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



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Why are parcel lockers not working in the UK last mile?

Despite the internet shopping boom and the march of click-and-collect, ByBox has recently withdrawn its consumer service and our ongoing last mile delivery research suggests that InPost is struggling to gain traction with volumes at its parcel lockers remaining low.

At the same time, Parcel shops, which perform a very similar function, are performing well, with growing volumes supporting the growth of the existing chains and the roll-out of a new one by DPD. And parcel lockers have been successful elsewhere – in particular in Germany, where DHL’s Pakstations are widespread. And ByBox’s lockers are successful in UK B2B applications, such as getting parts to and from field engineers

We don’t yet know the answer, but these are possible reasons.

The wrong business model?
Both parcel locker networks launched their consumer offering as an open network to serve a range of carriers rather than under the wing of a leading carrier. They did so at the time that many carriers were deciding that they wanted to have their own networks with, for example, UPS acquiring Kiala and rapidly rolling out its Access Points. But some of the parcel shop networks, in particular Collect Plus, do deal successfully with multiple carriers.

Unfavourable economics?
Parcel lockers are far more expensive to deploy than a parcel shop network. But the ongoing operating costs for lockers are clearly much lower – and ByBox and InPost had already made the investment in any case, so the cost argument doesn’t seem decisive.

Consumer resistance?
There is some evidence that UK consumers have not warmed to parcel lockers and that some people have struggled to use them. But if the German consumer can get the hang of it, why can’t people in Britain?

We aim to explore this in our upcoming research in the sector.

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