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 companies in one market, each taking different approaches to OOH network development, 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.

Setting the scope

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. 

The area:‍

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 as of 2021. Covering an area of 19.8 square kilometers, it hosts out-of-home networks of all major players. 

The data:

• Locations of out-of-home points: To be able to analyze an out-of-home network, we have to know the locations of its parcel lockers, pick-up and drop-off locations (PUDOs), and partners. This information can be sourced from public records. However, it is possible that some locations have not been disclosed. This means there is a potential limitation to the analysis and its results, as we cannot guarantee that we have included all locations within the defined area.
• Base layer: Due to the lack of volume data, our analysis is based only on population density.
   

Just by showing the infrastructure locations of different players on a map, we can already draw a few conclusions. Multiple out-of-home points present in the same location can indicate the need for greater capacity, which means the volume of deliveries is probably higher in that location than in other parts of Tower Hamlets.  Moreover, it also shows that several players are sharing infrastructure by partnering with local stores or post offices. 

Calculating coverage‍

As we’re using population data, coverage represents the potential number of people each location can serve. It can be calculated based on different criteria, such as walking, driving, or fixed radial distance. 

While we mention the different distance types throughout the analysis, most of the calculations will be done based on a radial distance of 500m. This is because the area has a high network density, making it impractical to evaluate driving distance. Additionally, using a 10-minute walking distance would limit our ability to identify gaps for the same reason. 

Per player analysis

Amazon

Strategy overview:

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. 

In Tower Hamlets, the company has over 50 locations, most of which are Amazon Counters.

Coverage analysis:

Now that we have everything on the Mily Tech platform, we can calculate and visualize the coverage.

In terms of numbers, 96% of the population in Tower Hamlets can reach Amazon Counters and Amazon Lockers within a 10-minute walk (W10). To make it easier to spot gaps, we’ve switched to a radial distance of 500m (R500), resulting in a network coverage of 85%. 

We can also see that the collaboration with Post Offices significantly helps with coverage. As Post Offices are not available 24/7, we can assume parcel lockers are added in areas with larger parcel volumes to improve customer experience. 

After a quick website visit, we noticed Amazon 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 the W10 coverage by 1% but brings an additional 4% when calculated based on R500. So, we can conclude that the partnership mainly reinforces existing locations and offers flexibility in terms of 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 can see three new locations (where local stores used by other players already exist), which could lead to expanded coverage: 

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DPD UK

Strategy overview:

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. 

In Tower Hamlets, DPD UK has over 43 parcel shops. 

Coverage analysis:

The parcel shops can be reached by 93% of the population in the chosen area within a 10-minute walk (W10). This also means they are within 500m (R500) reach of 85% of the population. If we add Collect+ locations, the R500 coverage increases to 92%. 

Looking into their website, the same network is utilized for the returns. 

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:

Final remarks

Partnerships are crucial for achieving a dense network. Amazon and DPD owe much of their coverage to their collaboration with the Post Office. However, too many shared locations could create capacity issues.  

Lockers are currently underrepresented compared to PUDOs, but we anticipate a significant increase in their presence over the next few years. 

While large and significant, Amazon and DPD are just two of the many companies present in the UK market. 

Mily Tech's platform also enabled an easy and insightful network analysis of other major players, so stay tuned for future articles in the Network Chronicles series.

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