Scope for home deliveries
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THE ENTRY by Lex Wilkinson this week into the home delivery market is a significant move for a carrier that had always aimed at the commercial address delivery business.
The new service is called Homeline and is aimed primarily at the mail order business where manufacturers and retailers offer delivery direct to the home.
"In the past we have always carefully avoided any traffic destined for home deliveries," said Lex Wilkinson managing director Colin Millbanks, adding that this market has not enjoyed good levels of reliability. In an oblique reference to TNT's short-lived experiment in the home delivery business, he said that lack of volume leads to high unit costs and that franchise arrangements are unstable.
Instead, Lex Wilkinson has chosen to move into home deliveries in a joint venture with GUS Transport, the distribution company in the Great Universal Stores group which includes the mail order catalogues Marshall Ward, Kays, John Noble and Great Universal. GUS Transport vehicles are better known by their White Arrow fleet name and until now have carried only in-house GUS mail order traffic.
Mr Millbanks estimated that the home delivery market totals 500,000 parcels a week, plus all the mail-order catalogue business. Only two per cent of Lex Wilkinson's existing traffic goes to non-business addresses, but the company felt that it could no longer afford to ignore the potential of home deliveries.
Explaining that Lex Wilkinson's business address-oriented delivery structure was "inappropriate" for residential deliveries, Mr Millbanks said that a partner had been sought and this led to the joint venture with GUS Transport in Homeline.
The two companies have signed a 10-year agreement which is mutually exclusive — all Lex Wilkinson's Homeline traffic will be delivered by the White Arrow fleet and GUS Transport undertakes to deliver no other carrier's traffic.
GUS Transport already delivers 65m parcels a year for the GUS mail-order catalogue companies and operates 1,300 vans (mainly Ford Transits) in the White Arrow livery as well as 100 trunking units. There are 32 depots, and a head office in Worcester.
According to GUS Transport managing director John Abberley, the company had been looking in early 1983 to take on some third-party work to supplement its captive GUS mail order traffic. Both he and Mr Millbanks expect the demand for deliveries to the home to grow.
"Mail order armchair shopping is with us now," he said. "Major High Street retailers are offering the option of home delivery on certain of their product lines. Today's television set is soon to become tomorrow's shop window providing a consumer service that demands a low cost, highquality home delivery."
Homeline offers delivery of most parcels within three days; all will be delivered within five days. Any parcels up to 25kg and 2.5m (8ft) in girth are acceptable and the service extends to all private addresses in mainland Britain and Northern Ireland. Saturday deliveries are also offered.
Lex Wilkinson vehicles will do Homeline collections as part of their normal Expressline and Nightline work. If the collection is solely Homeline traffic there must be a minimum of 10 par cels. The Homeline parcels are then integrated with the rest of Lex Wilkinson's traffic and trunked to the company's Hub sortation centre near Nuneaton, Warwickshire.
After sorting they will be trunked to the Lex Wilkinson depot nearest to the destination address. From there the Homeline parcels are moved to the nearest White Arrow depot for final delivery.
With this system neither Lex Wilkinson nor White Arrow vehicles need stray from their traditional environments; Lex Wilkinson collects from the business addresses and White Arrow does all the deliveries in the residential areas. In this way the "on-costs" of Homeline are relatively small and the new business should integrate quite easily into the two companies' existing traffic.
Revenue from Homeline will be shared between Lex Wilkinson and GUS Transport; they would not disclose the ratio.
Neither partner in the venture has to make any great investment in the short term for Homeline. Mr Abberley said that there is sufficient capacity in the White Arrow vehicles for the expected growth in the near future, so the fleet does not have to be expanded yet. But in his three-year plan, Mr Abberley expects to create 300 to 400 jobs.
For Lex Wilkinson, Colin Millbanks said that the Homeline traffic will be sorted during the day when the Hub is normally idle, so there is ample capacity there too.
Paperwork for Homeline customers is kept to a minimum with bar-coded labels replacing some of the traditional documentation and consignment notes. Another simplification is the adoption of a single rate for carriage charges throughout the UK — there is no zonal rating system. For the cheapest service (no delivery signature) the rate is £1.50 per parcel plus 10p per kg. With a delivery signature and additional insurance cover the rate rises to £2 plus 10p per kg.
Homeline has already been quietly tested in trial areas before its official launch and has been delivering books, wine, home computers and clothing to homes. Mr Mil'banks said that one Christmas hamper company has already signed up for this season.
Some of Lex Wilkinson's fleet has been painted in Homeline livery; but this is purely a marketing ploy and they are not carrying only Homeline parcels. Similarly, the GUS Transport fleet retains its White Arrow livery although the two partners are discussing a joint Homeline livery that could incorporate both identities.
Colin Millbanks predicts that within a year Homeline will be carrying at least two million parcels a year. Both partners said that they had not set out to take on the Post Office and felt that the mail-order market has enough potential to provide a living for them and the Post Office. Although not expecting Homeline to ever overtake Lex Wilkinson's deliveries to commercial premises, Colin Millbanks does foresee it becoming j a "significant" part of the business.