Pickup points are the future of ecommerce delivery – what are you waiting for?

Pickup points are becoming the delivery option of choice, yet many retailers are still without this option for their customers. Sam Jarvis, Founder and CEO of HubBox discusses why retailers need to embrace the shift in ecommerce to futureproof their business.

Go back a decade and the idea of collecting a parcel anywhere outside the home was a pretty new concept. Just like next day delivery, PUDO was in its infancy. Or at least, the tech was. The actual idea of buying your item in one place (in store or online) and collecting it elsewhere has been a well understood concept for decades. Take Argos and its ‘Collection Points’. It broke the mold at the time. 

Fast forward to 2011, and the likes of Collect Plus entered the market: a team-up between Yodel and PayPoint that empowered individual shoppers and small businesses to send and collect packages via shops that were part of the PayPoint network. 

By offering cheaper, more convenient package interchange, it took on the Post Office, offering services that weren’t just more convenient (most outlets were open seven days a week), it was cheaper, too.

And in the last decade? The majority of major carriers jumped onto the pickup point trend, building their network of pickup points, all with their own names, from their associated Out Of Home (OOH) delivery services, for example:

• UPS launched Access Points 
• Hermes/EVRI launched ParcelShops
• DPD launched Pickup Points
• Royal Mail launched Local Collect
• Fedex launched Hold at Location
• DHL launched Service Points
• Inpost launched Lockers

The inspiration? Delivery aggregation or ‘drop density’. By consolidating package drops into one location, rather than going to individual addresses, carriers could offer their customers – the retailers – discounted shipping rates – which they could choose to pass on to their customers, making them more competitive where high delivery costs are a factor to abandon cart.

Europe: where pickup points are the norm

In Europe, the idea of pickup points is so well embedded that in some countries, doorstep delivery is a rarity rather than the norm.

Finland, Slovenia and the Czech Republic top the ranking of EU countries with the most pickup points per population density, while: 

• Poland has over 50,000+ PUDOs (Pick Up Drop Off) points alone according to Allegro, the most popular shopping platform in the country, offering free, fast and predictable out of home delivery.

• In Finland, out of home is the preferred, and most common delivery model. 
• In Norway and Sweden, over 80% of all packages are collected from local stores.  

• In France, the Mondial Relay service operates a successful PUDO model, which gives individuals the option to send packages to a ‘Point Pack’ – a place that’s convenient for collection, based near home, work etc. The adoption of PUDO in France is circa 30%

So why aren’t you offering pickup options to your customers yet? Let’s remind ourselves of the benefits first…

Reasons to offer pickup points when selling online

More revenue from a cheaper shipping option

Our customers report conversion uplifts of between 3-5% at the shipping method stage when adding pickup points as an option. This can equate to over 1% of new sales from new customers. So, take the example of a £100m business – that’s a lot more revenue, simply by adding a cheaper shipping option.

Cheaper shipping decreases cart abandonment

Related to the above. Costly shipping accounts for around 61% of those who ditch their order at checkout, according to research by Baymard Institute.  By consolidating home deliveries into larger drop offs, carriers have no choice but to charge less – which means that retailers can reduce what they charge for delivery. This in turn can:

• Reduce shipping costs as a contributing factor for cart abandonment
• Increase AOV (average order value) when offering free shipping on a minimum order value

First time, every time delivery

Shoppers that use pickup points are exactly the shoppers who have issues with home delivery. These are the people who miss deliveries, request updates and have delivery anxiety. Retailers that offer this solution see a far higher first time delivery rate, less re-delivery costs, lower handling and returns costs, reduced instances of fraud (related to the rise of package thefts)  and less WISMO requests and complaints.

A free signed-for service reduces anxiety

Those shoppers spending top dollar online are reassured by pickup points. It takes away the anxiety of whether they’ll be home, and removes the stress of having to double check whether they’d agreed a safe place with that particular carrier. Fact: offering a pickup point option results in lower cart abandonment rate, particularly from those shoppers with high value baskets. Pickup points are effectively a free, signed-for service.

A more sustainable solution

Sending a package to a pickup point is the easiest way to lower the carbon footprint of the delivery. When a shopper chooses local pickup, drivers can deliver multiple packages to one place and cover fewer miles compared to driving from one home to the next. Missed deliveries are eliminated, along with the need to attempt second or even third deliveries, all of which create extra CO2. Read how pickup software creates Greener Shipping.

