The Path to Profit: Mastering these 6 Components is a key to Successful Parcel Locker Networks

9 Aug

Andre Veskimeister - Mastering these 6 Components is a key to Successful Parcel Locker Networks

Managing a thriving Parcel Locker Network is a complex endeavour. It involves a careful orchestration of network planning, software development, customer engagement, and fleet coordination, all aimed at maximising throughput. While each network has a finite number of lockers or compartments, this doesn't necessarily define your capacity limit. There are various strategies to augment available capacity or tailor your volume to align with the existing capacity. Proficiency in maintaining this balance is crucial to turn a profit. So, as you seek to ensure your parcel locker venture is lucrative, pay close attention to these six key components:

Capital Cost on the Hardware: The initial investment in setting up the hardware, including the cost of purchasing, installing, and maintaining the parcel lockers, plays a crucial role in determining profitability. Lowering the capital expenditure or exploring cost-effective hardware solutions can positively impact the network's financial performance.

Optimising Parcel Retention Periods: The average time parcels remain in the lockers before being collected by customers directly influences profitability. Shorter retention periods free up locker space faster, enabling efficient use of available capacity and accommodating more deliveries within a given timeframe.

Knowing Future Available Capacity: Understanding and forecasting the network's available capacity is vital for optimising its usage and ensuring efficient operations. By accurately predicting demand and capacity utilisation, logistics providers can avoid overloading the system, sell out maximum capacity and enhance customer experience.

Maximising Available Capacity: This involves serving various use cases and client segments through diversification. It's about rethinking how space can be used, employing innovative strategies like delivering multiple parcels to one location, implementing dynamic pricing, integrating with other carriers, and extending beyond traditional parcel services.

Minimising Time Couriers Spend on Filling the Parcel Locker: Reducing the time and effort spent by couriers in filling parcel lockers enhances operational efficiency. Implementing streamlined processes, easy-to-use interfaces, and optimised routing can significantly impact the overall profitability of the network.

Optimised Network: The arrangement and density of parcel locker locations play a vital role in driving profitability. An optimised network with strategically placed lockers ensures convenient accessibility for customers and couriers, leading to increased utilisation and improved overall profitability.

Deep-Diving into Key Profitability Parameters of Parcel Locker Networks

1.Capital Cost of the Hardware:

Effectively managing the capital cost of hardware plays a fundamental role in ensuring the economic viability of your Parcel Locker Network. And this is not about your negotiation skills or buying power. It is about your software that should enable using a wide range of hardware. Choosing a Parcel Management System (PMS) that supports a broad spectrum of hardware is a crucial strategic decision.

When your PMS is versatile and hardware-agnostic, you create an environment encouraging sup-plier competition. This flexibility allows you to leverage the best offerings in the market. It mitigates the risk of being locked into a single vendor, which can lead to escalated costs and reduced bargaining power.

By being able to tender for the best hardware available, you can reduce upfront investment and ongoing maintenance costs. Moreover, you can continually optimise your hardware choices based on the evolving needs of your network and the advancements in locker technology.

Such strategic cost control in the hardware segment can significantly improve your bottom line and lead to a more profitable operation. The hardware becomes not just a static element of your infrastructure but an evolving asset that can be optimised for cost-effectiveness and performance.

Remember, the objective here isn't just to cut costs and make smarter, more informed decisions about your hardware investments. After all, the hardware you deploy will interact with your customers every day. Ensuring this interaction is seamless, secure, and convenient will contribute significantly to the overall customer experience and, in turn, to the network's profitability.

2.Optimising Parcel Retention Periods

Your compartment's vacancy is not merely space; it's a valuable asset that directly contributes to your revenue generation. The more frequently a compartment is turned over with new parcels, the more potential revenue opportunities are gained. Consequently, managing the duration that parcels remain in lockers is crucial to optimise your network's profitability. Here's how a Parcel Management System (PMS) can contribute to this end:

A. Customer Communication: A sophisticated PMS must possess robust communication capabilities to incentivise customers to retrieve their parcels promptly. This could involve timely notifications, reminders, and perhaps even offering incentives for quick pickup. A well-structured communication strategy, enabled by your PMS, can significantly minimise the time parcels stay in the compartments, enhancing your network's throughput.

B. Behavioural Analytics: By leveraging behavioural analytics, a PMS can assist in establishing the most suitable time or day to deliver a parcel to a specific customer. This level of precision allows for more efficient use of compartment space. For instance, if a customer consistently picks up their deliveries only on Fridays, it is counterproductive to deliver the parcel on a Saturday, resulting in the compartment being occupied for an unnecessary six days. Similarly, if a customer usually retrieves parcels after 6 PM, an evening delivery route would be more sensible than a morning one.

