In a crowded last-mile delivery market, dominated by a single major player, it might seem counterintuitive to launch a new entrant.
In this episode, Amie speaks to Mark McGinley, CEO of Parca. Mark has over 20 years experience in last mile and e-commerce logistics, a large portion of which was spent at CouriersPlease, including six years as CEO. He's now on a very different journey as co-founder of new delivery company Parca dedicated to transporting big and bulky items.
In a crowded last-mile delivery market, dominated by a single major player, it might seem counterintuitive to launch a new entrant.
In this episode, Amie speaks to Mark McGinley, CEO of Parca. Mark has over 20 years experience in last mile and e-commerce logistics, a large portion of which was spent at CouriersPlease, including six years as CEO. He's now on a very different journey as co-founder of new delivery company Parca dedicated to transporting big and bulky items.
Amie Larter:
Coming up on this episode of Retail Untangled.
Mark McGinley:
Your whole business is reflected on .00001% of your activities. That's your reputation. In fact, the delivery courier might be the only person that a consumer ever interacts personally with the brand. If you do want it quick and you want it delivered to your home, you should pay for it. I keep coming back to Amazon because that's who a lot of these retailers are competing against and they want that Amazon experience.
Amie Larter:
My name is Amie Larter and I'm the host of Retail Untangled. This is the podcast where we unravel the complex world of retail by providing business hacks and insights that you won't find anywhere else. In each episode, we'll bring you stories straight from the retail coalface, sharing the latest innovation and solutions, and uncovering the secrets to success in this rapidly evolving industry. We speak to industry leaders and experts who share their insights and experience. Whether you're a seasoned retailer or just starting out, Retail Untangled is your go-to source for the latest thinking, ideas and strategies that'll help you stay ahead of the game.
Today we speak to Mark McGinley, CEO of Parca. Mark has over 20 years experience in last mile and e-commerce logistics, a large portion of which was spent at CouriersPlease, including six years as CEO. He's now on a very different journey as co-founder of new delivery company Parca dedicated to transporting big and bulky items. Mark, I think between yourself and co-founder, Hoy Yen Hooper who's worked at NZ Post, DHL and CouriersPlease, you have most likely been responsible for the delivery of many of our parcels and worked with most retailers who we know and love today. I'm keen to understand having navigated the complex, ultra competitive logistics landscape, how does Australia compare to the rest of the world?
Mark McGinley:
I think in Australia, it's fair to say, we're a wee bit behind, certainly in my space in logistics compared to UK, Europe and US as well. I think we're a bit behind those markets.
Amie Larter:
Why?
Mark McGinley:
Well, like Europe for example, a lot smaller, so you can get your parcels a lot quicker in Europe. They're way ahead on sustainability. You look smart cities, they've invested in smart cities, they've invested in EV infrastructure. You look at London for example, they've got diesel emission targets. They're charging you to go into the city. So there's an incentive and they've given incentives to buy electric vehicles for example. US, Amazon is-
Amie Larter:
The Amazon factor.
Mark McGinley:
Well, the Amazon factor, Amazon is the arguably the best logistics company on the planet, bar none. They've set the bar so high, not just for us as carriers, but for retailers to match that delivery experience. Consumers have seen the Amazon experience, fast and free, and that causes a lot of issues for carriers and retailers.
Amie Larter:
Expectation.
Mark McGinley:
Expectations. I was at a conference a few years ago when the guy who started John Lewis online in the UK and John Lewis at that time was phenomenally successful online. It's maybe 50% of their sales. This was been five years ago were online pre-COVID and Meyer at that time might've been 3% online. So this guy was a real guru and he said when he launched John Lewis, their average delivery time in London might've been 15 days or they might do a thousand parcels in 15 days. They were now doing a thousand parcels a minute. That's how much it had changed.
Consumers would've expected a delivery in 15 days through a catalogue order, maybe Argos or companies like that at that time, and then sort of moved on. Dell was one of the first that I've come across in Australia. Dell computers was all home deliveries at that time. And then obviously others have come on since. eBay is a huge player in the Australian market. I have seen a massive transformation over the last 20 years in this space and that's what keeps a lot of people in logistics because it's never a dull moment. There's always new technology. There's growth. I don't think we're tip of the iceberg as far as B2C growth.
Amie Larter:
Pandemic.
Mark McGinley:
I was CouriersPlease for 18 years and we grew about five years worth in six months, which was incredible and it was nothing that we did. Every cloud has a silver lining. But it was nothing that we did to get the growth, but we had to manage that growth. We opened something like eight facilities, small micro fulfilment centres. We hired 300 extra franchisees. And it wasn't just us, every logistics company was doing the same. Because it was one thing getting those volumes, but it was another thing actually delivering them, usually at that time.
