The Network Chronicles (UK): Exploring Amazon's and DPD's OOH Delivery Networks

The UK’s out-of-home (OOH) delivery landscape is dynamic and competitive.

Royal Mail, Amazon, InPost, DPD, Evri, Yodel, and other notable players have invested in building dense out-of-home delivery networks over the past few years. Most of them rely exclusively on parcel shops or carrier-agnostic networks, with the exception of Amazon and InPost, which include their own locker.

With many strong operators pursuing different approaches, creating a successful network requires a lot of effort. So, how do they do it?

In this study, we delve into the strategies, coverage, and overall market impact of the major players, starting from Amazon and DPD.

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Data sources and methodology

Using the Mily Tech platform, we’ll analyze the patterns, strengths, and potential areas of growth of the mentioned companies. But before we start, let’s define some boundaries. 

Study area: Tower Hamlet‍

Welcome to Tower Hamlets, located on the north bank of the River Thames. This London borough is notably the most densely populated area in the UK, with 15,695 residents per square kilometer. Covering 19.8 square km, it hosts out-of-home networks from all major players, making it an ideal location for testing OOH network strategies.

Data

• Location data: We surveyed the operators’ public websites to identify the locations of parcel lockers, pick-up and drop-off locations (PUDOs), and partners (last accessed in July 2024). Some locations may not have been disclosed, which is a potential limitation of the analysis.
• Population data: As we do not have shipment-volume data, the analysis is based on 2023 census data showing population density across Tower Hamlets.

Calculating methodology

As we’re using population data, coverage represents the potential number of people each location can serve. 

While we mention the different distance types, most of the coverage calculations are done based on a radial distance of 500m (R500) because:

• In dense urban areas, 10-minute walking isochrones (W10) will overlap, making marginal gaps difficult to see. 
• Driving distance is less meaningful in a compact borough.

Initial observations

Just by mapping the locations of different players, we can draw several conclusions:

• Multiple out-of-home points in the same location can indicate a need for greater capacity, suggesting that the volume of deliveries is likely higher than in other parts of Tower Hamlets.
• Several players share infrastructure by partnering with the same local stores or post offices, which can become a risk during peak periods.

Amazon

According to the Last Mile Experts’ OOH Delivery in Europe 2024 Report, Amazon has one of the largest collection point networks in the UK. By partnering with Royal Mail, Post Office, Next, COOP, McColl's, and Collect+, Amazon reached approximately 10,000 PUDOs and 5,000 lockers. 

Network overview in Tower Hamlets

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Coverage analysis

Now that we have all the data on the Mily Tech platform, we can visualize and calculate coverage:

• W10: 96% of the population in Tower Hamlets can reach Amazon Counters and Amazon Lockers within a 10-minute walk. 
• R500: 85% of residents are within a radial distance of 500 m of an Amazon location.

The collaboration with Post Office significantly helps with coverage. As Post Office locations are not available 24/7, we assume parcel lockers are added in areas with higher parcel volumes to improve customer experience. 

Amazon also partners with Evri for returns in addition to Royal Mail and Post Office.  

There are only a few locations where Evri is present, and Amazon is not. The collaboration increases W10 coverage by 1% and by an additional 4% when calculated using R500. We conclude that the partnership primarily reinforces existing locations and provides flexibility in required capacity.

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Market impact and suggestions

Without question, Amazon has a solid out-of-home delivery network. But is the coverage sufficient to serve its capacity? The density and scale of the network were achieved through partnerships, and as Amazon is not the only one using the partner locations, it is not in full control of the capacity. So, while coverage can help us answer whether or not they are close to recipients, we don’t have enough data to answer the question for capacity planning and assessment properly. 

When compared to other market players, UPS's network is complementary to Amazon’s. As the screenshot below shows, Amazon and UPS would clearly benefit from access to each other’s networks. 

Finally, we identified three new locations (where local stores used by other players already exist), which could lead to expanded coverage: 

DPD UK

According to the OOH Delivery in Europe 2024 Report, the DPD UK network has over 10,000 PUDOs and 500 parcel lockers, partnering with Collect+, Parcelly, Quadient, Royal Mail, Post Office, YEEP!, and local brands. 

Network overview in Tower Hamlets

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Coverage analysis

Calculating DPD’s coverage, we can see the following: 

• W10: 93% of the population in Tower Hamlets can reach a DPD parcel shop within a 10-minute walk.
• R500: 85% of the population is within 500 m of a DPD location.

By adding Collect+ locations, the R500 coverage increases to 92%. 

DPD’s shop finder shows that the same network is used for returns.

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Market impact and suggestions

As with Amazon, many shared locations could lead to a capacity issue, especially during the peak season. Potentially, building its own parcel locker network could be the solution. 

UPS’s OOH network again seems very complementary in terms of coverage, and a potential partnership could help both UPS and DPD UK increase their footprint. 

Last but not least, by taking into consideration DPD UK and Collet+ locations, we’ve identified three additional locations that could potentially result in greater network coverage:

Cross-player observations

• Partnerships drive density: Both Amazon and DPD achieve much of the observed coverage through partner infrastructure, notably with Post Office.
• Co-location is a double-edged sword: Too many shared locations can create capacity issues, especially during peak seasons.‍
• Parcel lockers are underrepresented: PUDOs dominate in Tower Hamlets, but we expect parcel lockers to expand over the next years.

Final remarks

Tower Hamlets is a harsh test – dense population, and dense OOH competition. In this area, both Amazon and DPD achieve high coverage, largely through partnerships that provide measurable footprint uplift. 

Amazon and DPD are just two of the many companies present in the UK market. So stay tuned for future articles in the Network Chronicles series, where we’ll examine more operators and explore how different approaches to building OOH delivery networks perform. 

Want to find out how you benchmark against other players in the industry? Reach out.