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Are parcel terminals viable?

UPS Access Point

UPS’s recent introduction of the ‘UPS Access Point’ in the UK follows the acquisition of Kiala, an operator of parcels delivery to shops.  UPS’s UK-based Access Point is scheduled to expand throughout Europe to the nearly 7000 shops that Kiala services.  This service is similar to UPS’s U.S.-based My Choice or to FedEx’s in store delivery (many of which are open 24/7).  All these services incorporate messaging to the recipients when parcels are ready for pickup.

In-store parcels delivery raises questions about the business viability of parcels terminals. (Parcels terminals are self-service automated lockers for the delivery and pickup of parcels; using the telecom/internet networks parcels terminals issue messages when parcels are ready for pickup). (see our blog entry from august 2012)

Parcel terminal location

Parcel terminals must be ubiquitous and conveniently located for their adoption to succeed, requiring high capital investment.   Even Amazon, which has been pilot-testing parcels terminals,  has promoted the “Collect+ stores” service in the UK, a service that offers recipient the choice to pick-up from 4500 convenience stores of their choice.  One must thus wonder, in this light, about the competitive advantage of parcel terminals:

  • What ‘yield’ (i.e., parcels turnover per locker) must be accomplished to justify the cost of deploying parcel terminals?
  •  Is the technical complexity of parcels terminals justifiable compared to the low-tech solution of in-store delivery?
  • Convenience stores being, by the mere virtue of their name, located at convenient spots, can parcel terminal networks achieve the same level of convenience?
  • Do recipients value the privacy of parcel terminals, or is the ease of the in-store pickup likely to be enough?
  • Are delivery costs to parcels terminals cheaper than to convenience stores?
  • And, what about end-users?  Will they expect both alternatives in addition to home delivery?

Low tech?

As parcel terminals gain increased visibility and adoption in the industry, one wonders whether the phenomenon is not merely driven by the ‘innovative’ and ‘high-tech’ image they convey when, in reality,  low-tech in-store delivery  can be  just as effective.

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