Amie Larter:
I could not imagine just the amount in terms of quantity growth, but also expectation because everyone was stuck at home. They wanted their parcels yesterday.
Mark McGinley:
Well, for a short period, in a very short period, there was a bit of tolerance. We were one of the first and most people did, we went to contactless delivery, so ATL was the default because we didn't want to interact with anyone to get signatures and stuff like that. That became acceptable overnight. Whereas previous retailers were demanding, oh, you must get a signature, you must get proof of delivery. So that was great for carriers that were able to do ATL as a default, authority to leave.
Consumers understood the pressures of logistics at that time. And if you remember, certainly in Victoria, we have facilities in Victoria, the Victorian government wouldn't allow us to hire more people to do deliveries. Very counterintuitive. They said, no, you had a thousand employees before COVID and you're not allowed to hire more because they didn't want more people making journeys. So we had to cope with the people we had at that time. It was extremely difficult and yeah, people were forgiving. They weren't forgiving before and they surely hadn't been forgiven since.
Amie Larter:
And they're not now, no.
Mark McGinley:
Very demanding. Social media... CouriersPlease, I remember would've delivered 60 million parcels over a period of time and we had 2000 reviews on product review or something like that. And nobody gives you a thanks for delivering a parcel, right? No one's going to go to social media, oh, I got a parcel. But they only jump on when they've got a bad experience. But your whole business is reflected on .00001% of your activities, but that's your reputation and just something you have to live with.
Consumers have a loud voice in this space. Consumers will go to the retailers and say, I don't want to use Australia Post or CouriersPlease or RMX ever again because I had a bad delivery experience. And you get enough of those complaints, the retailer will be forced to look for other alternatives. So consumers have a massive voice in this space. In the old days, they used to ring call centres, now there's social media and they get a response. As a CEO of CP, I responded directly or indirectly at every single social media post. You have to because if you don't, it leads to more and more and more.
Amie Larter:
And it must be hard when it's only people that are mad or angry. If I look at my own behaviours, I'm probably most vocal, like most people, when you haven't got something you want or you're not impressed.
Mark McGinley:
If you order a dress or a handbag, laptop or something, it's a thousand dollars purchase. For the delivery company, it could be a $5 delivery and for the driver it could be a $2 delivery. It's a $5 experience, but in your head it's a $1000 experience. And there's a bit of disconnect there as well. We as carriers are representing those brands and we take that very seriously.
You could have the best website and some of these companies, phenomenal websites, phenomenal checkout experience, multiple ways to pay for freight, all sorts of options, PayPal, Afterpay, credit card, et cetera. But if you get a bad delivery experience, that is what consumers remember about that brand, not the nice handbag or the nice dress or whatever, it took them four days to get here and it was damaged or whatever. So in fact, the delivery courier might be the only person that a consumer ever interacts personally with the brand. We take that very seriously and that's our challenge is to reflect the quality of your brand with our delivery experience.
Amie Larter:
That's so interesting. And I don't normally think about it in that way to be honest. It's something that they would likely take very seriously too in terms of who they're bringing on board, I suppose, because you are that sort of face sometimes.
Mark McGinley:
We're the face most of the time. You think about it, you buy that $1000 handbag or whatever, and some guy rocks up with a cigarette in his mouth and he's all dirty and the van's a mess and he throws a box at your doorstep, that's the experience of that retailer. And retailers spend so much time and effort to manage that experience and compensate. If you would complain about that, the retailers are then having to applicate you and offer giving you discounts or vouchers and things like that because their brand is the most important thing to them and rightly so.
Amie Larter:
You've sort of had that experience and now you're going into this new journey, which I'm sure is very exciting and putting the experience that you've had there and teamed up with Hoy Yen Hooper, who's also had a lot of experience in logistics, I think with, what was it, was it post DHL?
Mark McGinley:
Yeah, she was Managing Director of DHL E-Commerce worked in startup land as well with Bluethumb, and Sendle, worked at CP for a few years as COO. So she's seen both sides. In fact, I used to have to deal with Hoy Yen at Sendle. She was giving me a hard time, so I got her into the light. So yeah, we've taking all that learning... so we've got 20, 40, it could have been maybe 80 years of experience between the three or four senior managers at Parca but we didn't want to go into the small parcel markets. It's very competitive. The volumes are huge, but the margins are really skinny. And you've got three really good providers in CouriersPlease, RMX, Australia Post. It's very hard as a startup, how would you compete against those companies? You're not going to compete on-
Amie Larter:
I dare say you don't.
Mark McGinley:
You don't. Australia Post have got the national network, they're the national carrier and CP and RMX are competing against... Australia Post is about 80% of the e-commerce market. So we thought that there was a gap in the big and bulky space in logistics, and that has grown massively since COVID. I think I've seen figures, It's about 18% growth year in year in that space. So I'm talking a flat pack furniture, sports equipment. We're delivering trampolines, baby products. There's a lot in that space.
