Parcel Lockers – Spearheading Digital Disruption in Logistics


Digital Disruption & Hyper-Relevance
“Digital disruption” and “Hyper-relevance,” are the buzzwords of the dynamic digital industry. These words, which are actually the ripple effects of the fast-paced digital landscape are giving a silver lining to some businesses, and also making some lose their sleep. Let’s see how.

Simply put, digital disruption is the change that takes place when new technologies and business models are introduced, which affect the value proposition of existing products or services. For example, the emergence of online shopping disrupted the way people used to buy stuff primarily from brick-and-mortar stores. It triggered a paradigm shift for many retail businesses to stay competitive by embracing the change. The term “disruption” may have a tinge of negativity; however, it is actually good for both consumers and retailers when they see the merits.

Hyper-relevance, on the other hand, is about offering consumers upside values in terms of greater efficiency, savings, or engagement during their shopping life cycle. Hyper-relevance enables consumers to receive what they are seeking. It is possible to incorporate by retailers through fresh digitally-enabled solutions and innovative business models that deliver value.

Besides hyper-relevance, the two other characteristics of digital disruption are informed decision-making and quick implementation. In this post, we will have a contextual discussion about the digital disruption caused by parcel lockers in logistics vertical, and why it is futuristic.

Cost Effectiveness & Customer Experience – Digital Disruption is the Need of the Hour
Both cost-effectiveness and creating customer experience are pivotal aspects of online retailing that determine the competitiveness of retail businesses. Digital disruptors, however, are changing the dynamics of this competitiveness by integrating various values, leveraging significant efficiencies and insights of digital operations. Interestingly, the potential of disruption is just not limited to digital-based competitors. Many traditional and established retailers are also trying out disruptive new business models as part of their future business strategies. Some of these top-tier retailers, for example, are opting for click & collect or parcel lockers to spruce up their supply chain. Parcel lockers give customers the option to collect their packages without having to wait for home delivery.

The purpose behind incorporating parcel lockers is to slash logistic costs and provide a better customer experience. Considering the fact that the retail industry has the potential to generate business worth $506 billion by 2018 through the digital platform, embracing parcel lockers is an important step. Retailers, for example, were able to realise only 15 percent of the digital value in 2015. Digital retail business isn’t just about online shopping, for long-term success companies now require an effective and consistent process to deliver great customer experience.

Digital Value at Stake – Effects on E-commerce Businesses and Consumers
A recent study carried out by CISCO shows that “Digital Value at Stake” will be $506 billion worldwide through 2018. The study is based on evaluation and customer engagement of 350 private sector cases of digital use, and out of which 24 are retail sectors. This is a huge potential that retail companies can cash in on by using digital advantages.

Digital Value at Stake comprises two main components – one, new value sources generated from digital investments and innovations; and secondly, shift in the value proposition of companies based on their abilities to foster digital capabilities. Now, instead of a holistic view, if the things boil down to the grassroots level of the supply chain, just imagine the number of items that retail companies need to be ship and deliver! As already more consumers are shopping online, e-commerce companies are struggling to deliver items to their door. Customers need to get notified and also sign while collecting their parcels. Often the recipients are not home, and courier companies make re-attempts to deliver. All of this adds time and money, particularly in labour and logistics costs.

Considering the high-cost factors, many e-commerce companies like Amazon have introduced click & collect lockers into their supply chain. Others have opted for third-party locker service providers to streamline their delivery process and increase customer satisfaction. The concept is – instead of delivering packages to consumers’ home or office, courier companies will place them in the designated lockers. Consumers can collect their items anytime by using a passcode, within a three-day window. The main advantage of retailers is they can deliver higher volumes of orders at once without having to waste time looking for customers’ address.

One Survey, Many Revelations
The Differentiating Delivery study conducted by McGuire Research for Accenture provides great insights into the changing retail industry. The survey included 1,124 businesses with global revenue from online sales of below $500 million or more than 20 percent of their gross revenue. The online survey was carried out in 10 countries, which are Australia, Brazil, China, Canada, Germany, France, Italy, Japan, the United Kingdom, and the US.

There are five major findings from the survey as mentioned below:
1.Pricing – E-commerce companies are not only sensitive about customers but they are also sensitive about the pricing of items. The main reason e-Tailers stick to one provider is because they aim to obtain the highest discount on price (as stated by 73 percent of respondents). The study also suggests that exclusivity of e-commerce companies and the right digital analytical tools can help formulate smart pricing strategies.
2.Customer Segmentation – As the online retail industry is growing at a fast pace, the complexity and diversity of services are increasing manifold. Now, besides having basic delivery services in place, e-Tailers are also seeking to incorporate additional features to accelerate their business growth. In this endeavour, proper segmentation of customers to develop targeted products for addressing their specific needs is one of the decisive factors.
3.Parcel Returns – The Differentiating Delivery study reveals that consumers are seeking better return options and are likely to shop more with e-commerce companies that make returning a package an easy process. This is the reason why e-Tailers rank return capabilities among the most important factors when evaluating a delivery service provider.
4.Customer Experience – On the global scale, a large number of respondents (79 percent) stated that convenient and affordable returns along with complete transparency in tracking are the most important features. Features such as allowing customers to decide when they need their packages delivered, delivery notification on the delivery date, and coordinating delivery directly with the courier company are stated as key decisive factors.
5.Cross-border Delivery Convenience – Logistics or courier companies need to customise their services for cross-border, business-to-consumer (B2C) e-commerce, which is forecasted to grow to $994 billion by 2020. The cross-border shoppers seek to fulfil different requirements and expectations, which include delivery dates and pricing.

Overall, the above factors will determine digital capabilities of retail companies, which further enable them to take on various challenges including workforce efficiency, improving customer engagement, reducing shrinkage, increasing physical/transactional security, streamlining inventory, and the delivery process.

The Future Ahead
Digital technologies or ‘disruptions’ like parcel lockers are creating new opportunities by developing capabilities through automation in the current low ‘IT intensity’ of the retail sector. From customers’ point of view, the ease, simplicity, and seamless delivery would be the major takeaways.

On similar lines, Smartbox has brought about changes in the digital retail sector by redefining operating models and providing consumer convenience.

Smartbox is India’s first network of automated parcel delivery terminals. The terminals are located at strategic locations for easy drop and collection. Currently, present at various locations in Delhi NCR region, this network will expand all over India by the end of 2016 to help consumers and e-commerce companies in 24/7 parcel pick-up and drop respectively. Smartbox brings the much needed security, privacy and flexibility for the delivery of online shopping. It allows customers to pick-up parcels 24/7 as per their convenience. See more at



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