Dodging Retail Extinction

“It is not the most intelligent of the species that survives; it is not the strongest that survives. It is the one that is able best to adapt and adjust to the changing environment in which it finds itself.” Darwin’s Origin of the Species

This seems also to be true for retailers as well as logistics in a time where within only a few years, e-commerce has generated disruption in the market that requires swift adaptation. Consumers today shop in a mobile, hyper-connected, multi-device world. They expect not only variety, but omnichannel fulfillment experiences such as the ability to choose where, when and how they wish to receive their delivery; Home delivery, Same-Day delivery or Click & Collect, just to name a few. Click & Collect in this context should be understood as a way of buying something in which a customer order and pay for online, then collect the courier-delivered parcel themselves. As a result, goods are increasingly delivered as costly single shipments, while the price point of an e-commerce shipment continues to drop due to intense competition to gain market share. In other words, retailers are driven to charge less - and pay less - for a costlier service that customers to a large extend are not willing to pay for. This disruption introduces opportunities for new strategic alliances as seen with eBay, Walmart and SwipBox. While other technology setups require complete retail system renovations, Click & Collect requires only a way to track inventory and a cost-effective self-service parcel locker. Some parcel locker concepts have been deployed nationwide in a matter of weeks, allowing retailers to move quickly to gain market share. The question which then arises is then whether the system should be open, or proprietary to the retailers and/or logistics. The industry has watched postal companies like Deutsche Post and Post Nord establishing proprietary national parcel locker solutions for years. But a turn in development was seen in 2013, when eBay partnered with renowned UK-retailer Argos to offer Click & Collect service in all 700 stores. In Denmark, SwipBox, together with a prominent retailer, established an independent and open parcel locker network in 2013.The introduction of SwipBox parcel lockers in Denmark was just the first step in an international expansion strategy to help logistics and retailers adapt to the new environment. The market disruption of e-commerce will leave no one unaffected and those that are able to adapt the best will dodge retail extinction.

How can parcel lockers cover your business from retail extinction?
This question has for sure been asked by all stakeholders in the Last Mile Ecosystem in the last years. Meanwhile from being a rare novelty, seen only in the German market and in a number of small pilots, lockers seem to have grown to a worldwide ”must-have” phenomenon for any serious player in this field. How did parcel lockers transform from R&D novelty to sustainable business solution?

I will argue that there are three main motivations to the success of parcel lockers, all adapted and adjusted to the changed Last Mile Ecosystem; Cost Efficiency (directed towards logistics providers and consequently end-users), Click & Collect concept (for omnichannel retailers), and Costumer Convenience (to meet customers’ diverse needs and demands). Let’s take these subjects into closer sight.

Cost Efficiency:
A strong focus on both Cost Efficiency and convenience drives other strategic choices from designing for flexibility and placement. Parcel lockers can be placed inside as well as outdoor, which adds customer convenience. What perhaps is even more important in this context, logistics providers can deliver more parcels at the same place, which results in no re-deliveries and a 100% delivery success rate. This drives your logistics partner’s operating costs down, and eventually yours and your end-users’ expenses.

Click & Collect:
A parcel locker at a Brick & Mortar-based location is probably one of the most efficient and concrete ways of connecting online and offline business for a retailer. So, with a flexible and scalable solution, the retailer can start out with small parcel lockers of eg. two racks and then add racks to the parcel lockers and grow the capacity along with the volumes. Additionally, Click & Collect is an opportunity to attract more customers to your store.

Customer Convenience:
The most successful parcel locker networks today take into consideration which functionalities are necessary in order to deliver a parcel in the most effective way. This approach has resulted in change from lockers with all sorts of functionalities like receipt and label printers, credit card terminals, coin slots etc. to a parcel locker with minimal functionalities on the unit and all other functionalities in the cloud. In example Danish parcel locker provider SwipBox has a minimal user interface on the parcel locker, yet it has a number of innovative functionalities like ordering from smartphone, label less shipment, label less return, payment solutions etc. that are all cloud based. Moreover, the SwipBox solution is open for multi-courier networks. This reduces the cost and maintenance of the parcel locker while increasing Customer Convenience. Customers’ increasing demands to c onvenient solutions will be further extended in next week’s whitepaper.