Amie Larter:
So I don't normally necessarily break it up in my mind in terms of the smaller packages versus the big and bulky. How frequently are big and bulky parcels being delivered?
Mark McGinley:
We're currently running a survey at the moment and our survey shows that 33% of people have bought big and bulky in the last six months. So it's a big section in the market. You may not be you ordering every day, but-
Amie Larter:
It's not frequent, but-
Mark McGinley:
Well, it's getting more frequent. And there's big and there's bulk and there's ugly, It's not a simple category. But if you think of the small parcels that CP and Australia Post do, it fits down sortation equipment, sortation belts, it can go in one-tonne vans, it could be done by the gig economy. As a startup, we didn't want to compete with all the startups in the gig economy space. The Sherpa's, Zoom2U's. There's a lot of good companies in that space already, but big and bulky cannot be done through a gig economy. It needs to be done by professionals and vans with the right equipment.
And we find that there's good companies in the space, but there's also capacity in that space. Come back to our survey, we've got 65% of the people we surveyed thought the most important thing was visibility and value for money. So visibility, especially in regional Australia is really challenging. Getting back to consumers, they just want choice and there's a global sort of trend towards faster, faster, faster. Same day, quick commerce, hyper delivery, which in the grocery space, which personally I think is insane, it's 20-minute deliveries and you see all these companies going bust all around the world, but you do need to offer alternatives.
And so my learning over the years has been not everybody wants it quick. And if you do want it quick and you want it delivered to your home, you should pay for it. Free deliveries should be to a locker, a collection point or a deferred service. So do you want it today, whatever it is, $5, $10, or we can give it for free to a collection point within three days? Our research shows that people will take the cheaper option because especially in today's-
Amie Larter:
Particularly now.
Mark McGinley:
No, right? There's a massive cost of living crisis in Australia and globally, and it's really important if you don't need something urgently. But the problem is that what consumers do insist on is consistency and reliability. So okay, I don't need it today, but I definitely need it by Wednesday, for example. And if that doesn't happen, then they get really annoyed. And the other thing is they want to see it come through the stages. And that's a challenge, especially in regional Australia where it might take 10 days to get from Sydney to Outback, WA. Takes six days maybe to get the Perth, and now it has to get all...
Well again, people don't mind that as long as they can see it progressing on its journey and they're kept informed, that's perfectly acceptable. But if they want it next day, you should pay for that. From a sustainability point of view, that makes more sense too, that it allows carriers to aggregate, for example, to get to parcel lockers or to collection point network. We can deliver multiple parcels to a collection point network in one van as opposed to delivering 20 parcels down that street and all the emissions and everything that goes with that and the congestion that goes with that.
So the problem with big and bulky, getting back to that a wee bit slightly, is that the collection point network and parcels are not as attractive for bigger freight. The reason you're ordering a trampoline online is, well, I can't carry it and I'm not going to go down to the post office collection point-
Amie Larter:
Or a local pick up point and pick it up.
Mark McGinley:
Yeah, it's challenging and it won't fit in lockers.
Amie Larter:
Or my car.
Mark McGinley:
Yeah. But that's, as I said, the big and bulk is a niche area. It's growing massively, but the sustainability issue can be solved in other ways for the smaller parcels definitely, but it's much harder for the big and bulky.
Amie Larter:
I'm interested because you kind of pointed out that the smaller, I don't know if we call them regular size parcels, that is highly competitive low margin, and you've got this flip side of big and bulky where it sounds like demand is outweighing supply, so to speak. If you flip that, it says to me that there's probably room for retailers to improve in this space in terms of their offering to customers. What kind of insights do you have for retailers there?
Mark McGinley:
Yeah, look, retailers that I'm talking to at the moment, they're looking for options. So when I'm sitting around the table with them... again, I keep coming back to Amazon because that's who a lot of these retailers are competing against and they want that Amazon experience, but they want to provide options. They want to provide same day as an option, they want to provide click and collect as an option, and they want to provide value for money as an option because a lot of the retailers, without naming any, some of their basket sizes, the spends very low. It could be $20 spend, but it could be a big bulky parcel.
And to get that parcel from Sydney to Perth is not cheap, but can they absorb the freight charges at a $20 basket size? No, they can't. So retailers are always trying to do something smarter with logistics, and that's a whole range of things. You'll see retailers trying to use their store as a fulfilment centre or micro fulfilment centre. So getting back to Perth for example, they'll put stock in Perth in a warehouse. So if you're from Perth, you order it, it's a local delivery. It's not coming from Sydney or Melbourne or Brisbane. It's a local delivery. So that it's cheaper and again, more sustainable as well. So packaging is another big challenge for retailers.
