New Apex Insight research on consumer and small business parcels sending (C2X) reveals further growth but challenges ahead.

Consumers and small businesses wishing to send occasional parcels have traditionally been served by national postal services with customers taking their parcel to their local post office and queuing up to send it.

Historically, most parcels carriers did not target smaller customers. This type of traffic was challenging for their business models, which rely on consolidation of pick-ups to obtain superior economics and the fixed costs of setting up an account made small customers unprofitable
However, the rise of home shopping has led to significant increases in the volumes of items being returned by consumers. And marketplaces, in particular eBay, have many small sellers who need a way to dispatch items they sell but, like consumers, may not have the scale to operate accounts with established parcels carriers.

As a result, consumers, and small businesses are an increasingly important segment which has attracted the attention of traditional carriers and new entrants such as parcel shop / locker networks and online price comparison sites / brokers. Examples of networks include Hermes’ Parcel Shops, UPS’s Access Point network, DPD Pickup as well as independent networks such as InPost across Europe, Mondial Relay in France and Spain and Collect+ in the UK. Examples of brokers, which offer services from a range of carriers, typically at rates which would not be accessible to the consumer, include Packlink in several European countries, Parcel2Go in the UK, and Sendabox in Italy.

Many established carriers, as well as selling via brokers, have now introduced specific services for one-off or small volumes of consignments which they sell directly to consumers and small businesses via their websites and call centres. UK Mail’s ipostparcels was an early example with a distinct brand, but most of its competitors have now copied this approach. Our research on pricing shows that some are now very competitive, in certain areas of the market.

Prospects for further segment growth are healthy – certainly few doubt that home shopping will continue to grow in all countries, and European law increasingly supports and protects the right of consumers to return items.

However, there are some potential clouds on the horizon. For example, eBay’s growth is less rapid than in the past in its more mature markets such as the UK and Germany, and an increasing proportion of sales on its marketplace are from larger retailers. And there is an increasing tendency for larger retailers to organise, and pay for, their returns (as has long been the case in Germany), taking the sending decision out of the hands of the consumer and leading to a significantly lower revenue per parcel. Furthermore, our survey of UK small business senders confirms that there is considerable dissatisfaction with carriers and switching levels remain high.

Amongst the new players, it is not yet clear which business models and which companies will prevail as the winners. The market presents opportunities and threats for the various different models but volume growth has meant that any eventual shakeout has been delayed.

The full market report: European Consumer & Small Business Parcels Services: Market Insight Report 2015 includes insights from interviews with customers, profiles of the leading players, as well as growth forecasts for the market and its key drivers. There is also a UK-only version of the report: UK Consumer & Small Business Parcels Services: Market Insight Report 2015