These are just a few examples of how a data-driven, customer-centric approach can optimise your network's performance. By tracking and analysing customer behaviour, you can improve the customer experience and maximise your compartments' utilisation, ultimately boosting the profitability of your network.

Each locker is a valuable piece of real estate in your network. Smart, data-informed decisions on managing this space can yield significant benefits, driving customer satisfaction and your network's financial performance.

3.Precise Knowledge of Future Available Capacity

Possessing a precise understanding of future available capacity is pivotal to optimise the utilisation of your Parcel Locker Network. It enables more effective planning and helps steer operational decisions to maximise throughput and profitability. Here's how a Parcel Management System (PMS) can leverage this knowledge:

A. Resource Planning: An accurate prediction of future capacity allows for better planning of courier resources. It informs the number of couriers required, the volume of parcels they must handle, and the routes they should follow. For instance, if the forecasted demand is high, additional couriers might be necessary to ensure timely delivery and collection of parcels. Conversely, courier resources can be adjusted accordingly during periods of lower demand to avoid unnecessary costs.

B. Preliminary Works Planning: A comprehensive forecast might also reveal periods of overcapacity. You might need to plan for preliminary work to accommodate the increased volume during these times. This could include expanding existing locker units, implementing additional portable parcel lockers, or opening new Pick Up Drop Off (PUDO) points nearby.

C. Parcel Redirection: When overcapacity is anticipated, a strategy could be proactively redirecting parcels to customers' second-best locations. It could be another nearby parcel locker, a PUDO point, or even an alternate delivery method. However, it's crucial to maintain a balance here, ensuring that customer convenience isn't compromised significantly.

D. Parcel Locker Enlargement: An increase in future demand could also justify the expansion of your parcel locker size or establishment of additional parcel lockers in high-demand areas.

E. Opening Additional Portable Parcel Lockers: Removable or temporary parcel lockers could be an effective solution during peak periods. Now there are new autonomous parcel lockers that are easy to install and remove. Soon will be the available first review of autonomous parcel lockers. They offer the flexibility of addressing increased demand without the commitment of permanent infrastructure.

Your PMS can significantly improve operational efficiency and customer experience through accurate forecasting and strategic capacity management. It can help you navigate the thin line between overcapacity and underutilisation, ensuring that your parcel locker network is always running at its optimum level.

4.Options to Maximise Available Capacity:

To unlock the full potential of your Parcel Locker Network, strategies that maximise available capacity are essential. They not only improve operational efficiency but can also create new revenue opportunities. Here's how a Parcel Management System (PMS) can facilitate this:

A. Multiple Parcels to One Locker: When feasible, delivering multiple parcels for the same customer to a single locker compartment can effectively maximise capacity. This approach could be particularly beneficial when numerous deliveries are scheduled for a single customer or customers residing in the same household. This last one should still be treated delicately to ensure your customers' privacy.

B. Dynamic Pricing Campaigns: With insights from your PMS, you can identify underutilised locker locations or off-peak periods. You might consider running discounted sales campaigns to incentivise usage during these times. Dynamic pricing, like surge pricing, can stimulate demand when needed most, contributing to a more balanced utilisation of your locker network.

C. Integration with Other Carriers: Collaborating with other carriers to sell off discounted available capacity can be another effective strategy to maximise locker utilisation. This could open your network to a broader user base, increasing throughput and improving financial performance.

D. Offering Additional Non-Parcel Services: Your lockers can serve more than parcel deliveries. By offering services like Airbnb key handovers, library book pickups and returns, power tool rentals, and more, you diversify the utility of your locker network. This drives additional footfall to your lockers and creates new revenue streams.

In essence, maximising available capacity isn't just about optimising locker space. It's about reimagining how that space can be used and finding innovative ways to add value to your customers. By doing so, you increase your network's profitability and enhance the convenience and value offered to your customers.

5.Minimising Time Couriers Spend on Filling the Parcel Locker

Efficiency at the point of parcel locker filling directly influences the profitability of your operations. To this end, the PMS should incorporate functionalities and strategies to reduce the time a courier spends on this process. Here are some strategic implementations:

A. Optimised Locker Opening Algorithm: By optimising the compartment opening algorithm, the system can open compartments in a sequence that requires the least movement or steps for the courier. This can be determined by factors like the locker's layout and the size of the parcels. This smart sequencing minimises physical effort and time spent by the courier, thereby increasing efficiency.

B. Simultaneous Opening for First Mile Returns: Returns or 'first-mile' services can be streamlined by opening designated compartments simultaneously. This saves time by allowing couriers to process multiple return items at once without interacting with the system for each compartment.

C. Parallel Processing: In periods of high demand, parallel processing allows customers to retrieve their parcels. At the same time, the courier still fills the locker. This requires a PMS capable of handling multiple transactions simultaneously, which can be a significant time-saver and improve lock-er turnover rates.

