Big interview: Addison Lee on delivery logistics

Moving people and parcels is an incredibly emotional business, Catherine Faiers, chief operating officer at 40-year-old London taxi company, Addison Lee, tells Essential Retail.

"Think about the missions we're serving: we're taking people to an airport to catch a plane, or we're taking them to a really important business meeting or to the theatre on a Saturday night – that's why they're taking a car and not the tube. Because it's probably the most important event of their day, week, or month," she explains.

"And if something goes wrong – equally with our deliveries which are valuable or time sensitive items – if they don't arrive on time, or if the customer can't find the driver, it's understandably hugely emotional for the person at the receiving end of that."

Thankfully, Faiers says Addison Lee rarely disappoints the 10 million passenger and one million parcel customers it serves each year. "But for every one customer we let down, the ramifications for customer lifetime value and loyalty, in our sector, are much more difficult than they are in many other sectors."

Sub one-hour delivery

And as the trend for faster and faster delivery continues to increase in the industry, logistics companies need to recognise the emotional attachment to a parcel in a similar way as taxi companies understand the importance of delivering a customer at the airport in time for their flight.

But this delivery trend is not new for Addison Lee which has been delivering parcels for the last 25 years. "Our heritage is we would be delivering contracts for an investment bank, or very time sensitive legal documents," she says. "That's where our delivery business came from and why we recruited motorbike riders around the City."

Fraiers says it's only been in the last few years that Addison Lee has seen a real demand from retailers for this speedy delivery service – especially in luxury where if a customer spends £1,000 on a handbag, providing the them with hassle-free delivery of the product is part of the in-store proposition.

"People's expectations are set by the best experience they have. And we all interact in our personal lives and work lives with different technologies – from how we stream music to buying things on Amazon," she explains. "And every industry now has to be conscious and focus on that – but our heritage in passenger cars means we've always dealt with people who have very high expectations."

Business investment

In order to cope with these high expectations Addison Lee built a 24/7 support centre and the ability to track its vehicles. "Applying that to delivery, customers are sometimes quite surprised that you can call them and know exactly where they are and where you can meet them. But for us it seems intuitive that if you treat a parcel like a person you'll end up with a good customer experience."

But Faiers says a passenger customer will never be sat in the same car carrying a package for delivery in its boot. "We never double up passengers and parcels and to deliver a sub one-hour delivery record we typically only ever have one parcel on board."

To ensure efficiency of its 4,500 passenger cars and 500 dedicated courier vans and bikes, Addison Lee analyses the peaks in passenger rides – typically morning rush hour, early-evening commute, followed by a late-night peak. Meanwhile its delivery business is busy predominantly between 9am and 5pm, so it can use its passenger car fleet between those hours to cope with the increase in demand.

Faiers says around 10% of courier jobs are completed by passenger cars, while 98% of the firm's delivery jobs are delivered in under one hour, which it currently only offers in London. "We hope to roll out to other metropolitan areas like New York, Manchester and Hong Kong, but we're never going to build a sub one-hour delivery business in Ipswich," she explains.

Competitive landscape

But in an industry which seems to birth a new logistics player every week, how can this heritage business stay relevant?

"There's no doubt the competitive environment is fundamentally different today than it was 3-4 years ago," admits Faiers. "But we're seeing technology increasingly as a commodity – it was a massive enabler back in the early 2000s, but more recently, everyone has an app."

She describes how Addison Lee rebranded a year ago and reset its mission as a business to be 'at your service'.

"We think more and more in a world where customers have far more choice than they've ever had, differentiating through service is really, really important," she says. "So we have invested a lot in the last 12 months into the customer service team, live chat on the courier side, customer satisfaction surveys, rate my driver in real time – all these extra touchpoints we're gathering data to try and learn and improve our product, because differentiation will come through the product and the service wrapper you put around the product that you're delivering."

Addison Lee is in the process of integrating with Metapack and it also works closely with Shutl and other similar providers to deliver on its sub one-hour promise.

"But it's interesting as the industry evolves very quickly, we're trying to navigate our way through who is a really positive distribution partner for us, and who is a potential competitor," she explains. "And sometimes the line is very fine – are they owning the customer relationship and are they customers who we could win ourselves?"