copped the brunt of criticism from sole traders right through to large businesses for often leaving a note in the letterbox when the occupier was actually in their home or business office, has not rested on its laurels.
The postal giant has formed a strategic relationship with Temando, a leading shipping and fulfilment software platform for commerce, to improve their delivery service.
Temando will connect with any retail store, which will allow retailers to connect with Australia Post and StarTrack services within their chosen e-commerce platforms.
"Our technology will help Australia Post deliver on its promise to make it easier for businesses to sell online and for customers to receive, collect and return their online purchases," says Carl Hartmann, chief executive and co-founder of Temando.
Each year Australia Post and StarTrack deliver to 11.4 million addresses across the country but many Australians are looking for an alternative and new entrants are entering the market thick and fast.
