Traditionally, shipping methods involve delivering to the consumer’s home or, if an option is presented, picking up at the retailer’s local store. While home delivery is the norm, rising shipping costs and evolving consumer expectations highlight the need for alternative shipping methods.
Home delivery poses several challenges: if the consumer is not home, parcels may be left at the doorstep, risking theft, or taken back to the carrier’s facility for re-delivery, adding to shipping costs and delays. These issues increase costs for all stakeholders and result in inefficiencies. Additionally, consumers often face high shipping costs, which include residential surcharges imposed by carriers. These costs can significantly affect purchasing behavior.
Introducing alternative shipping methods offers a convenient and flexible solution. A prominent option is out-of-home delivery services (OOH), where goods are delivered to a convenient location such as a parcel locker or pick-up points at local convenience stores, drug marts, or other accessible locations near the customer’s home. These alternative options ensure successful first-time deliveries, reducing headaches for retailers, carriers, and consumers. Moreover, they offer cost savings for retailers and carriers, which can be passed on to consumers.
Missed deliveries can be costly. According to IMRG, missed deliveries cost retailers, couriers, and consumers collectively $2 billion a year. Additionally, the average re-delivery cost is $15 per delivery. These costs are significant and can be reduced by utilizing alternative pick-up points.
Implementing alternative shipping options provides customers with more choices, guaranteed first-time delivery rates, and easier access for couriers. This approach also supports sustainability by reducing the carbon footprint of deliveries, as packages are sent to consolidated pick-up points instead of individual homes. Often, these pick-up points allow for faster delivery than shipping directly to a customer's home.
Collection points have become increasingly popular in Europe, with over 330,000 points, including 43,000 automated ones. For instance, Belgium has the highest collection point usage at 8.7%, followed by France at 7.3%, Germany at 7.1%, and the Netherlands at 5.4%. Deliveries to collection points are faster and more efficient, taking around 0.6 days on average compared to 1.2 days for home deliveries. This efficiency helps in reducing delivery failures and costs, making it a more cost-effective option.
By offering alternative delivery options, merchants can enhance the customer experience, build trust, and reduce the risk of shipping issues. Catering to consumer preferences can help merchants differentiate themselves in an increasingly competitive landscape.
References:
- Locus. (2022). When will my package arrive? The cost of missed deliveries. Retrieved from Locus Blog.
- Enterprise Times. (2021). Research reveals the cost of failed deliveries. Retrieved from Enterprise Times.
- E-commerce Germany News. (2023). The use of collection points around the world. Retrieved from E-commerce Germany.
- Wise Systems. (2023). Last mile statistics 2023: Insights, innovations, trends. Retrieved from Wise Systems Blog.