Amie Larter:
Particularly in the big and bulky space?
Mark McGinley:
Well, in general, across the board. There's two different types of packaging. There's sustainable packaging, like packaging that is recyclable or reusable. That's definitely a huge topic at the moment. There's companies out there providing sustainable parcel wrapping and sustainable satchels and recyclable cardboard, and so that's brilliant. But then the other one is from a big and bulky perspective, we delivered trampolines, but five years ago those trampolines would've been maybe in two pieces. So you can imagine delivering that. Now it's in nine pieces. The company we dealt with went away and re-engineered their packaging. So it can be done by a courier and then it's just an assembly. It's the IKEA model really. So when you buy a table and chairs from IKEA, it doesn't come assembled, right? Now, it is a nightmare, don't get me wrong.
Amie Larter:
Me just thinking back to the last time I did that disaster, but I joke.
Mark McGinley:
Oh, I've built a few things IKEA, and they don't look like the brochure, I'll give you a tip, but that's how they're delivered. Makes sense, flat pack. So a courier can deliver IKEA furniture, for example. Whereas if they can't deliver the fully assembled table and chairs. Now there's all the challenges in the market around big and bulky with, I've talked about sofas and much bigger fridges and things like that, that's a different market altogether. That's a two man lift. It's white glove. There's lot of really good companies are doing that. We are focused on, it's ugly enough. It doesn't go down the sortation systems, but it can be delivered by an individual with the right equipment in vans.
Amie Larter:
From big and bulky niche perspective, you're obviously... When did you kick off? In November?
Mark McGinley:
In November, yeah.
Amie Larter:
How's it going?
Mark McGinley:
The response has been literally amazing. In the small parcel space, I say it's hyper-competitive. You could win an account by 5 cents or lose one by 10 cents, and the volumes are huge. But the demands are huge as well. I've just found in this space that people are just looking for another option, whether it's on price, whether it's on service, or whether it's just purely on capacity because come peak time, and in Australia, probably around the world, peak has got really peaky.
These Black Friday sales and the online sales are huge. Some of these companies can sell 20 times what we'd normally sell in those two days. And for logistics companies, it's a nightmare.
Amie Larter:
It is.
Mark McGinley:
But what consumers are doing there, consumers are extremely smart, they won't buy what they wanted to buy in October, they'll just wait, wait.
Amie Larter:
Just wait.
Mark McGinley:
But then it all ramps up, right? So as a logistics company, we'd rather be delivering slow and steady over the months. That's not an option anymore, right?
Amie Larter:
Yeah.
Mark McGinley:
When I first started with logistics, January was dead. There was no freight moving. January, everybody took in holidays, but that's all gone now too because the January online sales as well. That does provide challenges for carriers, these peaks. The biggest challenge we have in logistics at the moment is actually getting people to deliver the freight. There's just a massive shortage of people wanting to casual labour or flex labour, whatever you want want to call it. It's just not available. You just can't ring up and get 30 extra vans because you're busy. They don't exist.
Amie Larter:
Doesn't happen that way, yeah, so interesting. So given that you started in November last year and haven't really gone through peak, I'm assuming you just didn't start with a full setup and clients, what does that look like for you this year?
Mark McGinley:
A lot of the customers we're signing up are peak related. We signed up a Christmas tree company from America, artificial Christmas trees, and they sell thousands of them.
Amie Larter:
I could imagine.
Mark McGinley:
Not in October, but at least 20,000 in November and then nothing in January. The toys, the trampolines, the baby products, flat pack furniture, a lot of the products are peak related.
Amie Larter:
So how does that make you feel?
Mark McGinley:
Nervous.
Amie Larter:
It's going to be a test.
Mark McGinley:
Nervous. Yeah. Look, my biggest mistake at CouriersPlease was the first COVID year that we planned and planned and planned and we put caps on certain customers that don't send us any more than 10,000 a day. But there's one customer we didn't put a cap on and they didn't realise there was going to be so much freight either. So we just got swamped with freight. So lesson learned the hard way with that one that we're only going to take on what we can do, so we're not going to be greedy. We're going to just make sure we can do what we do, especially as a startup.
A startup, people will give us a chance, one chance, and that's what we're doing at the moment. We're running pilots and then they're happy with a pilot and then we move on to the next rollout phase. So that's working really well for us. It allows us to grow slow, give confidence to either our customer or the retailer or the consumer whilst maintaining a quality service. And then as a startup, we just keep building up our infrastructure and leverage of our partners.
So we're partnering with Hi-Trans, who is our major investor and they've got a phenomenal infrastructure around Australia. We leverage off that. That's given us a big lift up that we're not having to build that regional network, which in Australia, as you know is extremely challenging. Like delivering trampolines into regional Australia, it's not easy. I don't know why we're doing it, but anyway, yeah-
Amie Larter:
But you are.
