Five questions about the future of pickup points

There are now more than ten thousand parcel pick-up points in the Netherlands. In large cities, the share of online shoppers picking up parcels at parcel points is increasing slightly. In less urban and rural areas, there are initiatives for neighborhood hubs in private homes and parcel lockers in stores and bus stops.

Big business

Yes, it’s big business. Parcel locker provider InPost went public on the Amsterdam stock exchange for 8 billion euros. Meanwhile, Homerr, Viatim, Instabox, and Budbee are rolling out manned and unmanned parcel locker networks in Europe. BringMe and MyPup offer unmanned solutions for facility managers of offices. Amsterdam-based Parcls chooses to grow to more than 30 manned pick-up points. EVAnet chooses the bus stop as its pick-up point. In Utrecht, the pick-up points are integral to the new area development. Will pick-up points be the new trend?

Will consumers use them?

Consumer behavior has not changed in the past ten years. Almost 90 percent of Dutch customers have their parcels delivered to their homes (or to their neighbors); 13% of parcels are picked up, increasingly in retail stores. Moreover, parcel delivery companies can now deliver by appointment and provide reliable track-and-trace information. So picking up is not necessary anymore.

A small group of consumers consciously chooses to pick up their order and is willing to pay for it. However, I experience the service at the pick-up points as ‘insufficient.’ The experience could be so much better! Incidentally, consumers do know the way to a pick-up point for returns.

Whitelabel pick-up points where different parcel delivery companies deliver parcels can contribute to increasing the ease of pick-up for consumers and more efficient parcel delivery.

Of interest is the business market (B2B) of, for example, service engineers who can no longer go into town with their delivery van. Will the pick-up point become their new supply point? That would be valuable.

Is it good for the environment?

By 2025, virtually all parcel delivery vehicles in the Netherlands will be zero-emission. And, more and more parcels are delivered with cargo bikes. Moreover, recent studies show that parcel delivery is sustainable and even more sustainable than buying in a store.

Pick-up points do not necessarily lead to fewer delivery vans in my neighborhood. The parcel deliverers make their delivery rounds for the other parcels twice or thrice a day. The more parcels delivered to the pick-up point, the less often the delivery driver has to stop at households. A study by TNO shows that vehicle miles (not delivery vans) are reduced by 17% when 50% of packages go to a pick-up point in a round trip.

Consumer choices affect the impact on sustainability, as the reduction in emissions can be negated if a consumer goes to a pick-up point by car. Unfortunately, international research shows this is often the case; it leads to extra car trips. What would work to have fewer vehicles on our roads is when parcel delivery companies start delivering together.

What about cost?

Pick-up points are not financially viable. The last mile cost is 0.80 to 1.20 euros per parcel. A pick-up point will cost at least 1.00 euro per parcel (even though such a pick-up point only gets 0.30 to 0.50 cents). Unmanned parcel lockers are an expensive solution if the consumer leaves a parcel for two or three days, especially during busy periods. Only when many parcels are delivered through pick-up points is there a substantial advantage for the parcel delivery companies?

With massive seasonal peaks in parcel volumes, manned and unmanned ones must have a solid (over) capacity around Christmas, St. Nicholas, and Mother’s Day. The operator has to stimulate the consumer to come at a convenient pick-up time and in busy periods as quickly as possible. Then they can deploy a package locker several make a day. Just opening a physical pick-up point is not a good idea.

Should we be happy about it?

Not always. Not everyone is waiting for a pick-up point in their neighborhood. Pick-up points lead to a lot of extra delivery traffic and inconvenience from parked bikes and cars of consumers. The 500 to 1,000 consumers coming for a pick-up on one single day are in a hurry. Undoubtedly, the growth in larger pick-up points will lead to discussion in the official licensing process.

Will the big parcel delivery companies join in?

No! Those parcel deliverers will do anything to maintain their contact with the consumer. They certainly don’t want a ‘white label’ pick-up solution. That is their only USP. The business models of the new players don’t work when the large parcel companies do not want to share their cost advantage. The savings they make with an alternative approach stay in their pockets. Then the new players don’t get into the parcel race.

Pick-up points: a different business

Pick-up points are promising if they meet the convenience consumers expect (or business customers). Proximity, opening hours, and ‘white label’ are vital. The retail store as a pick-up point may not be such a crazy idea. Pick-up points also have potential in specific market segments where users are willing to pay for them. That user may be a landlord of apartments, offices, or a homeowners association. Consumers then experience it as a service with added value and safe delivery. Value for which the consumer is willing to pay. Do not forget the business user that looks for ‘value of time.’
A condition for profitability is that the operator knows how to stimulate the consumer to come at a convenient time. Therefore, there is a need for professionalization in existing points, such as organized storage, shopkeeper training, and strategic planning.

And is InPost worth 8 billion euros? A whopping 700,000 euros per pick-up point. We’ll see…

Walther Ploos van Amstel.

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