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November 25, 2014
The click and collect (C&C) revolution has been a decade and a half in the making. What began as a natural evolution in the Nordic countries and passed through eastern Europe is now recognized worldwide as the flexible solution of choice for customers who wish to collect and deposit parcels to fit their lifestyle.
“Click and collect is a major trend that IPC believes will continue to grow,” says Mark Harrison, head of markets for the organization. “Many retailers are revitalizing their main street business through consumers ordering online and collecting in store.”
In the UK the interim 2014 results for retailer John Lewis revealed that more than 50% of online orders are done through C&C to its network of stores. The company recently opened its first C&C outlet at St Pancras International in London. This is its first presence at a railway station, thereby reaching out to the so-called ‘transumers’.
“Today the UK is one of C&C’s chief proponents,” says Andrew Starkey, a leading postal consultant retained by IMRG as head of retail e-logistics. “It really took off during the snow-filled winter of 2010. Retailers were saying, ‘We can’t get to you, can you get to us?’ Village halls and railway stations were set up as impromptu pick-up points, and customers were encouraged to visit shops and collect goods for themselves. Today we estimate that purchasing or reserving online and collecting in-store now accounts for 25% of multichannel retailers’ sales.”
There are two principal incarnations of C&C. One is in-store collection and all the opportunities this entails for upselling. The other is the more familiar lockable solution, both manned (such as post offices, Collect+, Hermes Parcelshops, UPS Access Point) and unmanned (InPost and ByBox, for instance). Let us examine these solutions in the UK – an e-commerce market with a value of £100bn (US$160bn) but one that is costing £851m (US$1.3bn) a year in failed deliveries – before considering the posts’ response worldwide.
Right: Customers can collect online orders from InPost lockers at a number of Transport for London railway stations
InPost is a locker
solution based on the C&C revolution. The company’s headquarters are in Poland, but two years ago a UK branch was established. Today
it has more than 2,000 outlets, with 70% of UK households within five miles of one. Michelle de Pasquale is its commercial director. “Our lockers provide consumers, customers, carriers and the retail industry with a way of enabling access to parcels 24/7,” she says. “You can choose a locker for pick-up or drop-off [PUDO]. Our host locations include branches of the supermarket Morrisons and Transport for London facilities. We are also aligned to independent merchants who fit the right criteria of convenience and are working with retail clients and property management businesses to align where people might be passing on their way to or from somewhere.”
For de Pasquale the future of delivery is all about building it around lifestyle – not just our working lives but our entire lives. This might mean Monday for collection en route to work, Tuesday drop-off on the way to school, and even picking up a brand-new book or game release 30 seconds past midnight rather than waiting in line for 14 hours. Flexibility and taking control are key.
“C&C has to develop to become prevalent in areas we choose to use our time, whether we are working or playing,” she says. “It’s all about the communication and the experience. If you turn up at an InPost locker with your QR code or PIN, the touchscreen will effectively transport you to the retailer. The lack of brand recognition was a historical concern for retailers. We are saying the evolution of C&C is moving from the mechanical to the personal. The ability to be exposed to voucher codes and special offers doesn’t diminish just because you are not crossing a retailer’s threshold.”
In the UK, Amazon recently struck a deal with C&C newcomer Doddle (created by Network Rail and Lloyd Dorfman) to establish 300 C&C centers at UK train stations. This agreement coattails Amazon’s efforts to occupy soon-to-be-vacant ticket offices on the London Underground. Amazon already has 300 locker sites across the UK, including at supermarkets, libraries and universities.
Other recent developments include high-end supermarket Waitrose – in partnership with ByBox – establishing refrigerated lockers at London Gatwick Airport for vacationers to collect their shopping on landing, while catalog and online retailer Argos has revealed that customers will be able to collect eBay parcels from 650 stores by the end of the year.
“A new phenomenon is the springing up of C&C partnerships,” says David Staunton, head of product marketing for MetaPack, a provider of multicarrier management software and currently working with more than 80% of the UK’s top 100 retailers. “The success of the eBay and Argos partnership has shown that mixing of retailers and channels has a lot of potential in the future. The market is very close to a main street retailer opening their doors to a competitive retailer in their own space. This is likely to happen within 18 months.”
Left: In-store click and collect offers a number of upselling opportunities for retailers
The interface between consumer and retailer may be lessening on account of locker technology, but for many there is no substitute for in-store interaction. “Once inside the store, the customer has a number of opportunities, as does the retailer,” says IMRG’s Starkey. “In-store C&C can be supported by additional promotions. Collection is usually free and the consumer might get a discount on other products or capitalize on a promotion. In-store collection is an opportunity to cross-sell and upsell. The extra footfall means more spending overall.”
