THE SHIFTING TIDE OF OUT-OF-HOME DELIVERY
Out-of-home (OOH) delivery is redefining last-mile logistics. Consumer impatience with failed deliveries and growing anger at rising road congestion means retailers are shifting to OOH collection points, Pick Up Drop Off (PUDO) shops, smart lockers, and automated parcel stations. The question is whether consumers will embrace this transition or will adoption stall?
The jury is still out, with different countries showing different levels of appetite for OOG solutions. Poland – so-called ‘lockerland’ - is the frontrunner in Europe, where 60% of shipments for last mile delivery are destined for lockers, compared to single digit adoption in some other EU nations. Returns help drive customers to OOH solutions, with three out of five people saying they prefer to return to an OOH location1 whereas when it comes to heavy or high value items, delivery to home is still the preferred option.
We have to have a pick and mix approach so customers can make choices that fit into their lifestyle.
Tim Davies
Head of Out of Home & Indoor Accounts,
DPD
In the UK, where penetration is lower, it’s a case of building awareness and confidence in OOH solutions. ‘It’s about making it easy to use, and developing shop scan compliance, driver compliance and hub scan compliance so that all the way through the process it replicates as good as, if not better than delivery to home,’ says Tim Davies, Head of Out of Home & Indoor Accounts, DPD.
Demographics are playing a role in take-up of OOH options, with return-happy Gen Alphas expected to be heavy users and that heavy use is also expected to influence the choices of their Millennial parents. And customer interactions with OOH solutions are changing as their comfort levels grow, notes Christian Oestergaard, Lead Visionary - Senior Group Strategist at PostNord.
‘In the early days, over 90% of customers would pick up their parcels from the locker within the first six hours, but now we are becoming lazy because we feel secure that the parcel is in the PUDO point or locker and we know we can pick it up later at our convenience,’ says Oestergaard.
So what do these shifting tides in OOH mean for postal companies’ operations? Here’s Mark Briganti, Global Post and Parcel Lead, at Accenture to tell us more.
Although convenience may be the biggest driver for consumer adoption, sustainability could prove a longer-term driver of growth as city lawmakers seek to reduce urban congestion and pollution. This regulatory push could be significant, says Henning Gaudszuhn, Vice President of Out-of-Home & Returns Business at DHL eCommerce.
‘From a sustainability perspective, the higher drop factor of 50 or 60 is far more efficient than one or two at the doorstep,’ says Henning Gaudszuhn, who expects to see continuing growth in OOH volumes in the coming years.
The efficiency and the sustainability benefits of OOH CANNOT BE OVERSTATED2:
Companies have also learned that when it comes to OOH, it’s all about location, location, location. Lockers need to be in high density locations, with easy parking, local facilities and lighting.
‘You can save a lot of money with a lockers network but you can also burn a lot of money,’ cautions Gaudszuhn of DHL. ‘The wrong location or issues with useability can backfire.’
Everyone is really happy with PUDO until it’s over 500 metres from home. Over a kilometre and you can forget it.
Matthias Hofmann
EVP Last Mile Logistics,Österreichische Post
This has seen some cities see a proliferation of locker stations as carriers seek to build critical mass in prime pick-up locations. Österreichische Post has been acquiring shuttered premises of bankrupt retailers to build a network of unmanned locker branches across Austria. However, carriers need to be careful not to flood high streets with too many competing locker stations.
‘The visuality of it is important,’ says Jascha Waffender, OOH Director at GLS Group. ‘The look and feel of the streets is very important to councils and they’re protective of that space, and that could drive them towards favouring agnostic lockers.’
If dynamic optimisation of capacity can be done for the air cargo industry, it can be done for lockers.
Jascha Waffender
OOH Director,
GLS Group
Lockers themselves are increasing in functionality, with autonomous lockers having increased functionality while some stations offer additional services like packaging recycling. Technology is seen as key to success in this space, with AI helping to optimise location selection, dynamic optimisation of capacity – ‘if it can be done for the air cargo industry, it can be done for lockers,’ says Waffender – and deliver increasingly convenient and personal customer experience.
‘Imagine you drop off your return, you step out of the locker station and ping, you get your refund automatically,’ says Waffender. ‘That would be stunning customer experience. There’s huge potential in this space.’
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