Challenges from Helthjem’s Point of View

This section presents the challenges Helthjem may face due to their customers´ transition into a CE.

Unique Products

Helthjem stated that possibly the biggest challenge with CE strategies is that they will be transporting more unique products. This was further explained by Helthjem: “There is only one dress that is being rented. If it is lost, it is hard to solve that customer challenge”. This challenge is prominent in the second-hand market as opposed to new products. For example, if a consumer buys a new shirt and it gets lost during transportation, the company will be able to send them a new one. However, this is not the case with second-hand products. For instance, if a child is inheriting a sweater from their grandmother, this sweater represents an emotional value, not just an economic value as a new product would. If this sweater gets lost during transportation, then Helthjem faces a challenge they cannot solve. With such cases, the customer’s trust in Helthjem will most likely decrease, and these stories tend to spread quickly.

Valuable Products

Another challenge mentioned by Helthjem is that the circular products sometimes are of higher economic value. As of now, Helthjem does not have any measures to avoid theft of packages left at consumers’ doorsteps. Therefore, they cannot transport goods with a higher value than about 10.000 NOK. This was mentioned as a challenge and limitation by Helthjem because the circular products require a different design. To prolong the life cycle

of the products, these products are made of high-quality materials which sometimes makes them more expensive.

Infrastructure

Helthjem argued that their infrastructure could be a limitation and a challenge, as it is only appropriate for small and medium sized shipments, and therefore bigger packages are impossible to transport. The respondent uses rental services of tents as an example to illustrate this challenge:

As an example – Tents. A very attractive category for rental services, as they are used for a short period at a relatively high price. They are also something you plan to use well in advance, so you book them a couple of weeks before you are using it. The challenge for us today is that they will not go through our sorting facilities, so we cannot sort the tents to our routes - Helthjem

Time of Delivery

Since Helthjem delivers shipments by night, they are limited to a specific group of products where the customer does not have to be home to receive the package. For example, if the customer has ordered a washing machine, the customer need to be home to receive this and check that the product is in shape. These types of products are typically delivered by larger transport service providers such as Posten and PostNord and does not fit with Helthjem´s current network.

Customer Service and Documentation

Customer service was mentioned by Helthjem to be a challenge, as the carriers do not have to be in contact with the consumers at all. On one side, this is a huge advantage as the deliveries will be conducted without any interruptions. Helthjem mentioned that this has especially been beneficial during the Covid-19 pandemic. On the other side, since there is no direct communication between the consumer and the carrier, the consumer has no idea what has happened during the delivery or pick up. If a deviation has happened during the deliveries at night, the consumer will typically call the customer support center during the day. Here, Helthjem explained the problem, by saying:

The customer calls us at noon. At that point the carrier is sleeping, and we can only use the information that is found in the system – Helthjem

Helthjem explained that this raises the issue of documentation, as they depends on well-documented deliveries and pick-ups to answer any of the consumers’ queries. The respondent explained that they are constantly trying to improve their data tracking and that they are aware that some of their competitors are using more developed technology such as Radio Frequency Identification (RFID). RFID is a method to store and collect data through small devices called RFID-chips. Furthermore, the main challenge regarding documentation for Helthjem is if a deviation happens, such as if the carrier delivers the shipment to the wrong doorstep or forgets to pick up a package. This affects Helthjem’s quality, as the documentation found in their system has an error. Additionally, the customer will not know where their package is in the system. Moreover, Helthjem stated that some of their competitors are years ahead of them when it comes to the use of technology for documentation and tracking of data. This means they have a competitive advantage against Helthjem, which makes it easier for them with transparency and trust in their systems.

Coverage

Helthjem explained that they want more customers and users, which means they need to cover more areas. This is challenging because of the infrastructure in Norway and is both time consuming and expensive. For example, in the northern part of Norway, there is a difficult and advanced route network which implies delays and a long delivery time. The delivery times range from two days to one week, and in the northern of Norway it is often against a week. The customer outside urban areas have lower requirements for delivery times, but to attract more customers the delivery times should be more efficient and accurate.

In addition, the case company wants to increase their return services. Their network and carriers are already on the road, the next step is to increase the returns. Helthjem stated that:

Most returns today happens when a customer drives his own car to a store and delivers the package there – Helthjem

According to Helthjem, they are working towards having more customers using their return services instead of their own because this is both more convenient and environmentally friendly. During the interview, they stated that about 30 percent of returned shipments comes from the central part of Oslo where consumers can walk to return their packages. This means that 70 percent of the packages are returned by using cars. This represents huge potential to reduce the total impact on the environment.

Predictability and Accuracy

Helthjem asserted that rental services might lead to challenges regarding predictability and accuracy. The possibility for delays is high, and this is a threat both for Helthjem and their customers. Helthjem explained that CE strategies require them to have a well-established SC, which includes quality, high traceability, a continuous information flow, theft security and decreased deviations. This was exemplified by Helthjem by discussing the transport distance between Oslo and Bergen:

On this route, delays often occur because of the road infrastructure, which can result in delays between one day to a week – Helthjem

Thus, this therefore represents challenges, especially for the rental services. The renting strategy entails that the product should be sent to the customer, and within a time frame it should be picked up and delivered back. In these cases, it is unacceptable with delays.

Finding the Right Timing

Helthjem pointed out the struggle to find the right time to do investment and figuring out what they should invest in. Their customers are implementing different CE strategies, which is unpredictable. Some of the customers, such as Bergans, believes that rent will increase in the future, while Finn.no is unsure. Additionally, the society and market fluctuate constantly.

The respondent explained that they aim to be a forward-thinking player that is the first to make important investments, but this also brings risk. By this reason, Helthjem finds it really challenging to know when to do investments.