Another advantage of shop collection is that it enables retailers to handle returns more efficiently. It is commonplace for shoppers to order two or three of the same item in different sizes and colors. If consumers collect an order from the store, they may complete the returns process immediately – good news because they receive an immediate credit. There is anecdotal evidence that if the retailer gives the customer credit at the till they will use it as ‘free’ money while in the shop because they have in effect already spent it.
“MetaPack’s retailers have been using C&C to scale their customer offerings in a way that is not possible with just home retail,” says Staunton. “One of the drivers for any retailer is the ability to offer free delivery and for retailers that are already doing daily or frequent store replenishments; it is a way to access that capacity for free or at a level that is far below home delivery rates.”
A further driver for MetaPack is the opportunity to extend the range offered by remote suppliers but still retain the in-store experience. For products that need installation or fitting (in MetaPack’s case, those from Halfords), it is not preferable to have them delivered to the home. C&C allows consumers to mix the benefits of ‘bricks and clicks’ by having retailers’ extended ranges for easy purchase online combined with the ability to ship those goods to a store for in-store expertise.
“Predictability and reliability of service are key,” says Staunton. “If you look at the John Lewis and Waitrose experience of C&C in their stores, the customer proposition is paramount and the service is well communicated throughout the process. They are using MetaPack integrated into their warehouse solution to automatically allocate deliveries to their own fleet (for cost savings and service) and then using MetaPack to proactively contact the consumer to let them know their item has arrived in store. This eliminates a lot of the problems consumers face with the uncertainty of home delivery.”
There are now major considerations for retailers regarding the physical layout of their stores and the volume being processed on a daily basis. The true nature of omnichannel retailing means that purchases seamlessly mix over channels and the challenge comes in trying to proportion that volume. If a purchase is done online but is only successful because of the availability of the store, and is then collected in store, is that a store sale or an online sale? The lines have now been blurred.
Right: Waitrose has partnered with ByBox to provide lockers at Gatwick Airport in the UK
Posts understand the importance and convenience to the consumer of C&C and
are responding through an expanding network of parcel lockers, which offer 24/7 collection options and delivery points. For example, in Germany, Deutsche Post DHL has introduced 2,650 Packstations to provide nationwide distribution, while Australia Post has invested A$50m (US$43m) in 250 parcel terminals. Posts are also entering into partnerships with third-party suppliers to provide pack stations, as is the case in France, where Le Groupe La Poste is working with NeoPost to roll out 1,500 lockers by 2016 operating under the Packcity brand. However, it would also be fair to say that most haven’t truly grasped the opportunity and few entered at the onset of C&C.
“Posts in any domestic market have the biggest infrastructure and the greatest capacity,” says Starkey. “If they did C&C well, why would any other competitor enter the market? The fact is they’ve missed it. Other faster, more agile competitors have come in with better technology and a better opening-hour proposition, and posts have let the opportunity fly by. Only now are they starting to respond. The Post Office in the UK has just announced C&C locations with extended opening hours and is starting to install boxes in some locations. In 2008, the only competition was 2,500 locations, but by the end of 2014 the Post Office will be competing with 20,000 locations. If it had acted fast enough, those 20,000 wouldn’t have happened. But posts still have the opportunity to be trusted.”
In a similar vein, the US Postal Service has created Gopost, its own C&C solution. “Gopost represents the next great innovation from USPS,” explains Kelly Sigmon, vice president of USPS Channel Access. “It’s based on a simple yet novel idea: why wait for your package when your package can wait for you.”
This is all well and good, yet the pilot scheme, established in 2012, is still ongoing and features only 25 sites with a mere 80 lockers at each. To put this into a more general C&C perspective, this year USA Walmart announced a target of 60% of its online orders to be collected in store, with Macy’s also looking to leverage its in-store pick-up through its 500 in-store fulfillment locations.
“I don’t think there is a compelling and tailored offering from the posts on C&C,” says Staunton. “Since privatization you can see that the UK Post Office has had an increasingly broader scope and is looking to compete in the PUDO market more aggressively, but not fully formed as yet.”
“Posts need to align their key strengths in last-mile delivery and roll them out regardless of whether the last mile is to the consumer at their home, their office, or to a collection point of the consumers’ choice,” concludes Harrison. “Surveys show that delivery choice is one of the key factors that encourages cross-border e-commerce, which is seen as a major growth driver in the years to come.”
- This article was first published in the January 2015 issue of Postal Technology International
November 25, 2014