Mark McGinley:
Yes. Look, it was the gap that we see. As I say, there's other companies doing it, but there's definitely space for a company like us.
Amie Larter:
That's exciting. And so they're bringing to the table sort of that regional network, did you say?
Mark McGinley:
Yes.
Amie Larter:
So obviously your unique point of difference when it comes to the big and bulky is that you can service those areas relatively well.
Mark McGinley:
We cover Australia wide.
Amie Larter:
Right.
Mark McGinley:
Like Hi-Trans has been around since 1968. That network is well established. So we're just leveraging off that. They never did residence deliveries, they were always B2B, and we are part of their B2C strategy. So their investment in us was another strength to their bow that they wanted to get into that space. So we are the B2C e-com wing of Hi-Trans, part of the group. So it's a really good fit. Where they've got big bulky trucks, they run their own line haul, got their own facilities, and then that allows us to be agile and grow within the metro areas with our own people.
Amie Larter:
I spoke about sustainability before and I want to tap into that because I know that's something that you are quite passionate about. I think when it comes to balancing the big two cost and sustainability, it is something that retailers are really struggling with. How does this coexist or conflict with the big and bulky niche?
Mark McGinley:
Yeah, look, it is a real challenge for everyone, and I've always been a firm advocate that the logistics industry needs assistance from government. If we start with EVs, for example, electric vehicles, there's no electric vehicle can run from Sydney to Melbourne, for example. They're talking about hydrogen and things like that there. But there's a 250 kilometre limit to a three tonne EV, but there's no infrastructure to support it. There's not. There is in other markets, say London and Europe, but there's not here.
So I could buy an EV in the morning, but where am I going to charge it? It's very challenging. The infrastructure's not there. So that needs to be built. The incentives aren't there to buy an electric vehicle. So you'll see big companies like Australia Post or DHL and others who will transition their fleet over time to electric. But the biggest challenge we found in Australia... at CouriersPlease, we had 900 franchisees so they're all owner operators, independent businessmen. What was I going to say to them? I want you to go out and buy a vehicle that's three times more expensive than the one you're currently used, and it's going to take three to four years maybe before you see a return on that. But we can't pay you anymore and the retailers won't pay anymore and the consumers won't pay anymore.
They all want sustainable options. So that's a real challenge from a EV point of view. But the other challenge is even if we all use electric vehicles, there's also a congestion issue. All the loading zones are full. Doesn't matter if they're electric vehicles are not, there's so many vans on the road. This what was said earlier about collection points and that sort of thing, microfilament centres where we bring the freight to one location and then it can't be done in big and bulky unfortunately, but you can start using cargo bikes and more efficient ways of delivering that very last mile.
And there's other things like route optimization, fleet optimizations, that's what we use. So we use that technology to make sure the vans are efficient in their runs and we have the right number of vans. So the last thing you want to do is send a van with two parcels across Sydney, that's just economically inefficient, but also environmentally inefficient. So that technology is very helpful.
Without some sort of government intervention and subsidies and investment in that infrastructure, it's going to be very challenging. And I suspect knowing what I know about the Australian government is that it won't be an incentive, it'll be more like, if you don't do it, we're going to fine you or have diesel limit phase or coming into the CBD or thing. It's going to be more pain to you not to do it than actually helping you to do it.
Amie Larter:
Which is interesting given the current setup and the lack of infrastructure around EVs, you'd assume that would be far away, but who knows?
Mark McGinley:
In my space, you hear about things like drones and the stuff. Yes, they can deliver small, but there's not going to be drones flying around the CBD of Sydney, there's just not. There is a user case for it. I see that, where medicine and rural areas and things like that, but not industrial scale deliveries.
Amie Larter:
Certainly not in big and bulky anyway.
Mark McGinley:
Definitely not in big and bulky because there'd be cots and prams flying from the sky if that was the case. There are more efficient ways of delivering it and is I think harder in big and bulky, but certainly getting the consumer to... and there's surveys on this like Hub have done these surveys where if you order something online and get it delivered to one of their collection points, you can pick that up with your leisure and most of those journeys you were going to do anyway. So you're not making an extra journey to get your parcel. You're going to the shops, you're going to the chemist, and you're going to pick your parcel up on the way. And there's this sweet spot of, they call it slipper length, like 400 metres from your home, which is quite difficult in an Australian landscape.
Amie Larter:
Given the demand from consumers, retailers, and I'm sure that from a logistics industry perspective, it's there too, how do we get to the next step on that sustainability front given there's a high demand for it, but we're still seen to be stuck in that kind of, it would be a good idea to do a couple of these things, but we are not quite there. What's the next step?
