By Robbie Whelan
On a recent weekday afternoon in Brooklyn, N.Y., Abdul Azam,
store manager at Greenfield Pharmacy, sold soft drinks to
teenagers, rang up orders for elderly customers buying medicine and
scanned bar codes for a pile of parcels being shipped by United
Parcel Service Inc.
Mr. Azam's pharmacy is one of a growing number of UPS Access
Point locations -- small businesses like drug stores, dry cleaners
or cafés with a small storage area where UPS drivers can leave
packages for customers to retrieve later.
The managers at Greenfield, which sits just a block from the
neighborhood's main subway station, have set up a storage rack in a
back room where a pharmacist offers health consultations to
customers. Mr. Azam scans packages with a device provided to him by
UPS, collects a small fee for each one, and holds them until their
owners come, show photo ID, and take them away.
For Mr. Azam, the Access Point location is helpful because
customers picking up a package might also buy a tube of toothpaste
or a bottle of aspirin: "We have a lot of new faces coming in"
because of the package pickup service, he said.
But for UPS, Access Point locations solve the more crucial
problem of failed deliveries: When recipients aren't home to
receive packages, drivers have to make costly second and even third
return trips. UPS said last month that it will expand the number of
Access Point locations from just a few thousand locations now to
20,000 in North America, including new ones in Boston and the San
Francisco Bay and the Washington, D.C., areas, by year-end.
As online shopping grows in popularity, more parcel-delivery
services and retailers, plagued by the failed-package-delivery
problem, are experimenting with ways to eliminate the often
inefficient, maddening "last mile" of the supply chain
altogether.
E-commerce hasn't turned out to be as profitable as delivery
companies had hoped. Dropping off items purchased online at homes
scattered across a neighborhood adds time, miles and costs to each
delivery, while Amazon.com Inc. and its peers are able negotiate
low prices based on their huge volumes.
Dropping off packages in bulk and creating incentives for
consumers to fetch their parcels at nearby retailers or locker
banks dramatically improves the economics of delivery.
As a result, UPS, FedEx Corp. and Deutsche Post DHL Group's DHL
unit are investing heavily in new systems geared towards getting
e-commerce customers to collect their orders anywhere but their
homes.
FedEx offers a 24-hour locker system called "Ship&Get" in 31
cities in Texas, as well as in Memphis, Tenn., situating most
lockers outside FedEx stores or Walgreens pharmacies. In August of
last year, the U.S. Postal Service installed 17 "Gopost" lockers in
New York and Washington as part of a pilot program. DHL, whose
"Packstation" lockers are ubiquitous in Germany, is testing lockers
in Plantation, Fla., and plans to install more in Orlando, New York
and Miami this summer.
In Chicago, UPS is testing out brown-and-yellow, ATM-like smart
lockers adjacent to a Staples store and an Aldi supermarket;
customers can enter a numeric code and retrieve their packages.
Self-service pickup stations and lockers have been popular for
years in Europe, where home delivery can be difficult and more of
the population lives in dense urban centers than in the U.S.
DHL started building self-service lockers in Germany in 2001.
Since then, the company has installed 2,700 locker banks, mostly in
train stations, and opened 12,000 staffed parcel pickup points,
including newsstands and small shops. The company hopes to expand
the locker program elsewhere in Europe and the U.S.
Andrej Busch, chief executive of DHL Parcel Europe, said the
cost of maintaining locker banks is offset by savings the company
generates by not having to deliver each package to an individual
customer's address. Most business-to-consumer deliveries are paid
for by the shipping fees on each package. By leaving as many as 100
packages at a time at bulk drop-off points, DHL can spread the cost
of each delivery over many dozens of shipping fees.
"The more parcels you can deliver to a single location, the
lower the cost," Mr. Busch said. In the U.S., however, the
challenge is finding the right place for pickup stations. "It's
very, very early to say if this is going to work" in the U.S., he
said. Fewer Americans commute by train than Europeans do, he said,
and more Americans visit shopping centers as part of their regular
routines. DHL is exploring putting lockers at shopping centers to
"better cater to the American lifestyle."
For brick-and-mortar retailers, adding lockers outside stores
for after-hour pickups would help eliminate the need to pay to ship
online orders often covered by free shipping offers.
Several manufacturers of lockers are actively pitching their
products to U.S. retailers and parcel-carriers, hoping to replicate
their success on the other side of the Atlantic. InPost, Ltd., a
Polish company that designs lockers that can be opened with a code
sent by text message to the customer, recently presented its
lockers at a logistics industry conference in Atlanta. The company
has installed lockers that, it says, can save online retailers 30%
per package on shipping costs in Poland, the Czech Republic, Russia
and Ukraine; most recently, it installed about 1,000 in the
U.K.
"The e-commerce shipper has a huge incentive to decrease their
logistics cost," said Rafal Brzoska, InPost's founder.
InPost and its competitors are hoping, ultimately, that big-name
retailers will commit to the "click-and-collect" model using
lockers and implement it en masse in the U.S. Although few
retailers have actually adopted locker technology, some say they
are considering it.
"The idea of a locker concept is very much on our minds," said
Terry Lundgren, chief executive of Macy's Inc., in a recent
interview with The Wall Street Journal, although the company has no
immediate plans to start using pick-up lockers, a spokesman
said.
Any parcel-carrier or retailer experimenting with lockers is to
some extent following the lead of Amazon, which began putting
Amazon Lockers in grocery and convenience stores and drugstore
outlets in Seattle, New York State and near Washington in 2011.
But some logistics industry experts doubt the need for lockers
and pickup points. Satish Jindel, a long-time industry consultant
and president of data firm ShipMatrix, Inc., said that failed
deliveries aren't a big enough problem to warrant the investment
parcel companies are making. A ShipMatrix analysis of 300 million
deliveries from shippers to consumers by the major carriers found
that only 1.5% of all parcels require a second delivery attempt,
and only 0.8% of all parcels require a third attempt.
Mr. Jindel called UPS's Access Point program "an
operations-driven initiative, not a market-driven" one. "It's only
for deliveries in a bad neighborhood," he said. "What works in
Europe is not going to work here."
Write to Robbie Whelan at robbie.whelan@wsj.com
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