The transformative effect of alternative last mile delivery networks


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The rapid growth in the volume of online sales has forced a rethink of the B2C last mile delivery model. Home delivery is expensive for retailers and parcels companies; sometimes inconvenient for shoppers as well as being a headache for administrators and regulators concerned about levels of traffic and pollution caused by the soaring number of delivery vans. The combination of these factors has prompted many companies involved in the e-retail sector to look for alternative delivery solutions.

Many of these solutions involve alternative delivery addresses or locations such as, for example, collection points, lockers, parcels shops and even ‘in-car’ or ‘in-house’ delivery. According to a survey by UPS, 41% of customers have had their orders delivered to an alternative delivery location and, amongst those who had returned an online purchase, 28% had taken their returns to carrier authorised retail stores. A quarter of customers had used a ‘ship-to-store’ option (i.e. click and collect). The survey also found that 63% of customers in Europe, 52% in USA and 71% in Asia were interested in shipping to alternative delivery locations with extended hours for a reduced fee.

The range of delivery options are also critical in consumer-choice and it has been recognized that delivery location options are important in terms of preventing lost sales as well as speed and cost.

In research undertaken for Ti’s latest report, Global Express & Small Parcels 2019, seven categories of Alternative Delivery Network were identified:

  1. Click and Collect/BOPIS
  2. In-store Locker Solutions/Automated Parcel Stations (APSs)
  3. E-commerce locker networks
  4. Third Party ‘Carrier Agnostic’ Platform Locker Networks
  5. Express parcels ‘captive’ locker networks
  6. Parcels Shop/Collection and Delivery Points (CDPs)
  7. In Car/In Garage/In Home Delivery

Other alternative delivery network findings in Global Express & Small Parcels 2019

  • Many alternative delivery networks utilise alternative delivery addresses or locations such as collection points, lockers, parcels shops and even ‘in-car’ or ‘in-house’ delivery. The range of delivery options are also critical in consumer-choice and it has been recognized that delivery location options are important in terms of preventing lost sales as well as speed and cost.
  • The development of alternative delivery solutions has strategic implications in the trade-off between inventory management and product availability. Many retailers are converging their online and offline offering into an ‘online-to-offline’ (O2O) approach to combine the benefits of open-all-hours e-retail with a physical presence, close and convenient to the customer.
  • Home deliveries have been blamed for a large increase in the volume of small vans on the road with the associated disbenefit s of traffic, congestion and pollution. There may be some environmental benefits to the use of alternative delivery locations, although research to quantify these benefits is still at an early stage, however, it would seem that the location of the boxes and the operating environment (rural, semi-rural, suburban, inner-city) are the critical factors in the efficiency and sustainability of alternative delivery systems.
  • In terms of market development, it is still to be seen whether one single model wins out – closed or open networks of lockers; parcel shops or in-house or in-car deliveries – or whether it is economically feasible for all these options (and others) to co-exist.

Ti’s Global Express & Small Parcels 2019 report finds that the development of alternative delivery solutions has strategic implications in the trade-off between inventory management and product availability as many retailers are converging their online and offline offering into an ‘online-to-offline’ (O2O) approach to combine the benefits of open-all-hours e-retail with a physical presence, close and convenient to the customer. Moreover, while such networks should bring environmental benefits, the location of the boxes and the operating environment (rural, semi-rural, suburban, inner-city) are the critical factors in the efficiency and sustainability of alternative delivery systems.

Source: Transport Intelligence, October 10, 2019

Author: Transport Intelligence

 

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