Mark McGinley:
Look, I think pricing is definitely incentivization. So if you're a consumer and you're buying something, there should be a choice of how you want that delivered. As I say, we've talked earlier on around speed, location, but there are companies out there that do sustainable deliveries with EVs, but charge slightly more for it. Because especially the younger generation, Gen Z, they're really passionate about sustainability and all the surveys they say they're prepared to pay.
Amie Larter:
Yeah.
Mark McGinley:
They do. So I think if you can work to give them that choice, then you'll see more companies spring up the way you do in Europe. There's a lot of companies in Europe have sprung up purely on electric vehicles or cargo bikes.
Amie Larter:
It's going to be hard though, if you've got retailers, the competitive nature of retailers, you want to get the sale. So I feel as though from a retail perspective, free shipping or whatever it might be is obviously going to get that across the line. How do we change that?
Mark McGinley:
It's very difficult for the carriers. It really is where you've put no financial incentive to do it. We do have a moral incentive to do it. When I was at CP, we looked at EVs, but again, you're talking about the franchisees, we couldn't afford to subsidise it, and you can't pass that cost on to the consumer. So forget about that, right?
Amie Larter:
Yeah.
Mark McGinley:
What might happen, let's say big companies like Amazon, eventually they may insist that their carriers are all EV, and that might change the dynamic. But I was listening to a podcast the other day with an expert talking about the US. They've already committed to converting 10% of the USPS over the next 10 years, like 10%. That's not a lot.
Amie Larter:
That's not a lot.
Mark McGinley:
Brilliant companies like DHL and DPD in the UK and Europe, they're way ahead of that. I just couldn't understand why it's only 10%. I'm not sure what Australia Post are, but I know they're working towards it. And my old company, Singapore Post, they have just released new EVs. But if you look at these EVs, they're all quite small. They're either cargo bags or small little vans, come back to big and bulky.
Amie Larter:
It's a bit different.
Mark McGinley:
It's a totally different proposition. But look, if it was only big and bulky that wasn't delivered by EVs, well, at least that's something, right?
Amie Larter:
Okay. So from a big and bulky, just going back there, because that's what Parca is about, can you pinpoint any retailers that are doing big and bulky well? Some things that you tap into that, go, okay, retailers can probably hone in on that and improve?
Mark McGinley:
Yeah, look, I go to a lot of conferences and listen to them. And there's ones that do their own white glove services like Winnings Group, I think probably they do. So they'll deliver your fridge and take the old one away and instal it. And that's phenomenal service, but you do have to pay for it. So companies like that do it really well. But [inaudible 00:31:29], Kogan probably an another one that offers that sort of service. And there's a lot of small companies in Australia offering that white glove service; taking, replacing, installing, but that's not the space that we're in. We are in sort of the mass market of big and bulky. Listen to some of the retailers in these panels complaining. Most of them are complaining about regional visibility, regional, don't know where it is, where to go, it's taking 10 days, I don't know where it's. So that's their biggest pain point. In the main cities, it's not a problem, you know where it is.
Amie Larter:
How are you going to solve their biggest pain point?
Mark McGinley:
We've got a longstanding existing network there already. Don't get me wrong, it's not easy.
Amie Larter:
I can imagine.
Mark McGinley:
All our agents sign on glass. So that's a big help. You're getting that footprint.
Amie Larter:
Is it a transparent process?
Mark McGinley:
Yeah, yeah. Oh, yeah.
Amie Larter:
Right.
Mark McGinley:
Yeah, we can expose those tracking events back to whatever system that you use. Most retailers these days are using third party platforms like Shippit, Starshipit, ShipStation, all the ships.
Amie Larter:
All the ships.
Mark McGinley:
All the ships. Ship [Guardrail 00:32:38]. There's a lot of them out there. And I can see why they're successful because they can offer retailers an end-to-end solution. If I walk into a retailer, I can only offer my little narrow part of the puzzle. Whereas these platforms can do all your freight; you're smalls, your dangerous goods, your ugly, your pallets, and they can give you reporting, manage the customers-
Amie Larter:
Brings it all together in one space-
Mark McGinley:
Brings it all together.
Amie Larter:
And allows for a multi-platform approach.
Mark McGinley:
And they dominate the market. So we're working with those sort of companies. Because the good thing with those companies, they'll also give you the freight that you want. Say you're talking to Shippit or [MaxShip 00:33:20] or companies like that, you just tell this is the freight that we want in those areas, then they can look at the data and say, okay, well we'll put you in there as an alternative. And if you're not performing, they'll switch you off. What they want is to offer their customers options and alternatives. So if their retailers aren't happy with a certain leg, oh well, we've got another option here, whether it be us or anyone else. So that's really important is providing that competition, providing an options. You'll succeed if you do a good job and if you don't, you'll struggle.
