March 9, 2021
Turning the tide of consumer behaviour
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.
As far as Singaporean shoppers are concerned, buying online means delivery to the doorstep, and out-of-home deliveries remain the exception rather than the rule. Given the economic pressures and capacity challenges faced by carriers, consumers need to be won over and see out-of-home delivery as a valuable part of their lifestyle rather than an inconvenience. As ecommerce adoption rises and COVID pushes the proportion of retail happening online ever higher, this will become a more and more urgent task.
The government’s deployment of locker infrastructure is a forward-thinking move that will bring out-of-home delivery closer to home (literally, given their colocation with HDBs) but this alone will not be a panacea for carriers, who will still pay rents on the lockers and quickly learn the limits of their capacity.
However, what the locker program might achieve is a normalisation of the practice of picking up deliveries from somewhere other than the doorstep. That is a critical factor in encouraging shoppers to adopt PUDO in other formats too. In our experience, in the UK and elsewhere, usage breeds usage when it comes to PUDO.
Capacity and experience challenges
It’s clear as well that consumers and host locations alike have some issues with the current form of over-the-counter PUDO. Limited storage, lingering parcels and a lack of consumer trust are limiting capacity, hurting the customer experience and reducing usage. Improving the flexibility for hosts, recruiting larger host partners and offering a smoother and more secure experience for customers are key objectives for carriers who need alternatives to lockers to really increase capacity. These are challenging but absolutely achievable objectives, which will require investment in technology and customer experience design to come to fruition.
How to incentivise customers and retailers alike
Pricing will be a vital weapon. It’s something we hear time and time again from carriers across the globe: they don’t want to pass on the savings of consolidation to their customers. That’s understandable – giving away margin seems like bad business.
However, strategically passing on some amount of cost reduction to retailers is the right way to drive volume and ultimately secure a greater benefit from consolidation in the long term. Used intelligently and adaptably, pricing can also be used to manage capacity, by making PUDO a cheaper option than home delivery at peak periods. That doesn’t necessarily mean PUDO has to become cheaper – another way to achieve a similar incentive would be to increase the prices of home delivery. In the United States, 2020 was the first year for carriers like FedEx and UPS to bring in volume-based residential delivery charges, affecting home deliveries. Similar movements may begin elsewhere, as the investments in infrastructure and consumer behaviour start to pay off for parcel carriers.
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