Research and consultancy firm Apex Insight has published an indepth review of the European parcel locker landscape. The European Parcel Shop and Locker Networks Market Insight Report 2015 report focuses on the networks of locations within the last mile delivery of parcels (typically, local parcel pick-up and drop-off points for consumers and businesses), usually – but not always – found at local convenience stores.
Here, we’ve summarised some of the report’s content, and there’ll be a follow-up summary to come soon. You can find more information about the report by following the link above.
Locker networks and parcel shops are being rolled-out rapidly in most, if not all, European countries. In fact, a large proportion of the European population now has several locker outlets within easy reach of their home or workplace. Locations tend to be:
Parcel shops – staffed PUDO locations, most commonly found in easily accessible outlets of host businesses with long opening hours, such as convenience stores. Staff normally has barcode scanners which enable parcels to be scanned to record receipt or collection.
Secure locker banks – typically consisting of 20 or more keyless lockers and a control unit which allows a locker to be opened by someone with the necessary access credentials. This is often done via a PIN code sent to a customer by email or SMS following a booking transaction carried out on a website and/or a smart card provided to registered users. Lockers are generally found in locations which have both long access hours and a reasonable level of security, such as railway stations, supermarket car parks and petrol station forecourts.
Both types of outlets typically have a data link – usually in real-time – to update the system of the network operator or parcel carrier when an event, such as a delivery or collection, has occurred. This means that the operator is able to know things like which lockers are empty or full and how many parcels are at a given parcel shop at any time and hence, where there is spare capacity in the network.
Locker and parcel shop networks existed in the 1990s with most of the features of those which are currently being rolled out, and some more basic networks have a longer history. However, the services have developed more slowly than many predicted. Apex believes there are several reasons for this:
- Operators have sometimes struggled to find the right business model to enable profitable roll-out of networks.
- Some of the implementation issues, such as integration of systems with inflexible, legacy parcel carrier systems, proved to be challenging.
- Some logistics and parcels companies saw the networks as a threat to their existing processes and hence their profitability and therefore did not necessarily rush to embrace them.
- Acceptance by consumers took time to build
Logistics companies, such as Hays in the UK, operated networks of lockers which were used mainly for business-to-business applications such as delivering spare parts to, and collecting them from, field service engineers. Early lockers were usually key-operated, with the driver delivering to the locker and the engineer each having a key. As discussed above, lockers had the potential to reduce costs for field engineering forces by:
- Eliminating the need for the engineer to go to the depot each morning and pick up necessary spares
- Speeding up the return of spare parts from the field to spares warehouse or repair centre
However, key-driven lockers had inherent weaknesses, such as:
- Risk of the key being lost or not available for example when either the driver or engineer was on holiday or sick
- Lack of a data trail logging key events such as the drop-off or pick-up of the part or the opening of the locker (which meant that, if a part was lost, it was hard to prove whether responsibility lay with the driver or engineer)
- Lack of flexibility to make operational changes such as rescheduling of jobs between engineers.
Around the turn of the millennium, the dot-com and ecommerce boom gave additional impetus to the development of networks, with their potential to be the solution to the last mile problem. Several networks were created at this time – some of which prospered while others did not – including:
- Kiala, the parcel shop network in Belgium which is now owned by UPS
- ByBox, which acquired the Hays network in the UK as its starting point and has expanded it with new technology
- BearBox and Business Direct, similar UK networks, which were both later acquired by ByBox having failed to raise the necessary funding to reach profitability
- RelayStar, a parcel shop network started by Texaco to use its forecourts, then sold to Caterpillar Logistics and since merged into its operations
- Pickpoint, a German parcel shop network which now focuses mainly on business to business customers
- Collectpoint, a similar network in the UK with a more consumer focus but which did not reach profitability and exited the market
- Pick-up Services, a parcel shop network based in France, which was later acquired by La Poste
- Mondial Relay, another French parcel shop network, owned by 3SI Group, now part of Otto
- Deutsche Post’s Packstation network, by far the most ambitious post-office initiative and which is still the largest locker network.
Many of the networks which thrived did so by shifting their focus to business-to-business customers, such as field engineers, rather than consumer deliveries. We believe that there were two main reasons which favoured the business-to-business segment:
- It offered more attractive economics (ie higher rates per parcel) than consumers were willing to pay
- It provided tangible cost savings for an easily identifiable customer – the operator of the field force.
The consumer segment initially proved harder to crack to a large extent because, while many parcel carriers and retailers felt that the model offered benefits, it was not clear how either these benefits or the costs of rolling out a network should most equitably be shared between retailer, carrier and the consumer.
Both lockers and parcel shops also faced concerns regarding perceived security weaknesses in their models, for example:
- Parcel shops were felt to be vulnerable because they were rarely able to provide a secure, locked cage or storeroom in which to keep parcels.
- Locker systems were felt to be vulnerable to fraudulent claims / theft because they were unable to provide a proof-of-delivery signature.
For the most part, those concerns have now been addressed to enable networks to be rolled out. Deliveries to consumers are believed to account for the large majority of volumes and are growing much faster than the other segments which adopted the model earlier, such as spares for field engineers.
In the second part of this summary of Apex Insight’s report, we will look at market size and growth, and which European countries are seeing the most take-up of locker points.