Amie Larter:
Yeah. So visibility and transparency, anything else they're complaining about in terms of the big and bulky?
Mark McGinley:
Reliability, speed. As I said earlier, some people do want to express, especially in regional, you're not going to get that experience anyway. You're not getting same day in regional Australia, you're not getting next day in regional Australia. They want to see it, and they don't care when it comes to a certain point as long as it's within the guidelines that you give them. Yeah, so we said it'd be there in six days, and I can tell you now, if it's not there in six days, you'll get a phone call on the seventh day. That's just a fact of life. They haven't heard anything in six days. So they're panicking. I've got my kid's birthday party or my daughter's whatever.
Amie Larter:
You're me and you've left it to the last minute, no doubt every time.
Mark McGinley:
Well, you'd be shocked at what people would send through and the timelines. I remember at CouriersPlease, 2GB rang me on a Saturday morning chasing a wedding dress. So the lady was getting married on the Saturday and she ordered this wedding dress on the, say, Wednesday. We picked it up on the Thursday, should've been out on a Friday. And for whatever reason... We didn't know it was a wedding dress, it's just a package for us, right?
Amie Larter:
How dare you?
Mark McGinley:
So okay, Chris Smith rings me or his producer, and he said, "I'm putting you on the line now with Chris Smith live." And I'm, "What the F?" And Chris, "Mark, I know you can help me now, you're the CEO of CouriersPlease, I've got Mary on the line here and she's getting married at 12 o' clock and I know you'll get that wedding dress." And I hung up as quick as I could to try and get this wedding dress. We'll ring you at 12 because we know you'll answer. And then I had to send a guy out to the depot looking around a thousands of parcels to get this parcel. We found it and one of the managers drove it out, bottle of champagne out to Mary, half 11.
But can you imagine if I hadn't have found that because then Chris Smith rings me at 12 and they give me all sorts of accolades and I thought he was going to get stuck into me for making her sweat in the first place, but he didn't, he really thanked me a lot for doing it. But I still have sleepless nights that if we had not found that wedding dress. But again, the point is, surely if you were getting married, would you not drive over to [Lakehart 00:36:23] or wherever it was and pick it up yourself?
Amie Larter:
Yes. And just the timeframes there. Just the timeframes for that.
Mark McGinley:
And by the way, we'd have been charging six bucks for that. So it's not as if it was an express $100 delivery where we're sending a guy over dedicated to pick it up and bring it there. It was just general freight. So that's the challenge of all logistics companies is that sort of stuff.
Amie Larter:
I suppose when you are talking about regional and big and bulky, if the transparency hasn't been there, if the speed hasn't been there, then it's about building trust in that space as well, right? Because it would sort of be untested. No one wants to promise something they can't deliver. They also have to test that you can deliver. And that's probably a little bit of not an education, but an awareness and testing base for you guys.
Mark McGinley:
Well look, 100% every customer we've brought on, we've run a pilot. So we've said to look to them, if you've got a problem area or a problem profile, just give us that area, that bit, that city, that region, and we'll give you some comfort and then they test the hell out of you. They will test you and they track every parcel. And so that's the other thing that's changed in logistics.
Back years ago when we first started, if you were my customer, I'd meet you once every two or three months and we'd review what has happened in the past. So we delivered 95% on time and we work out what we're going to do better. That doesn't happen anymore.
Amie Larter:
It's all real time now.
Mark McGinley:
All real time. And it doesn't matter if it's early or late, the big retailers and most of the e-commerce market, they're chasing real time proactively. It's not that the consumer chasing them, they just want to get ahead of it. So even though you have three days for you to receive that parcel, they'll start ringing us on day one. Where is it? Is it on time? So it's a very heavy resource required to be in this market. See, the other thing about you see in logistics, everything you've read in logistics is about, it's 40% of the total... last mile, let say 40 to 50% of the delivery fee for any parcel.
But the assumption is there's somebody delivering it physically. Somebody has to drive to your location, get out, walk up 10 steps of stairs and deliver to your apartment. They have to pay for that. It's not free. And people deserve to be paid well for what they do. And I've always believed that. So I'll pay whatever it takes to get it done. But the pressure driven by consumer expectations, especially as I said around Amazon, the minute their shipping fees apply, consumer just drops off and goes on to the next website until they get the free shipping. It's just a fact. So then we're working with retailers, how do we-
Amie Larter:
To reset expectation almost?
Mark McGinley:
Well, look, I read a lot of articles coming from US, but even Amazon are now looking at is free shipping sustainable? Look, it's not, but Amazon, they've Goliath, they've got Amazon Web Services, can subsidise our shipping or whatever, but not everyone can do that. So it's massively challenging because consumers, they're setting the expectations for logistics companies like ours.
Amie Larter:
So the scale up plan, it's pretty quick then?
