ReThink Productivity Podcast

Exploring Last-Mile Delivery and Locker Systems

October 29, 2023 Season 1 Episode 138
ReThink Productivity Podcast
Exploring Last-Mile Delivery and Locker Systems
Show Notes Transcript Chapter Markers

Tim Wheeler, the UK Sales Director for Strongpoint returns. We delve into the intricate world of retail's last mile and its environmental implications. Discussing the labour-intensive nature of this process. Our journey takes us across the UK's home delivery landscape and on to the Nordic region's popular locker-based delivery system. Locker collection, is it the next big thing or a challenge that retailers are yet to master? Tim debunks the assumption that consumers prefer home delivery, putting forth compelling arguments that are sure to get you thinking. 

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Speaker 1:

Welcome to the Productivity Podcast. This is the second in our mini series with our friends at Strongpoint and delighted that Tim Wheeler is back to join us. Hi Tim, hi Simon, nice to talk to you again, and you and you. So we kind of talked around eFulfillman Automation, dealt a bit deep into grocery, talked about all sorts of AMRs if I remember the terminology and humanoids. Today we're going to have a bit of chat and get a bit deeper into the last mile, because I think there's lots of talk, isn't there in this area of retail and distribution around how labour intensive it is. There's always an environmental angle rightly so on everything that happens as well. So for those that maybe aren't sure what the last mile means, do you want to give us a synopsis or Tim's view of the world?

Speaker 2:

Yeah, it can do, and I think it's fairly simple. When a person makes an online order, the product has to get to them, and it can get to them in a couple of different ways. It can be delivered to their doorstep in their home or they can go somewhere to pick it up. That's the last mile. Why is it the last mile? Well, fulfillment in eCommerce usually finishes at a storefront. If you've done picking in store, it can finish at the front of a warehouse. If you do your eCommerce fulfillment in a warehouse, it can be either. Or if you have a fulfillment network, but somehow that order has to get to where the customer is expecting to pick it up.

Speaker 1:

So if we're not walking in, as in going for a browse and paying through the till and walking out with it, it's when we've pre-purchased, somebody's picked it, got it and then it has to get to us via DHL, whatever it might be at this moment in time.

Speaker 2:

Correct and I think for the UK in particular, that's a pretty good synopsis, because the UK is very much a home delivery market and when people think of the last mile in the UK, home delivery is where their mind will go. But actually, if you look at other markets around the world, and particularly the home market of strong point our head offices in the Nordic region if you look at the last mile in the Nordic region as an example, instead of being highly dominated by home delivery, it's actually got a very substantial locker based market, and what that means is, instead of the product being delivered to each and every person's home, the products are delivered to central points within the fulfillment network lockers lockers that are able to keep the product at the right temperature, obviously, the right safety, and that the consumer can come and pick up their order from their preferred point when they want. And now, obviously, as well as home delivery as well as locker pickup, there's the traditional clicking collect. I buy something online and I go to the store itself in order to pick it up and I think clicking collect always exists. It has positives for companies and has negatives for companies, but that last mile is going to be a combination of store pickup, home delivery and increasingly this sort of intermediate locker pickup option, and that's almost the let's meet you halfway kind of option.

Speaker 1:

See, I like that and I suppose on the clicking collect front we do lots of measurement on clicking collect for organizations. It's a real challenge for them because the times are really varied and it's inevitably a frustration for a customer if you've got to wait while somebody goes and finds a parcel or doesn't find a parcel. Inevitably, and in some occasions, that stores just weren't laid out for the volume and breadth of product that they're now servicing. Right, and I think any retailer supermarket hasn't got and probably wouldn't want to have to refit every store to carve off that space that's now needed. So it it, as you say, is a necessity and will always be there. But if you think of DIY stores, for example, they sell anything from Tinder paint, screws and nails to whole bathroom suites, sheds, so that slabs. That breadth is huge. So I think that's interesting Lockers I've seen lots and lots in the UK spring or pat service stations, petrol stations, supermarkets, but more the other way of I'll go and drop my return off there or my eBay parcel, rather than me going to the locker to collect my shopping, to collect my whatever it might be. Does that make sense?

