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UK Business to Business Parcels: Market Insight 2015

  • August 2015
  • -
  • Apex Insight
  • -
  • 33 pages

What does the report contain?

This report focuses on the UK business-to-business parcels sector

It provides estimates of – the size of the segment, – its rate of growth – the B2B revenues of the main carriers serving the segment It explores what factors drive business to business parcels growth and the extent to which GDP is likely to be a reliable proxy.

The report provides qualitative findings from a series of in-depth interviews which we carried out with a sample of 23 business-to-business parcels customers – The interviews were carried out during August 2015. – Interviewees were randomly selected from across a range of sectors – Interviews were conducted by telephone and generally lasted from 25-45 minutes.

The interviews explored the following areas in detail: – Buying behaviour – how to do customers go about selecting their parcels carriers? – Sole and multiple suppliers – what do customers do and what are their reasons? – Satisfaction with carrier performance – how well, and in what areas are carriers meeting customer expectations, where are they falling short, what are the priorities for improvements, and which ones would customers pay extra for? – Volume trends – how have customers’ volumes changed, to what extent is this a function of their own production volumes vs other factors such as changes in supply chain organisation, and what do they expect to happen in future? – Pricing trends – what do customers actually pay for the services they receive, how have they changed in the past and what do they expect in future? – Switching behaviour – how often do customers review their use of carriers, do they switch regularly and what is most likely to trigger a switch? The report contains our conclusions from the work, supported and illustrated by evidence from customers’ comments.

Why is it important?

Business-to-business (B2B) parcels is has declined from being the core focus of most of the leading parcels carriers as a result of the e-commerce revolution.

– This has seen business-to-consumer (B2C) parcels grow dramatically, driven by internet retail.

– As B2C has become the main priority for most carriers, its needs have increasingly driven carrier innovation and new service developments. However, B2B is still very important to the parcels industry.

– It still accounts for a substantial share of the market – we believe around 35%.

– Its range of different requirements and highly diversified and fragmented customer base give it greater stability and, potentially, more attractive pricing than the large B2C accounts.

– And it offers the thing most critical to the economics of parcels networks – the potential for consolidation at both the points of collection and delivery. Nearly all of the leading UK carriers serve the B2B segment but their degree of focus on it varies.

– For some, such as FedEx and TNT, providing a quality service to B2B customers remains the main priority. – Others, such as DPD, UK Mail and Parcelforce are mainly B2C carriers who also serve B2B customers.

– A third group – in particular, Hermes – has always had B2C as the main focus and has therefore benefitted greatly from the movement of the market in that direction.

However, compared to B2C, there is limited information available on what drives the sector, for example:

– What factors are influencing changes in volumes and hence growth of the segment: is the segment likely to grow at, above or below the rate of GDP – and why? – Are customers looking for new service features either of the type being introduced for B2C customers, or otherwise?

– How satisfied are they with the service they receive? – Are there any insights on the performance of specific carriers in the B2B segment? This report aims to explore what is happening in the B2B segment now and how it might develop in the future.

Who is it intended for?

It is intended for:
– Parcels carriers who are active in the B2B segment
– Investors in these businesses
– Market regulators and policymakers
– Banks, analysts, consultants and other parties with interests in the sector
– Customers of business-to-business parcels services

Table Of Contents

UK Business to Business Parcels: Market Insight 2015
Introduction 2 Contents 7 List of figures 8 Interview sample 9 UK B2B carriers 10 B2B segment size and growth 12 Insights from interviews 14 - Buying behaviour - Use of multiple suppliers - Satisfaction - Service features - Volume trends - Pricing trends - Switching behaviour List of figures 1. Interviewee sample by industry 2. Which carriers do you use? 3. UK business-to-business parcel carriers 4. How many suppliers do you use? 5. What are the reasons for your choice? 6. Changes in number of carriers used 7. How happy are you with your current arrangements on a scale of 1-5? 8. Change in service quality 9. Top priorities for future improvements (unprompted) 10. How important for you is the carrier's ability to give you a one-stop-shop for all your parcels needs (including international + domestic)? 11. How important for you is the carrier's ability to cope with large / heavy items? 12. How important for you are value-added delivery services such as providing customers with notification messages or delivery windows? 13. How important are weekend deliveries or collections? 14. How important are sameday deliveries? 15. Would you except to pay more for services? 16. Volume trends: parcels you send [% change over 1 year] 17. What has caused changes in your parcels volume? 18. How will your parcels volume change in the next year? [%] 19. Prices paid for specific parcels services 20. How have prices for parcels services changed in the last year? [%] 21. How do you expect them to change in the future? [%] 22. Number of alternatives? 23. How often do you review your parcels carriers? / years 24. Have you ever stopped using a carrier? 25. How long since last switch? / years 26. What was the reason for switching? -

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