Swipbox, a Danish operator of neutral parcel terminals, has developed an innovative multi-courier parcel locker network in Denmark enabling several logistics providers to share one single terminal and pay only for the compartments they use and a service charge.
The concept has become so successful that the company has been doubling its capacity year by year generating high revenue and volume growth.
Henrik Gedde Moos, Co-founder and Chief Business Development Officer of Swipbox, told CEP-Research in an interview that the business model of Swipbox eliminates the need for the logistics providers to buy complete parcel locker terminals which require considerable funding. “The problem for many companies is the big investment that a last-mile delivery solution requires. Sometimes it’s difficult in a big organisation to get an approval for such a big project because you cannot present a business case as you don’t know how it’s going to work.
“So we established ourselves in Denmark as a logistics company based on our parcel locker solution. Initially, we started to sign up e-commerce companies to use our service and that’s why we knew we needed to have a lot of stations. Otherwise, the e-commerce websites would not sign up with us because they are not interested in a solution that will only work in one corner of the country. And we hired the logistics companies to actually transport the parcels.”
He explained that the background of Swipbox is more than 12 years of experience in manufacturing self-service solutions for national postal services. “We did this in the technology company called aCon and we’ve delivered solutions for a number of postal services in Denmark, Norway, Ireland, Israel etc. We have always been developing solutions based on the requirements of the postal services. But at some point at time, the co-founder of Swipbox, Allan Kaczmarek, who is a very visionary guy, saw the disruption that e-commerce would bring upon retail and change the way we shop. Following this would come a disruption in logistics and that is exactly what we see now.”
In 2011, aCon decided it was the right time to develop an independent last-mile solution in order to create the most cost-effective and convenient way to walk “the last mile”.
“We started looking at this project in spring 2012. And with the investors, we stepped out of the supplier role and developed the solution that we thought was right for the market. We always focused on customer convenience and cost-efficiency because our vision was to establish the most cost-efficient last-mile delivery solution for parcels, predominantly from e-commerce.”
Moos explained that Swipbox started hiring the logistics companies to actually move the parcels on behalf of the e-commerce companies while independent partnerships with the delivery providers came at a later stage. “Three and a half years ago when we talked to e-commerce or logistics companies about business-to-consumer deliveries and last-mile solutions, they didn’t realise that they had this problem yet. And they didn’t really believe that we had a solution.”
“So we established a logistics company running on this solution to prove that the customers liked it and that it was cost-efficient.” Moos didn’t disclose the amount of the investment but stressed that it was a big investment – 325 parcel locker delivery points across Denmark to start with to have a nationwide network. “And once we did that, we started to realise that it would be most efficient if we could open up the network to more than one courier.”
“Meanwhile, we have 400 delivery points in Denmark. But at the same time, we more than doubled the capacity of the network because we kept adding capacity gradually.”
When an e-commerce company signs up with Swipbox to send a parcel, the Swipbox solution is integrated in the checkout flow as a delivery option. Then all the Swipbox locations come up on a map and customers can either choose their favourite box (which will be registered for future deliveries) or send their ZIP code to get the nearest parcel locker.
In terms of delivery providers, Swipbox currently works with DHL, TNT and Bring in Denmark. “We are integrated with the logistics providers and then it’s up to them to present this delivery option to the e-commerce websites.”
At some websites, customers can choose the delivery provider while other websites have only one delivery option. “The trend in the e-commerce market is that more delivery options result in fuller shopping baskets and more satisfied customers,” Moos said.
Once the network has been established, it was easier for Swipbox to attract the logistics companies to try it out, Moos continued. “And once they tried it out, they saw the results. For example, DHL Express Denmark has announced that they generated cost savings of 2% in 2014 on their entire delivery costs by using Swipbox. Instead of making home deliveries to individual customers, they can consolidate deliveries into a box.”
Most of the Swipbox terminals are placed in the supermarkets of the Dansk Supermarked group which includes the hypermarkets Bilka, the supermarkets føtex and convenience stores called Netto. “In a chain like that, the biggest number of delivery points are convenience stores. And that’s why we also needed to build a station that was extremely space-efficient,” Moos said.
“And since we place most of our delivery points in supermarkets, we really benefit from the fact that everybody goes to the supermarket so consumers can pick up their parcels when they go there anyway. Some of the Swipbox machines are also located at university campuses and some at the offices of the courier companies.”
Moos explained that Swipbox terminals have a minimum configuration of 21 lockers while the big ones can be 9 metres wide with 200 lockers. “And there is actually no maximum. The limitation doesn’t come from the system, it comes from the physical distance – from display to the locker where you need to pick up your parcels,” he said.
“In case a terminal is saturated, it is often sufficient for the courier to come a bit later in the day because the bulk of the parcels are actually being picked up within the first hours,” Moos said. Couriers can come twice in the day – early in the morning when they fill in the terminal with parcels and then on the way home they fill it once more. In addition, more capacity can be added to store the parcels. “It’s a matter of scaling capacity to the volume and in five minutes we can add more capacity at certain delivery points by simply adding another box to the terminal. It is an extremely flexible solution, e.g. for peak seasons you can add terminals and take them back afterwards.”
He added that about 67% of the parcels are picked up within the same day, 32% on the next day. So at the end of the second day, almost 90% of the parcels have already been picked up. “In peak seasons where we motivate people to peak up their shipments very fast, a parcel remains in the terminal for 16 hours on average.”
The delivery time of the shipment to the terminal depends on the logistics providers, Moos stressed. “Our strategy is really to provide a last mile solution for logistics. How the carriers want to utilise it is their business.”
While the delivery companies pay only for the number of compartments they plan to use with Swipbox, they can opt for a capacity upgrade in case they used all of them and need more.
He also said there are no ‘wasted’ compartments when logistics companies would actually pay for more lockers that they use, which never happens. “This is exactly the dynamics that we are building into the business model. We want to incentivise the logistics couriers to have a high turnover on the box with as many parcels to be passed through in as small station as possible because this also adds value to the supermarkets. Our incentives all go in the same direction – more foot traffic in the store and higher utilisation of the boxes.”
In Denmark, Swipbox also established a ‘Click&Collect’ solution for the Dansk supermarket group because it is the strongest omni-channel player in Denmark with a very strong presence both in supermarkets and online. Thus, by putting a Swipbox into the supermarket, Dansk made a very strong connection between its online and offline businesses, Moos concluded.