Speaker 2:

You're right, it's a lot less prevalent here in the UK than other countries and it's always, in a way, it's confused me because when you hear retailers in the Nordic region, for example, talk about their locker channel, they are absolutely glowing about this channel and you think it barely exists in the UK as an outward channel. I mean, you know, you see the odd Amazon lock around the place, for sure, but you don't. People don't pick up their groceries at lockers. So much in the UK. And it doesn't make sense when you think about it, because the retailers in the Nordic region they say the things that everyone knows, which is that lockers save an enormous amount of cost in the home delivery aspect. So, instead of a retailer delivering to you know every single household that's ordering a product, they're delivering only to certain chosen bulk pick up points. So there's a huge saving in the van fleet that you're using, in the labor that you're using to drive to people's homes. That's the part that everyone knows. Everyone knows that there are huge cost savings if you can do something about home delivery. The piece that I think not everyone knows and understands unless you talk to one of these Nordic retailers, is that there's a significant portion of the online customer base that prefers that. There's a presumption, I think, in the UK market that the consumer wants home delivery. It's the most convenient thing for the consumer and I'm now convinced that that's actually a wrong assumption. And what the Nordic retailers will say is that some people will prefer, you know, give me an hour window and I'll hang around the house and the van will come, hopefully, in that hour window. You know, maybe a bit either side and I don't mind, but there's a significant number of customers you say I don't want to have to sit in my house listening for the doorbell for even a one hour time slot. I want to get my product exactly when I want to get my product. And actually I'm a part of this market because when I, you know, buy, you know, a book or something from Amazon, let's say, I choose the locker option. And why do I do that? Because I control exactly when I go and pick it up. I'll do it while I'm putting petrol in my car, so you know it's not an extra trip. So it saves the consumer time and money that otherwise would be spent waiting. You know, waiting for the doorbell to ring inconveniently, or travelling somewhere for a special trip and I think this is the big news to the UK market and I really think the UK market is ripe to change, to really add this locker channel in the coming two, three years. I think it's going to be a huge explosion because when the realisation comes that some of their consumer base not all, I'm absolutely not claiming that all will, but a significant number of people currently ordering and getting delivered to their home will actually be happier to go to a locker pickup point, I think that's going to be one of those huge UK light bulb markets and the UK retail market will really change because the carrot the carrot of cost of doing home delivery is so big, it's such a huge cost that when people realise that you can actually realise those huge cost benefits and your customers will be happier, it's the ultimate win-win. And I haven't even begun to mention the environmental benefits. I mean fleets of trucks and lorries and delivery vans driving around from house to house to house to house. The cost of that's huge but the carbon footprint is huge, the fuel spent on that is huge and if you can eliminate even a portion of that whilst making a portion of your customers happier, then I think retailers are really, really going to go crazy for this solution and I think it's going to be huge.

Speaker 1:

Well, everyone's struggling and backtracking slightly on their 2020, 2030 net zero challenges, aren't they including kind of the government and alike? So there's a huge cost. I suppose my working assumption would have been that the organisations would just start to put the cost up of last mile and almost price. Unfortunately, people out of the market has it got more expensive.

Speaker 2:

Yeah, it's one of these things where the carrot and stick debate is always there, and if you have to provide a stick to encourage a certain behaviour, then maybe you have to If you can do it with the carrot and the carrot is convenience, so if you can say there's a more convenient way for you, the customer, you know when you're on your school run, drop in at the locker on the way, pick up the kids, go home. You have total control over when you pick up your online order. As I say, it's not adding a trip, it's not adding any cost. So you get convenience and you know the flexibility to do things when you want, at the same time as being beneficial for the environment, because it's really hard to stress. You mentioned the net zero goals and the Environmental aims that companies have. I think this is also a huge opportunity for them, because most companies are thinking Well, if I convert my fleet to electric vehicles, I'll make some big inroads on the environmental front, and they're right, certainly, but it's not solving all of the problem. So I read somewhere that the carbon footprint of an electric vehicle is around about a third of what a petrol or diesel vehicle will be. So it's not zero because it's electric. It certainly helps to solve the problem, but it doesn't remove the problem. Removing the special trip to that house to deliver those groceries, that takes away 100% of the carbon footprint.

Speaker 1:

Yeah, I think there's still yeah, there's still that debate isn't there as well, of the end to end production of an electric car. Is it as environmentally friendly as being suggested with the creation of the battery? There's still a massive on known in the disposal of the battery. So so, yeah, you're right, we have people have to be careful on just switching to electric flea. Is is the panacea and clearly that's a significant cost as well. Yeah, so I suppose I've rationalized it in my mind as you've been speaking is on demand. So if I want to watch a film At home, I can put Netflix on and I can watch it. When I want to watch it, I can pause it. I can watch over three nights. One night I can rewatch it. Really, what, what we're almost getting to here is and let's use grocery is the example shopping on demand. So as a retailer, I know that in between X windows you're gonna collect it, which I think is really, really helpful for a retailer, because back to probably our old world's Tim, if you've got known demand, that's planable. That's far easier to staff Resource and carry out the activity at given times than Unknown demand which is me walking in, if I feel like it this afternoon, if I feel like it tomorrow, to browse the shop. So I think there's a whole bunch of, you know, environmental stuff on demand, you know, in my time windows at my preference. But also Clearly there's a cost benefit at the retail side. But also from a planning of workload point of view it should become far more known. So fit or fix this probably the word far more known rather than variable and variable is is the bit which absolutely screws all your schedules, because do you know, if a coach load of people are going to turn up and by sandwich it's going to throw it down, no one's going to come in right.

