As a more operationally efficient and consumer-centric option, out-of-home (OOH) delivery presents itself as a worthwhile investment for parcel delivery companies, postal operators, and retailers.
Although OOH networks are expanding throughout Europe, 81% of e-shoppers favor home delivery above all other options. Nonetheless, there has been a gradual change in delivery location preferences in recent years, with parcel shops and lockers gaining popularity.
While e-shopper readiness for OOH is increasing year-over-year, something still stands in the way. What’s slowing the adoption, and can people be motivated to choose out-of-home delivery more often?
Continue reading to find out.
Adding OOH delivery to the checkout
Let’s start with the most obvious fact: If e-shoppers can only choose home delivery during checkout, the utilization of the OOH network won’t increase. This also prevents them from developing a preference for any other delivery method.
To solve this problem, we can make two important changes. First, add the option to select out-of-home delivery. Second, show e-shoppers all or nearby parcel shops and lockers, as well as important information like opening hours.
However, e-commerce companies are the ones in control of the checkout process. Parcel delivery companies and postal operators have to persuade their clients this change will be mutually beneficial and make it easy to implement. Providing a tool that seamlessly integrates into any website helps get them on board, as e-commerce companies don’t have to spend valuable time and resources developing the solution.
Informing e-shoppers about the benefits
Even if OOH delivery is available as an option during checkout, it’s possible that e-shoppers will have to be motivated to choose it more often.
The Active Last Mile Report presented findings from a study conducted by the Centre for London and the Behavioral Insights Team regarding this topic.
Over 3000 online shoppers from London were split into four groups to test the effectiveness of different nudges at an online checkout. The control group saw a regular checkout without any changes, while the second group had the option for out-of-home delivery already selected and placed on the left-hand side. The last two groups were shown messages with environmental or convenience benefits.
Based on the results, all nudges were more effective than the control group. The environmental nudge was the most successful, with 71% of participants choosing OOH delivery. The convenience nudge was a close second, with OOH delivery selected for 62% of checkouts.
Although the study has some limitations, such as the fact that OOH delivery was free while home delivery had a charge, it is still likely that nudges will encourage online shoppers to select OOH more frequently.
Making OOH the cheaper option
The E-commerce in Europe 2021 report by PostNord reveals that, on average, 59% of respondents consider delivery cost the most crucial factor when making online purchases.
Lower delivery costs could trump the convenience of not having to make an extra effort to collect parcels for most e-shoppers. So while offering OOH delivery for free (like in the previous study) is not an option, motivating online shoppers to participate in the final step of the parcel's journey can be achieved by making it cheaper than home delivery.
This approach is feasible as out-of-home is more operationally and cost-efficient due to greater consolidation of deliveries, fewer stops, and nearly 100% first-time delivery success. However, we’re not considering the increase in parcel volume due to redirects caused by failed home deliveries. Re-delivering parcels almost doubles vehicle movement and time spent on the field, increasing the initial expenses for the delivery company.
Optimizing the OOH network
Ultimately, the success of OOH networks heavily relies on location.
People may prefer home delivery because they can’t be bothered to drive/cycle to a collection point, the location doesn’t feel safe enough, or they don’t have time to pick up the parcel.
If the network utilization is low, asses current locations and performance. Are they in well-lit and safe areas, within walking distance of consignees or along their commute routes, and with longer opening hours or available 24/7? Are there some points that significantly outperform others, and why? Do some locations need to be reinforced? Is it better to descale rather than expand?
By answering these questions, you can determine whether the problem of low utilization is due to consignees' lack of awareness and price sensitivity or a location and internal processes issue.
In conclusion, a multifaceted approach is necessary to increase the utilization of OOH delivery networks. However, your efforts may be in vain if the network density is too low or the locations limit OOH's benefits for consignees.