Why pickup points make sense 

It’s all about the shopper. Unless you have a concierge, you’re going to have an issue with home delivery at some point. Whether that’s because you decided to switch your work from home plans to come into the office, or didn’t specify a safe place: home delivery will be a pain you could do without. Some shoppers will always have a home delivery, such as out-of-home workers and those working shift patterns. Read more about how pickup points target hidden areas of your market in Do you really know your customers? How package collections target the unexpected. 

You offer every size of t-shirt…. So why only one sized delivery option?

Only offering home delivery is akin to only offering one size of clothing. If you only offer a Medium sized t-shirt, then the people who are small, large, or X-large, will not shop with you.

This is the same for delivery. Home delivery means you need to know if you’re going to be home at a future and unknown day in a 1-2 minute delivery window. For standard delivery (i.e. 2-4 days) how can you know whether you will be home or not?

Pickup points solve this whole issue. A pickup point represents all the other ‘sizes’ catering for any schedule, any changes with ultimate flexibility.

Retail giants dominated pickup points – and now we’re seeing a rise in take up once again

As we saw above in our Argos example, some retailers have offered pickup options for over a decade. It’s not a new concept – but until recently there was a lag in take up on this service.

Why? Two key factors: 

High Costs for Bespoke Software – the larger retailers have large development budgets, huge amounts of IT resources and long timescales to develop and launch their products in line with carriers. 

Lack of expertise – by and large, carriers wanting to take advantage of the new advancements didn’t have the tech, infrastructure or industry know-how needed to build pickup options into their own solutions to retailers. Hardly a criticism; it’s not their area of expertise. This left retailers to their own devices, without guidance or underpinned by the carriers’ invaluable input. The result? Minimal adoption.

What are the barriers to pickup software adoption? How does HubBox overcome these?

At HubBox, we’re fully aware of the challenges to pickup adoption – and that goes for both sides. Sitting between the carrier and the retailer, we see the challenges in black and white, and are in a great position to help both to embrace the opportunities of the technology.

It’s too technically challenging to account for every variation of ecommerce and checkout. 

Building software to account for every variation of the customer journey, their preferences and choice of device, is a huge software build. Doing it more than once, to account for the following, is an unreasonable strain on any development team:

• Guest checkouts
• Logged in journeys
• Payment processes
• Subscriptions
• Oversized parcels
• Shipping method rules
• Native applications
• BOPIS or own store Click & Collect solutions

Is it any wonder that carriers struggled?

How HubBox overcomes:

Our software comes ready built with 70 core versions, extending to 300 when catering edge case user journeys. Basically, our software team has done the development so that you don’t have to. Importantly, by integrating a map and pin selector into the checkout process, customers can easily find and select the most appropriate pickup point. This takes advantage of the UI, which is natively adaptive to the users’ device and browsing habits. The result: a smooth, frictionless customer journey, regardless of the shoppers’ entry point.

Reliance on middleware/third party providers to get results

You need to set a new Service Level for a shipment heading to a pickup point and share that new information with the carrier to accurately label generation. Sounds simple right? No. Why? Because very few middleware/WMS/ERP type systems such as Shipstation and Shippo have accounted for these requirements in their systems. 

In short, they can’t pass the additional data through. This lack of compatibility produces hard stops on progress for many retailers. Without the middleware systems making system updates, retailers cannot deploy. As anyone knows, a dependency on another third party to make a technical change stalls the project, if not stopping it completely.

How HubBox overcomes: 

HubBox is working with carriers to re-invest in their systems to make it easier to communicate different service levels. DPD & HubBox pioneered a solution which can make deployments instant with no downstream changes. UPS has followed suit in the US and we’re in technical discussions with other carriers on how to avoid the downstream blockers caused by non compliant middleware systems. This means that retailers can deploy the ecom software and go live without even telling another system of the upstream changes.

HubBox – why every retailer should offer pickup points

In conclusion, there’s no reason why every retailer shouldn’t offer pickup points as a standard shipping option. 10 years ago, Next day delivery was new and now it’s ubiquitous. The barriers to making pickup points the same no longer exist. Given the clear benefits across the supply chain (to courier/retailer/shopper) one thing’s for certain: pickup points are the future: it’s just a matter of time.

I’m interested. How easy is HubBox software to use?

If you can copy and paste, then you can use HubBox. It’s that simple to launch pickup points in any territory. Want to improve your margins, offer shoppers a modern way to shop and decrease your carbon footprint at the same time? Book a demo today.