With these strategies, you can streamline the parcel-filling process and achieve a faster turnaround. Not only does this increase courier productivity, but it also enhances customer satisfaction due to quicker delivery and collection times.

6.Optimised Network:

The effective orchestration of a parcel locker network necessitates careful consideration of the location and density of your lockers. When optimally arranged, these lockers ensure both convenience and accessibility for customers and couriers, driving increased utilisation and, in turn, improving overall profitability.

A. Rich Customer Database: Building a comprehensive customer database is a critical first step in network optimisation. The database should ideally include parcel locker addresses and customers' street addresses. This al-lows operators to understand the geographical spread of their customer base and thus place lock-ers in strategically beneficial locations.

B. Leverage Historical Data and Predictive Analytics: Harnessing the power of historical usage data coupled with predictive analytics can help anticipate demand patterns. Predictive models can reveal insights into peak times, recurrent demand fluctuations, and potential growth areas. By analysing these patterns, operators can identify optimal locations for new lockers and adjust the network design regularly based on these insights.

C. Accessibility for Customers and Couriers: The location of parcel lockers should account for the convenience of both customers and couriers. For customers, lockers should ideally be in areas of high footfall, such as shopping centres, residential complexes, or near public transportation. For couriers, consideration should be given to van accessibility. Placing lockers in areas with ample parking and accessible unloading zones can speed up the parcel deposit process, optimising courier routes and increasing operational efficiency.

D. Regular Network Re-evaluation: Your network should evolve as customer preferences and habits evolve. Regular review and reassessment of your locker network is essential to ensure it continues to serve customers and couriers effectively. This might involve repositioning underutilised lockers, expanding in areas of high demand, or even adjusting the operating hours of specific locker locations.

By prioritising these elements in your parcel locker network design and continually iterating based on data and feedback, you can maximise your network's efficiency, utilisation, and profitability.

Expert view by Arti Kütt, CEO of Cleveron

In the realm of tomorrow's e-commerce logistics, the end user's experience is priority number one. Consumers seek a seamless, almost magical interaction with the world of commerce. They envision a reality with no waiting times, obstacles, or inconveniences. In an ideal world, the desired products would appear effortlessly, economically, and without adverse environmental impact.

Over the past decade and a half, the development and optimisation of parcel locker networks have brought us closer to realising this vision. The six components mentioned in this article are foundational to achieving success in this sphere. However, the driving force must be a relentless pursuit of excellence that resonates with the consumer's imagination and desire for simplicity.

Our holistic and deep understanding of the entire last-mile ecosystem sets Cleveron apart as a preferred partner in this landscape. Our approach provides more than just the parcel locker hardware; it extends to a smart software platform, comprehensive maintenance services, 24/7 support, data analytics, business advisory, and more. We believe in the perpetual innovation of processes and strategies to serve various use cases and client segments, thus maximising efficiency, cost-effectiveness, environmental integrity, and customer experience.

Partnering with Cleveron means aligning with a philosophy that transcends mere functionality. It is an engagement with a futuristic retail and logistics model that continually seeks to exceed customer expectations. This has been the foundation of Cleveron's partnerships with leading global retailers and logistic companies, and it will continue to be the north star guiding our path towards making the improbable a reality.”

Expert view by Mart Mägi, CEO of Omniva

I fully agree that establishing a lucrative parcel locker network involves hardware optimisation, timely parcel retrieval, accurate capacity forecasting, diversifying capacity, efficient courier processes, and network design. Shorter parcel retention periods, aided by communication and behavioural analytics, boost clear throughput. Maximising available capacity entails bundling parcels, dynamic pricing, carrier collaboration, and non-parcel services. Enhancing courier efficiency with optimised algorithms and simultaneous opening drives profitability.

Concluding remarks

Our exploration of the dynamics of parcel locker networks shows that the six components we discussed are significant drivers of profitability. While each component has its impact, its collective operation and integration create real value. However, the importance of these components pales in comparison to software development's role.

The management of these tasks is predominantly executed through a Parcel Management System (PMS). The PMS is not just an administrative tool—it's the digital heart of a parcel locker network. It orchestrates the flow of deliveries, ensuring efficiency, accuracy, and timeliness. It's like a master conductor, coordinating each component in a harmonious symphony of parcel delivery.

Therefore, it's clear that if an operator wants to enhance the profitability of their parcel locker network, focusing on PMS improvement should be one of their primary strategies. By investing in software development, operators can further optimise their systems, cut unnecessary costs, and provide a better customer experience—culminating in a significant boost in profitability.

I hope this comprehensive look at parcel locker networks and the crucial role of software development has been enlightening. We encourage your feedback, comments, and critique as we continue to delve deeper into the intricacies of this rapidly evolving sector. The conversation doesn't end here—let's continue to discuss, question, and explore the world of parcel lockers together.

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About the Author:

Andre Veskimeister