Mark McGinley:
It is, yeah. But again, it's a real challenge that one. Sustainable growth is challenging. Because we could grow twice as quick. If somebody gave us a million dollars, I could go and hire lots more people, more salespeople and bring on more customers quickly, but owe a million dollars. So we're just trying to grow. We bring on customers, we make money, we hire more people.
Amie Larter:
Slow and steady.
Mark McGinley:
Slow and steady. Look, it could be that we may want to accelerate at some stage that we do take an investment in and just kick us on to another level. The amount of customers that we're talking to at the moment, if they all came on, we would need an infrastructure investment because the opportunities are there. So it is exciting in that sense. I suppose the other big thing that in this market is returns-
Amie Larter:
Does that big and bulky, returns?
Mark McGinley:
Yeah, that's a massive issue. See, returns if you get a shoe or a dress or a pair short, a suit-
Amie Larter:
That's easy to return.
Mark McGinley:
It's easy to return. Just pack it up, bring it down to your local post office. What you going to do if you got a faulty, your flat pack furniture's faulty, or your gym equipment is faulty?
Amie Larter:
I'm not going to say right now what would happen in my house.
Mark McGinley:
Well-
Amie Larter:
It's not going back.
Mark McGinley:
Well, that's why a lot of people have to take that attitude, don't they? But if you're buying gym equipment or whatever and it's not fit for... a rowing machine or whatever, it's not fit for purpose, you have to ring the supplier and say, this isn't working. So then they have to return that. So we're talking a lot of companies about that as well. And returning from regional Australia is really challenging.
Amie Larter:
You're having enough problems getting it there.
Mark McGinley:
Everybody can... Well-
Amie Larter:
Not with everyone-
Mark McGinley:
Not everyone, but you're delivering to Townsville or Mackay and that came from Perth or Sydney, it has to come back to Perth or Sydney. The retailer has lost money immediately. The freight charges could be more expensive than the product. And you see that sometimes actually where they just say, keep it. Not a treadmill or something like that. And the other big market, there's electric bikes and bikes generally, there's like this huge market there. But it could be a $10,000 bike and if it's not working or it's faulty or it's damaged, it needs returned. So there's definitely challenges there. And that's another big issue for all retailers, but it's really difficult in big and bulky. You cannot expect the consumer to drop that down to the local post office or hubbed collection point.
Amie Larter:
Well, they're not going to get it there. And what can Parca do for that?
Mark McGinley:
Well, we'll pick it up through our infrastructure and bring it back.
Amie Larter:
Bring it back.
Mark McGinley:
Yeah.
Amie Larter:
Okay.
Mark McGinley:
At a price. Not free.
Amie Larter:
No doubt. Nothing's free.
Mark McGinley:
Not free.
Amie Larter:
But just having the option there to do it is fantastic because I can imagine that's quite the gap in the market at the moment.
Mark McGinley:
It is. We're talking to some seriously big retailers who have that issue at the moment. And look, reliability and infrastructure are really important to do that. There's a lot of small, local companies are doing that white glove service. Will deliver your fridge or deliver your furniture, your sofas, et cetera. But that needs a national footprint to do national returns. It could be done by a whole network of companies, I suppose, but it's much easier if you've got a one cohesive network to do that.
Amie Larter:
This sounds exciting.
Mark McGinley:
It is. Look, it couldn't have done any better from a market reaction point of view. Obviously we've got our own challenges around bringing customers on in a timely fashion.
Amie Larter:
Before peak.
Mark McGinley:
Well, this is it-
Amie Larter:
All through peak.
Mark McGinley:
Don't be greedy. Don't be greedy. September, October, you need to cut it off. What we are trying to do and what every courier will and try and do is manage expectations. If you look at Australia Post, I don't think they send freight after a certain date if you wanted to get it delivered before Christmas. And it might be-
Amie Larter:
Well, it makes sense.
Mark McGinley:
Yeah, of course.
Amie Larter:
Manage expectations.
Mark McGinley:
It might be 20th of November, I'm only guessing here. But other companies will say, oh no, we'll take freight up until the 19th of December and guarantees Christmas deliveries. So what we'll be doing is managing expectations, we'll take that amount of freight and we'll deliver it at that time.
Amie Larter:
It seems sensible.
Mark McGinley:
I've been through the horrors, I just mentioned that the worst Christmas ever, that COVID. I'm not going through that again, ever. I was a Grinch.
Amie Larter:
But also you're on your slow and steady and you're building up to something. And I think setting expectations from a business standpoint is just as important. So I think that's good choice. A special thanks to Mark McGinley from Parca, and thank you for listening to Retail Untangled. Don't forget to rate and review us. Let your colleagues know that Retail Untangled is available on Apple, Spotify, and wherever you listen to podcasts.
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