October 13, 2017

B2B customers being left behind in rush to support B2C demand, FedEx executive says

B2B customer expectations, historically low, are starting to increase, Rude says.

By DC Velocity Staff

Carriers serving the business-to-business (B2B) and business-to-consumer (B2C) channels need to do a better job of delivering the same levels of service to traditional B2B customers that the B2C segment has come to expect, according to a top FedEx Corp. executive.

Speaking earlier this week at a conference in Chicago sponsored by technology provider project44, Mike Rude, director of international marketing for Memphis-based FedEx's Services unit, said B2B customer expectations are "far below" those in the B2C world, where consumers expect to order and receive products when, where, and how they want them. However, B2B customers are starting to expect comparable experiences from their providers, Rude said.

Up until now, Rude said, carriers have failed to give the B2B channel what it needs to meet or exceed expectations, despite having mountains of data and a track record of IT innovation. This failure, he said, manifests itself in the proliferation of shipment audit companies that make their livings correcting errors made during transactions, he said.

Rude used blunt rhetoric to describe the industry's shortfalls in managing B2B expectations, saying that "we've left our customers behind," and that "we have the opportunity" to deliver a robust experience but that "we are letting it pass."

The B2B customer has long been predominant in the worlds of all transportation carriers. At FedEx and at its Atlanta-based rival UPS Inc., the B2B space has generated the largest revenues and margins because of the carriers' ability to deliver multiple packages per driver stop. By contrast, the B2C segment has been marked by a dearth of package density, as drivers generally deliver one or two pieces per residence. However, the projected growth of deliveries to consumers living in densely populated urban areas is likely to create a level of density the B2C segment has never seen.

The explosive growth of e-commerce demand has turned the traditional parcel carrier model on its head. At FedEx, much of the future investment will be earmarked for its FedEx Ground parcel unit, which handles most of the company's e-commerce traffic. At UPS, B2C shipments are expected to have overtaken B2B volumes by the end of 2017.

Rude said B2B shippers expect their carriers to deliver an end-to-end integrated experience supporting a product lifecycle approach. He also urged providers not to focus on trying to be the next Uber, and to instead give customers what they want and need.

"Do what matters to your customer," he said. "Don't try to be cool."

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