ANALYSIS: Lockers (and PUDOs) taking Europe by storm

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Customers are increasingly demanding when it comes to the delivery experience. They want visibility, flexibility and control. Several recent studies show that consumers will abandon their basket if their preferred delivery option is not available.

With massive volume growth during the Covid period, out-of-home (OOH) delivery has become a ‘must have’ to be able to achieve capacity and to offer customer choice. Moreover, OOH is critical for efficient returns and a good returns process is an important element of customer experience and can determine whether customers come back … or not.

In this context, the Last Mile Experts 2022 Out of home delivery in Europe report released this week is hot stuff: The European CEP market reached over 17 billion parcels, including slightly more than 10 billion B2C parcels.

The future looks even bigger, with 20 billion total annual B2C parcel volumes forecast to be reached at some point between 2025 and 2026, and 30 billion between 2028 and 2029.

Last-mile delivery is responsible for 40-50% of total distribution cost for carriers.

Out-of-home delivery in Europe
OOH is increasingly important in many EU markets – OOH accounts for close to 50% of deliveries in the Nordics, France, Germany, Romania, Czech Republic, Hungary and Poland.

Poland has the largest locker network in Europe, which is about 70% bigger than that of the second European player, DHL, in neighboring Germany. In Spain, there are over 37,000 lockers but most of them are small residential parcel lockers.

One of the key drivers for PUDO network expansion is delivery success. OOH delivery efficiency – that is, first-time delivery – is over 99%.

Network size and density
Based on Last Mile Experts’ minimum viable product rule, OOH networks should have at least one point per 10,000 inhabitants.

Denmark has overtaken Finland to become the European leader in terms of OOH density with more than 25 points per 10,000 inhabitants. Other countries with more developed OOH solutions have between seven and 20 points.

PUDO points significantly outnumber parcel lockers, with over 430,000 PUDO points compared to 79,700 parcel lockers in the EU and UK.

There is significant opportunity for bigger parcel locker networks in 20 out 28 countries. Without investments in OOH delivery networks, the EU and UK will increasingly suffer from serious delivery infrastructure gaps leading to last-mile capacity issues and increasing costs.

Recently, more agnostic networks are being developed, which support cost optimization and environmentally friendly delivery. They also allow for greater OOH network expansion in markets where availability of additional locations and partner shops is becoming a challenge.

“Location and customer traffic analysis play a crucial role when it comes to logistics business – the data shows that even in the European ‘lockerland’ there is still plenty of space for growth, with over 11 million Poles living further than 6km from the nearest parcel locker,” says Joanna Misiewicz, head of growth at location and offline customer intelligence firm, the report’s partner. “In this context traffic data brings in the additional perspective of how customer paths impact a location’s potential and helps anticipate market needs.”

By analyzing the available data, the authors were able to identify 79,710 automated parcel lockers (APMs) in 2021, an increase of 82% over 2020. The total number of unique OOH locations (PUDO and APM) in the EU and UK increased by 36% over the same time period.

Source: Out-of-home delivery in Europe 2022 PUDO and automated parcel machines – Last Mile Experts

Almost all industry experts expect an increase in the percentage of B2C parcels going OOH for the following reasons:

  • As the proximity of points increases, they become more convenient and closer to a home delivery;
  • Capacity demands make this the only viable or cost-effective option;
  • Ecological matters favor proximate OOH delivery.

While the most developed OOH markets now have over 90% of volumes going OOH, we expect that the ‘new norm’ will be about 40–60% depending upon markets specific and cultural issues.

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Mirek Gral is vice president at Last Mile Experts. He was formerly COO of UPS Poland, and has over 27 years’ experience in the courier industry.

Marek Różycki is managing partner at Last Mile Experts, specializing in CEP and e-commerce last-mile advisory.

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