Speaker 2:

Right and and you're right that there's there's knowing the demand, there's also influencing the demand, so you, you may be able to give incentives towards, you know, certain time slots, certain geographical locations, so it's an interactive thing. You can, you can also influence the demand, but certainly knowing what it can be. But I, but I think I think just having multiple channels Available to customers Is going to be the most important thing because the the cost-saving elements there. They're really exciting and they're particularly if you can get Home delivery moving to other channels. The cost savings are absolutely huge. But I think the the customer focused positives Are even more exciting in a way. So if you can say to your customer base, instead of two options you know home delivery and there'll be options within that you know fast delivery, slower delivery, you know choose your urgency type stuff options, for sure, but but broadly speaking, that's home delivery or Click and collect. You know you come, come to us and and pick up your stuff. As well as that, there are other channels available for your convenience and, like I say, some portion of the market is going to going to really like this and it's not necessarily just lockers. I think they're a really important addition that will come in the UK. But in some market markets there are things like drive-through collection points where you know you go into a Space and a system will read your license plate and know that you've just arrived. And so by the time you get to the Pickup point, your orders, they're waiting for you. Throw it straight into the boot Off, you go. You know that's a channel that's barely Existing in the UK. Maybe that's something that's interesting. There are also things like temporary Channels. I find this Really interesting. Yeah, the locker example that I gave the, the sort of mass collection point. Historically that's been a fixed thing. You know we put a bank of you know red lockers somewhere in a car park and everyone knows it's there and that's where it is and that's where it stays. But actually strong point has Mobile lockers as well, where you might think there's a festival coming up. You know why don't we Put a temporary Collection point at a comedy festival for a couple of weeks? You know people are there, people are going to want product. Why not make it convenient? Why not make it a good branding exercise? You know, let's show the attendees to some event that there's a channel here where you can really conveniently Get the products that you need. So you know mobile lockers, temporarily, it could be with with sporting events. It could be again in the Nordics. One thing's quite common There'll be a Scheme season. Let's say so. Let's have the collection points In the places where everyone goes for their skiing trips, and then when it's the summer and those places are not frequented, no need for it to be there. So you can have temporary channels for different reasons. And I think this yeah, ultimately these options are addressing cost and the environmental issues that tend to go along with cost as well, but they're also giving positive new options for customers to make customers happy and ultimately be more loyal to your brand and probably even buy more frequently or by larger when they do buy.

Speaker 1:

There must be opportunities as well in places like inner city hotels, where you've got food being delivered that could be stored in there and you almost become endless in terms of the things that you can think. You know ordering parts or something. A car dealership if you were just picking up bits, you know Halfords, probably a great example where I just want a bulb from a car and there becomes endless when you start to put your mind to it.

Speaker 2:

It really does. And you know, in that example the Halfords example you know, maybe I was busy all day doing work or something and by the time I'd like to pick it up, the stores closed. You know what a pity. Well, if it's a locker, you punch in your code, you pick up the product, you know you're not encumbered by sort of operational matters like when's the store open. So there are many, many reasons why this channel, in particular the locker channel, is something that delivers both convenience and cost reductions. And, as I say, when I look at the UK retail fulfillment market, I think the locker channel is the thing that really is going to transform this market in the next few years. And it's not. This isn't a you know. Theoretically, I think this could be a big thing because there's a you know such a strong cost saving case. It's not theoretical at all. You can point to markets that have done this right, where it's a very significant part of their online structure and where the business case and the positive customer feelings towards it are very well known and very well documented.

Speaker 1:

Brilliant. So on the last episode we talked around kind of the automation piece, amrs. Some of the humanoids hit clearly with this one. We've talked about last mile and lockers. If people want to find out more, tim, take you up on some of those kind of other countries are doing this. Teach me, show me where's the best place for them to get in touch.

Speaker 2:

I can be emailed at timwheeler, at strongpointcom. You can probably find me on LinkedIn although there's probably many Tim Wheeler's, but Tim Wheeler, strongpoint, linkedin's a good place to go and, of course, the Strongpoint website. Ultimately, you'll get to me as well.

Speaker 1:

Brilliant. So we'll link your name on the show notes to your LinkedIn profile so we don't find a different Tim Wheeler, because that'll be awkward for him, I'm sure and we'll also put a link to the websites so people can click straight through to reach out if they've got any more questions. Great stuff.

Speaker 2:

Thanks, simon. Thanks for having me again Brilliant Now. Always a pleasure to catch up, Tim.

Speaker 1:

Look after yourself and we'll speak to you.

Speaker 2:

Thanks, mate, bye-bye.

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