Online Sales of Bulky Goods Fuel Boom in Delivery Specialists
November 17 2015 - 3:00PM
Dow Jones News
By Loretta Chao And Laura Stevens
Online shoppers accustomed to having their packages dropped off
by United Parcel Service Inc. and FedEx Corp. increasingly are
being visited by rivals that specialize in delivering items such as
furniture, appliances and mattresses.
Sales of bulky items are rising faster than online orders
overall as customers become more comfortable making big-ticket
purchases online. Retailers including Home Depot Inc. and Best Buy
Co. are fueling the shift with free shipping on goods like patio
chairs and washing machines.
That trend is sparking a boom in so-called white glove services
that involve delivering, setting up or installing large or delicate
items. Among the largest of these upstart providers are XPO
Logistics Inc., Pilot Freight Services and Fidelitone Inc. These
companies and others have gained market share by offering
competitive pricing on shipping and throwing in services, such as
trash removal and furniture assembly.
They are making a play for this fast-growing e-commerce market
as the two giants in the package delivery business take a step
back. FedEx and UPS carry oversize items as freight, but aren't
broadly set up for installation and other services. Both recently
raised fees for oversize-goods, which they say interfere with their
hub operations. The U.S. Postal Service also typically steers clear
of delivering large items due to the small size of its mail
trucks.
"Those [services] are things that we do that UPS and FedEx don't
do. So it's giving these shippers the option" of offering set up
and installations to their customers, said Daniel Sayne, director
of sales for Illinois-based Fidelitone, which offers white glove
service out of 25 U.S. distribution hubs and from client locations
in nine markets. "The rates are still new, and shippers are still
trying to get their hands around what their options are."
The for-hire home delivery market for heavy and oversize items
grew 8% in the past year to $6.8 billion, according to Satish
Jindel, president of SJ Consulting Group Inc., a parcel industry
research firm. He says the cost of providing delivery and set up
for goods such as a refrigerator is between $70 and $80, and can
run more than $300 including moving goods from a manufacturer's
warehouse to the delivery company.
Some retailers absorb the cost for their customers and others
charge fees to cover the added expense. Lowe's Cos., for instance,
offers free delivery on appliances. West Elm, a subsidiary of
Williams-Sonoma Inc., charges for most deliveries and has employees
who can help with assembly for an additional fee.
Fidelitone expects to complete 600,000 white-glove shipments
this year, up 20% from 2014. XPO, the largest such service by
volume, expects to make about nine million white-glove deliveries
out of its 55 distribution centers in the U.S. and Canada. IKEA,
Lowe's Cos. and online mattress startup Casper Sleep Inc. are among
its clients. XPO took in $489.4 million from its "last mile" home
deliveries in the first nine months of 2015, up 35% from a year
earlier.
Parcel delivery typically requires just one driver making many
quick stops on a preplanned route. White-glove deliveries often
require two people or more, with some stops taking minutes, others
hours. Drivers might need to know how to hang a television or
assemble furniture without damaging walls or scuffing floors in the
process. White-glove companies said training is a major focus, and
some, including XPO, give drivers smartphone packed with
instruction manuals.
"We're not delivering freight, we're delivering product into
some very sacred areas of people's homes," said Will O'Shea, chief
sales officer at XPO Last Mile, the company's white glove unit. The
services train their employees in greeting customers, dressing
appropriately and getting customers' approval when completing a set
up.
The business is so new that not all the kinks have been ironed
out, some customers say. Sam Mazaheri, a 27-year-old marketing
strategist in Sunnyvale, Calif., said when he turned to the
Internet to outfit his new home, the process didn't go
smoothly.
A television shipped via FedEx arrived cracked. XPO, of
Greenwich, Conn., initially didn't bring enough laborers to carry a
refrigerator up a flight of stairs, requiring a second trip. When
the appliance turned out to be damaged, they mistakenly left it at
his home instead of taking it back. By the time the refrigerator
was successfully installed, weeks had passed. He posted a complaint
about his experience online, prompting XPO to call and offer him a
$50 gift card for his trouble.
"I would have paid extra if there was some kind of company that
took the hassle out of it," he said.
Retailers say the services provided by white glove delivery is
crucial. Casper Sleep initially delivered and installed mattresses
and later used UPS for nationwide delivery. But it switched in many
locations to XPO to get the in-home services, said Neil Parikh, the
retailer's chief operating officer.
White-glove delivery companies say they're beefing up customer
service, calling customers to check on service after a delivery and
offering online tracking. Fidelitone also has "furniture medics" at
its hubs to repair scratches and check for missing parts.
Write to Loretta Chao at loretta.chao@wsj.com and Laura Stevens
at laura.stevens@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
November 17, 2015 14:45 ET (19:45 GMT)
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