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March 9, 2021

High rise and higher costs: bringing down the cost of delivery in Singapore

This blog article is part of our Singapore market insight series, exploring opportunities for parcel carriers and offering insight and comparison to other parcel markets around the world. Download your free copy of our Singapore market report here.

In most of the world, delivery is cost-effective in densely populated cities. Unfortunately, the reverse is true in Singapore today thanks to the high percentage of the populace living in HDBs and other high-rise accommodation, which typically have been designed with mail storage and delivery in mind rather than parcels.

Failed deliveries are not unusually common in Singapore relative to other markets, but the cost of each failed delivery is higher, driven by the higher cost of delivery attempts and worsened by the fact that there is very little use of parcel shops or locker drop boxes in cases of failed delivery. That necessitates another (expensive) delivery attempt.

Consumer expectations do not allow for deliveries to be much more expensive than they currently are, but parcel volumes are increasing steadily, exacerbating the delivery cost challenges and further squeezing carrier margins.

In other markets, especially China, parcel carriers have found success with diverting packages to locker installations or other PUDO locations if the consumer isn’t immediately available to accept delivery. By leaving the package somewhere secure and local, the carrier saves bringing it back to the depot and re-attempting delivery, and the consumer gets their parcel at their own convenience. This also introduces consumers to the experience of using PUDO as a delivery option, without the carrier needing to convince them to actually choose it up-front, potentially increasing future PUDO adoption and reducing the overall cost of deliveries through increased consolidation.

However, in Singapore, PUDO capacity is stretched, particularly in parcel shops, which are typically small-format convenience stores with limited storage space. These stores suffer when parcels are left to build up over time and are not able to offer a great customer experience. Additionally, while some consumers are familiar with locker banks and frequently use them for returns, they are not usually harnessed by carriers as a potential location for failed delivery redirects.

Increased PUDO capacity needs to be found. On the parcel shop side, adding new host partner stores and increasing flexibility for individual host locations will help spread volume through the network and prevent storage issues, allowing individual shops to “turn off” new drops until they have the space. Better customer communications could also help to nudge consumers to pick up their parcels in a timely fashion, preventing parcels taking up limited space for long periods.

There may also be an opportunity to use the federated system of lockers to turn on new PUDO capacity quickly and reduce the cost of failed delivery attempts by enabling missed deliveries to be left securely in a location very close to the delivery address. As noted, the Chinese market illustrates the power of this set-up, where carriers have easy access to local, carrier-agnostic locker banks. That means they very rarely need to re-attempt delivery.

To find out how Doddle can help to reduce delivery costs through out-of-home delivery and PUDO, get in touch with us today.

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