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The End of Free Delivery


4/17/2008
By Jon S. Owens

With rising fuel prices, the industry has an opportunity to end the practice of delivering parts for free. But will we take advantage of it?
 

While having an informal conversation with a few WDs recently, the topic of gas prices came up. That’s not unusual, as everyone in the industry is attempting to speculate how the price of gas will impact vehicle owners’ wallets, and subsequently their decisions on whether or not they’ll be able to afford needed repairs and/or have routine maintenance done to their vehicles. But, what was unusual about this conversation is that it centered on the impact gas prices were having on WD and store operation delivery services, and how it might just be cheaper to have customers come and pick up their parts for free, rather than absorb the cost of delivering those same parts! That is radical rhetoric of course, and lots of laughs followed. But, there’s a hint of truth in that scenario, if not for all parts, at least for those under $5.

So, what impact is the price of gas having on your ability to profitably deliver parts? Have you calculated it? The harder question is, have you passed that cost on, in some way, to the customers that you provide this service for? Most likely, you haven’t. Thus, the price of gas has the potential to negatively impact your business in more ways than one, and that’s not good for business. Of course, the common excuse for not charging for delivery service, or even a temporary surcharge for delivery service to help offset your increased fuel costs, will be, “I can’t do it because my customers won’t accept it, and my competition will take that business from me.” But, I believe that, as a result of the high price of gas, our industry is staring at a very unique opportunity right now to reverse a negative (from a store operations standpoint) customer expectation and put an end to “free” delivery service.

It’s been said that we are the only service industry that doesn’t charge for delivery of products. I haven’t researched that to the ‘enth degree, but I know from a consumer standpoint that it’s very rare to have anything delivered to my home at no charge. If delivery is “free,” it’s usually part of a package deal, or offered as some incentive to buy. In this way, consumers are made keenly aware that there’s a price to pay for delivery service. We’re left with the impression that, by having it delivered at no charge we’ve received a very nice benefit. That’s significantly different than expecting to have something delivered for free, and not appreciating it because it’s a common practice. As a consumer, I don’t expect to have home delivery of anything – from furniture to pizza – at no charge. I assume there is some fee involved with the service.

I may be able to negotiate the fee away, but I know there is a fee associated with the delivery service nonetheless. Some of you may already be incorporating these practices into your delivery service process (i.e., showing delivery charges but not invoicing them, or offering the service for free if a minimum order requirement is met, or raising the price of your products to compensate for the cost of delivery). If so, kudos to you.

However, the critical difference between what we do as an industry and what other industries do is, we’ve set the precedent with our customers to expect free delivery. That’s a bad precedent because it’s on top of other costly and time-consuming services like identifying the correct, hard-to-find, application specific, critical parts and getting them delivered within 30 minutes or less. We’ve established the customer’s expectations, and they are high! Once precedents are set, there are rarely any opportunities to reverse them. Yet, with the cost of gas so high, we have before us just such an opportunity. Will we seize it? Or, will we some day find ourselves closing up shop, and blaming it on the cost of fuel?













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