Whats wrong with Internet household moving move brokers?

Christopher Noblit
Internet moving brokers

Background -- The Internet "Vision" Circa 1996
During the introduction of Internet access into American households, the Internet was widely regarded as a network that would connect consumers directly with the suppliers of goods and services. The result would be an elimination of the "middle man." This resulting efficiency of this shortened supply chain would benefit consumers by reducing the middle-man markup (and thus lowering cost to the consumer) while increasing the consumers ability to communicate directly with the supplier or service provider.

Background -- What is a "COD Move"?
For the purposes of understanding this issue it is important to define the "COD household move" (which I shall herein refer to as a "COD move"). A COD move is the interstate relocation of household goods and personal effects for which the mover is located, interviewed, selected, and paid at the point of shipment destination by the customer whose household goods and personal effects are being moved.

Background -- An Explanation of The "Van Line" System For Interstate COD Household Moving
Interstate household goods carriers -- commonly referred to as "van lines" -- are irregular route for-hire carriers (moving companies) who specialize in moving used household goods and personal effects. These van lines (including firms such as Atlas Van Lines, North American Van Lines, United Van Lines, Allied Van Lines, Mayflower Van Lines, Wheaton Van Lines, etc.) are generally corporate entities located in the mid-west who provide interstate federal operating authority, centralized dispatch services, load planning services, claims settlement services, and revenue distribution services to their "agency network." Van line agents are local independently owned and operated moving companies who provide storage services, packing services, and local loading/unloading services to the consumer. It is the local agents that advertise locally and who solicit, book, and service interstate COD moves for their van line. Generally speaking, there are three (3) agents involved in a COD move;

(1) The "Booking Agent" who has procured the lead, sold the move, and registered the order within their van line system. The Booking Agent can be thought of as the sales agent who negotiates price with the customer, sells and closes the order, acts as the move coordinator and quality assurance monitor, and who tracks the customer needs and the services supplied by the van line.

(2) The "Origin Agent" who services the move at its point of origin. Services provided by the Origin Agent can include the initial survey (visual inspection) of the items to be moved by the customer, packing boxes at origin, and providing the driver assigned to the move with labor to assist with loading the moving truck.

(3) The "Destination Agent" who services the move at its point of destination. Services provided by the Destination Agent can include unpacking boxes at destination and providing the driver assigned to the move with labor to assist with unloading the moving truck.
It should be noted that -- for COD moves -- the Booking Agent and the Origin Agent are usually the same party as nearly all COD moves are booked at origin.

Enter The Internet Move Broker
Internet brokers are middle men, who place themselves between the service providers (the van line and the Booking/Origin Agent) and the customer. The Internet broker collects the sales lead and connects that lead with the van line Booking/Origin Agent. What's wrong with this scenario? Well, there are several issues worth considering. The first is determining what value does the Internet Broker add? It would appear that the answer is "next to none." With few exceptions, the Internet Broker provides no customer service or quality assurance functions for the customer. In fact it appears that often the Internet Broker gets in the way of direct communications between the consumer who is moving and the Booking Agent, Origin Agent, or the corporate van line service provider. As a result, the Internet moving broker creates a model that is exactly the opposite of the Internet's utopian vision of lower cost and increased communication. The Internet move broker actually adds a layer between the consumer and the service provider which inhibits communications and degrades service quality.

But There Is Even More Bad News
Most van lines utilize the same tariffs (i.e.: rate books) and allow their agents to discount only up to specific set maximum allowable levels. These set levels are -- for the most part -- about the same at each van line. Brokers, by and large, speak to the customer of "providing the consumer with access to substantially reduced or lower prices, prices that are much lower than are available elsewhere" and this is a false premise. The van line Booking Agents have a natural tendency to price moves close to the maximum discount levels allowed by their van line and, consequently, profitability in the moving industry has been severely reduced since the introduction of tariff discounting. Internet move brokers who interject themselves into the COD move process add another "mouth to feed", that is they take a percentage "off the top" that further reduces move profitability for all service providers who take part in the relocation process (the Origin Agent, the Booking Agent, the truck driver, and the van line). As a result, the Internet moving broker adds no value and also serves to further reduce the already slim industry profit margins.

Can It Get Any Worse? Unfortunately, "Yes It Can"
Internet moving brokers too often convince the consumer that they have the ability to provide an accurate estimate of the costs involved in a relocation without performing a visual in-home inspection of the goods to be moved. However, it is an accepted truth within the relocation industry that a visual in-home inspection of the goods to be moved is the first step towards providing a household relocation of acceptable quality. As a result, the Internet broker has...

(1) Provided virtually no customer service or quality assurance functions for the moving consumer. As stated above, the Internet broker inhibits direct communication between the customer and the service providers.

(2) Created a situation exactly the opposite of the utopian Internet vision of lower cost and improved communication though the elimination of the middle man; the Internet Moving Broker is a middle man who adds a layers between the consumer and the service provider.

(3) Takes a percentage of each job thereby creating another "mouth to feed", further degrading the already very narrow household relocation industry profit margins.

(4) Often allows moves to be dispatched to service providers for which no visual inspection of the shipment has been performed. Non-visual estimates are usually under estimates, and under estimation of shipments creates the following issues:

(a) Extreme customer dissatisfaction when the price is raised on move-out day to match the actual size of the shipment that is being moved.

(b) Quality assurance issues for the service provider who often finds the shipment to be much larger then they had been advised. As a result, manpower, materials, and truck space assigned to the job are insufficient to accommodate shipment requirements.

Internet Move Brokers. Hot...Or Not?
A few DotCom's do offer real benefits to many consumers, such as no cost full replacement valuation, professional and unbiased pre-move counseling, exceptional customer service, and claims advice that is of value to the customer. In addition, some agents experience a lower cost of sales and greater opportunity when working with these Internet companies. However, our conclusion is that most Internet-based household moving brokers add an additional (and unnecessary) layer to the household relocation. This additional layer reduces overall household relocation quality, reduces the efficiency of consumer/service provider communication, and reduces service provider profitability. As a result, it is inadvisable for van lines, van line agents, or independent moving companies to do business with Internet-based household moving brokers or with Internet-based directory listing services that do business with (provide leads or listings to) Internet move brokers. Internet moving brokers...hot or not? Not hot...not by a long shot.

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