InPost has begun rolling out a network of 2,000 parcel terminals in the UK, which it is offeringas an open network to retailers and parcel carriers and also as an end-to-end solution via a chosen
national delivery partner.Simon Croft, MD of InPost UK, told CEP-Research that he was unable to reveal the identity of thepartner carrier at this stage, but it would be revealed shortly as one of the UK’s major nationalparcel carriers.
The Polish group, which has already deployed parcel terminals in 17 European and overseasmarkets under an ambitious expansion strategy, has so far installed around 100 of the ‘ParcelLocker 24-7’ machines in the UK and expects to increase this to around 1,000 by the end of June andto 2,000 by January or February 2014.
Croft, who spent 15 years working in the UK parcels sector with Securicor/DHL followed by aperiod as head of commercial development at TNT Post, said the costs of using the terminals forretailers or carriers would be “competitive with what is currently charged by parcel shops, makingit a very cost-effective delivery solution”, but that the InPost solution had the added benefits of24-7 access and being open to all carriers.
“A system like Collect Plus is fine, but it means you have to use Yodel as a carrier, andlikewise with the Hermes ParcelShops you obviously have to use Hermes,” he said. “If a retailer hasa preferred carrier they want to use, then we can accommodate that.
“But I think one of the other big issues is the potential lack of capacity in the conveniencestores. If you look at the growth of online shopping and the growth of these click-and-collect typeoffers – parcel lockers and parcel shops – the volumes are going to be quite significant.”
He believes most of the convenience stores used as parcel shops have limited space to storeparcels. “It may be fine if they have 5, 10 or 15 parcels, but it may be very different if theyhave 30 or 40 parcels per day coming through and customers take two or three days to pick themup.”
The parcel terminals built by InPost, in contrast, have a modular design that means they startwith between 47 and 72 lockers and can have additional columns built on when demand requires it. “So the scalability is very different,” said Croft.
He said the UK parcel and e-retail sector had been talking for some time about the need foralternative delivery solutions. “We are at the point in the UK where this needs to happen now,”said Croft. “There is an increase in volumes from retailers and I don’t see there being muchinvestment from the carriers in new capacity.”
Peak season capacity is certainly very limited, with some of the main UK parcel carriers cappingthe volumes they offer during the two-month period before Christmas and allocating this capacityearly each year to their key customers.
Croft said one of the benefits of 24-7 parcel terminals was that carriers can make deliveries tothe boxes during the night or at a time that is convenient for them, effectively increasing theiravailable capacity and the efficiency of vehicle use.
He anticipates that carriers will make up the main customer group for the parcel terminals,because it is such a cost-effective and efficient way of delivering parcels. “But I think we willhave a significant proportion of tie-ups with retailers too,” he added.
With InPost manufacturing and distributing the boxes itself from its home base in Poland, Croftsaid the main factor determining the timing of the rollout was finding the right location for theterminals.
“While service engineers may not mind going around the back of buildings to pick up deliveries,customers really need parcel terminals to be in areas that are accessible and secure,” he said.Thanks to an agreement with two petrol-station management companies, most of the first wave ofterminal installations has been on garage forecourts. Croft anticipates that most of the first1,500 terminals will be at suburban or provincial town locations such as garages and supermarkets,although he expects a certain amount of penetration in city-centre locations.
“In rural areas, carriers have greater stem mileages,” he said. “In a big city like London thereare different issues; you have the population density but then you also have the issues of trafficcongestion.”
He acknowledged that there is a certain initial reluctance among some major retailers to offerthe InPost solution until it reaches a critical mass, with some retailers waiting to gauge itslevel of popularity first while others are keen to be early adopters.
“We have had the greatest level of success so far with small and medium-sized retailers,”observed Croft. But he insisted there was no particular advantage to waiting until the full networkis in place.
Croft stressed that the new network is solidly financed. “We are not dependent on funding therollout through revenues. We are a well-funded organisation through our partner company in Polandand the private equity company PineBridge Investments,” he said. “The funding is in place and the2,000 terminals will be launched. I think that sets us apart from others in this situation.”
InPost lockers are currently already in operation in 17 countries, including the UK, Poland,Hungary, Brazil, Russia, Ukraine, Cyprus, Estonia, Latvia, Lithuania, Chile, Saudi Arabia, Spain,Slovakia, the Czech Republic, Australia and Ireland. The UK rollout this year is part of a widerprogramme that will see 16,000 of the parcel terminals installed in various countries acrosswestern Europe.
Croft said the open-access model adopted in the UK is likely to be different in most otherEuropean markets, where InPost is likely to mainly partner with a single national carrier. One ofthe reasons for this is that carriers in the UK had already invested significant amounts in theirown delivery solutions and there was no single large carrier able to take on a whole nationalnetwork of parcel terminals and guarantee the necessary volumes, he explained.
Because of this wider European development, Croft said that ultimately it may be possible topost something via a parcel terminal in Nottingham and have it delivered to a parcel terminal inBarcelona, although this may be several years away.
