• on Jun 23rd, 2014 in Delivery & Collection | 8 comments

    When you think German ingenuity, perhaps high-end automobiles or precision cameras come to mind. Might be time to add individual residential parcel box lockers to the list.

    Don’t laugh. Deutsche Post DHL plans to roll out individual locked parcel boxes to interested German households, and if successful pilot tests in two cities are any indication, the idea could prove to be a lucrative hit.

    The German postal operator is convinced residential parcel boxes are a key element in its strategy to secure more of the growing package business. Deutsche Post sees these home-based parcel delivery lockers as a more convenient option for e-commerce customers, who would otherwise probably have to trek to their local shop or parcel terminal to collect their parcels.

    Deutsche Post isn’t claiming it’s the greatest development since sliced bread, just since the invention of the mailbox. Customers can choose among different designs, sizes, colors, and mounting methods. In addition to receiving parcels, they can also place outgoing packages in the box.

    The parcel lockers are aimed at single-family and two-family homes or those apartment complexes with enough space and easy accessibility for delivery. At a rental price starting at 1.99 euros ($2.70) per month or outright purchase starting at 99 euros (about $135), it’s not clear how many customers will jump on the offering. But Deutsche Post thinks the convenience factor and improved customer experience will win over a number of residents.

    Home parcel lockers are another way the German postal operator is trying to serve customers in a rapidly changing ecommerce market, where double-digit growth is expected to continue for the next 4 years. The U.S. Postal Service is also seizing the opportunities ecommerce provides, and its 20 percent growth in package revenue over the past few years is a testament to the promise of this market.

    Do you think home-based parcel box lockers would work in the U.S.? Would you be willing to pay a small monthly rental fee or buy a box for a more secure home delivery of parcels? If yes, how much would you be willing to pay?

  • on Mar 31st, 2014 in Delivery & Collection | 6 comments

    That ethereal voice was enough for Ray Kinsella to build a baseball diamond in his cornfield in the movie Field of Dreams. But is this approach a sound business model for same-day delivery providers? It seems to be the model they are following: provide same-day delivery in anticipation that customers will eventually consider it standard practice – and actually want it.

    Study after study shows consumers shop online mainly because of low prices and free delivery. Consumers consistently rank “fast shipping” toward the bottom of their reasons for returning to an e-tailer’s website. And yet e-tailers, brick-and-mortar stores, startups, and even the U.S. Postal Service have embarked on the quest to provide same-day delivery service.

    Amazon, Nordstrom, and Walmart are among retailers offering same-day delivery in select markets for orders placed by a certain time. Startups such as Deliv and Instacart are getting in on the action, providing same-day delivery services for retailers in malls or for grocery stores. And, in an interesting convergence, eBay and Google have partnered with traditional retailers not only to deliver their products within hours of a receiving an order, but also to sell them online through consumer-friendly platforms.

    The Postal Service stepped into this market with a short-lived pilot project in San Francisco and now a refined test in New York City. FedEx and UPS do not appear to be jumping in wholly with a same-day service aimed at the retail e-commerce channel, instead offering individual customers some a la cart same-day options.

    Overall, the prices providers are charging for same-day delivery range from about $6 to $10. This is roughly in line with the value consumers place on these services, according to surveys. The price point is good news for consumers, but raises questions about same-day delivery’s sustainability. According to some analysts, many of the same-day services are money losers. Still, as the late Steve Jobs understood well, consumers’ preferences change as offerings are refined. Demand for same-day delivery could increase in the future, which means those already in the market could have an advantage over late entrants.

    Share your thoughts on same-day delivery service. Is this something you want? Are you willing to pay extra for it? If so, how much and for what types of products? Where is the best opportunity for the Postal Service in this market?  

  • on Dec 30th, 2013 in Delivery & Collection | 49 comments

    The 2013 holiday season turned out to be a particularly eventful one for e-tailers and the shippers that deliver all those packages to your door.

    Factors like fewer than average shopping days between Thanksgiving and Christmas and an increasing comfort level with online buying helped push holiday e-commerce up significantly. In fact, demand exceeded expectations and stressed shippers’ capacity, causing some late deliveries of their goods.  

    Package delivery is clearly a growth industry and the Postal Service expects its piece of that business to rise 6 to 7 percent annually through fiscal year 2017. But is the Postal Service ready for all these packages? Can it meet the growing demand, or is it hampered by a delivery infrastructure that is largely geared toward letters and flats? We recently took a look at the issue and the results were mixed.

    Our audit report, Readiness for Package Growth – Delivery Operations, found the Postal Service has done a good job of managing package growth in terms of mail volume and workhours. But it could make some changes to better handle future increases. For example, to-the-door delivery works well but curbside mailboxes were primarily designed for letters, flats, and small parcels, and they can’t easily accommodate multiple or large packages. We suggested the Postal Service look at modifying cluster boxes to accommodate more packages.

    We also encouraged the Postal Service to explore investing in shelving space on delivery vehicles to accommodate packages and to continue to develop an advanced dynamic routing system. Dynamic routing analyzes individual addresses to tell the carrier how to get to them more quickly. The tool takes into consideration things like traffic congestion and left-hand turns, both of which can eat up time and fuel. These and other steps outlined in the report should help the Postal Service expand services and increase revenue to meet growing customer demand.

    So, what was your experience over the holidays? Were you among the many Americans who bought more gifts online than in previous years? Were your delivery services reliable or did any part of the experience discourage you from future online buying? What changes would you like to see in delivery and returns?

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