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March 9, 2021

Unlocking the potential of out-of-home delivery for 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.

Around the world, carriers in the most mature ecommerce markets are struggling to hire enough delivery drivers, a problem exacerbated in Singapore thanks to tight labour laws. Combined with the incredibly dense urban environment, which results in warehousing and sorting space restrictions, and it adds up to a last-mile delivery market where capacity is constantly stretched and has little flexibility.

Unsurprisingly, this is usually especially apparent during peak season. However, 2020 saw parcel volumes reaching levels usually associated with Singles Day at various different points in the year, thanks to lockdowns and restricted offline purchasing driving ecommerce demand upwards.

The solvable problem here is to deliver more parcels with the same resources (in terms of drivers and warehousing capacity). For that to happen, the element of the equation which must change is the final destination.

The out-of-home opportunity

Encouraging greater PUDO adoption and improving the consumer experience at the point of collection should be a key goal for Singaporean carrier businesses who need to increase the efficacy of their networks. By improving the user experience and promoting the adoption of PUDO, they will be able to deliver more parcels by bulk drop-offs at collection points. In the case of lockers, the pilot for government-provided lockers showed that it allowed drivers to deliver up to 250 parcels per day. That figure is approximately four times higher than the number of parcels which drivers can deliver to the doorstep.

There is a clear need to improve the PUDO offering to host partners, who appear to currently struggle for storage room and are having to deal with lingering uncollected parcels. The remedies outlined previously are therefore also crucial to be able to scale up the pickup and dropoff network effectively and ensure a great experience for consumers.

Amazon is a potent example of a logistics business trying to maximise its effectiveness. In many of its markets, the logistics/retail giant has been actively nudging customers to increase their usage of pickup and dropoff locations, with discounts for consumers who select Amazon Hub (their PUDO brand) delivery locations and homepage promotions to raise awareness of the option. Their reasoning for doing this in a market like the UK is similarly applicable to Singapore: the development of new infrastructure (warehouses et cetera) is challenging and expensive and drivers are expensive to hire and hard to retain. That’s why Amazon has developed its combined “Amazon Hub” & “Amazon Locker” PUDO network, and it is now increasingly marketing that to consumers.

On lockers

Singapore’s federated locker program (Locker Alliance) is unique in mature ecommerce markets – not only is government taking positive action to improve the delivery paradigm is somewhat rare, but to promote parcel lockers at a federal level is unusual.

It seems unfortunate that such a program should not be truly carrier-agnostic as yet, however. The two major trial locations are each delivered to by a single delivery business (blu and SingPost, respectively.) For consumers, that means that only some of their orders will be able to use these lockers, because each bank is rented by the carrier. Given that the scheme is government backed, the opportunity is there to offer carriers the opportunity to rent a locker on a per-door, per-delivery basis rather than renting whole banks at once. That would allow any carrier to drop a delivery straight into the locker and massively reduce their last-mile costs, and would mean that consumers can get anything (within size limits!) delivered to the locker bank, regardless of who the carrier is.

Driving consumer adoption of locker deliveries is highly dependent on distance to their home. The optimum is what one European post calls “slipper distance”, i.e. so close you don’t even need to put your shoes on. With both trial locations being within a few hundred meters, they’re sufficiently central to local communities that they remain convenient for shoppers.

To find out how Doddle can help you to expand your out-of-home delivery capacity and performance, and shape your strategy for the future, get in touch today.

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