With parcel lockers continuing to dominate the out-of-home delivery market, what are the main considerations for optimizing the networks?
Direct-to-consumer deliveries are rising steadily, accounting for one in seven e-commerce dollars globally according to consumer intelligence company NIQ. With this rise in e-commerce parcels come last-mile challenges as retailers and carriers strive for fast, reliable delivery while simultaneously looking to reduce their environmental impact.
One of the most popular solutions is out-of-home delivery, namely parcel lockers. According to a recent report from Fortune Business Insights, the global parcel locker market is expected to grow from US$1.012bn in 2024 to US$2.552bn in 2032, a CAGR of 12.3%. And by consolidating last-mile delivery to one centralized location, carriers can make fewer trips to fewer destinations, reducing fuel consumption and carbon emissions.
Major logistics operators, including InPost, DHL, Austrian Post and Geopost, have embraced this trend by expanding their self-service parcel locker networks, with new lockers regularly popping up at key locations such as gas stations, supermarkets and convenience stores.
Many retailers are keen to partner on these projects. British consumer group Co-op, for example, believes that expanding the number of lockers across its stores is a way to enhance convenience for its customers and increase footfall for its member-owners.
“Our stores are located in the heart of communities and parcel lockers can help time-pressed consumers pick up or return parcels at a time or location convenient to them, whether close to home, when popping out for groceries, or traveling to their place of work or study,” notes George Hayworth, Co-op’s head of quick commerce development.
Optimizing your network
As the number of parcel lockers continues to expand – especially in Central and Eastern Europe, where there were more than 85,000 lockers in 2023, according to Statista – how can operators ensure they are providing an optimized network that meets customer needs while providing operational efficiency and maximum profitability?
This should begin with the consignee and the three things customers look for when choosing a locker service: ease of use, proximity and 24/7 availability.
“Any OOH network must be ‘slipper distance’, so that it can effectively offer many delivery benefits while simultaneously giving the customer control over when they pick up their parcel as well as the added bonus of easy returns,” confirms Marek Różycki, managing partner of consultancy firm Last Mile Experts. “A good rule of thumb is our 1:10,000 rule, which states that networks with a density of less than one access point per 10,000 people will fail. This doesn’t mean that larger ones will always succeed, but they have a chance to do so.”
Locker networks provider Bloq.it agrees, with its own research showing that lockers within 100m of users see a much higher adoption rate. However, in inner cities this 100m radius may only offer prime locations such as city parks or commercial buildings, which often come with regulatory challenges.
Locker size should also be considered, according to Jonathan Bouaziz, CEO of tech firm Kardinal, as this also influences customer use. He notes that the larger the item, the less likely customers are to choose locker delivery methods due to size limitations and weight. Therefore, providing lockers that accommodate various parcel sizes can enhance the appeal of this option. “But it will have a cost for the locker provider as the capacity will be impacted,” he adds.
Analysis, accessibility and adjustments
Analysis of an area and its specific needs will help identify the most strategic locations. Bouaziz points to factors such as population density, existing lockers and pickup and drop-off services, accessibility, type of area and local dynamics.
“Assess the number of existing lockers and PUDO points to ensure adequate coverage and avoid oversaturation, and check the location is easily accessible in terms of parking, public transportation links and pedestrian access,” he recommends. “Also, determine whether the location is in a business or residential district as this affects parcel turnover rates and peak use times. Look at consumer behavior and foot traffic in the area to gauge suitability.”
Bloq.it believes it is also important to consider the environmental conditions the lockers are likely to face once deployed, focusing on durability, adaptability and ease of deployment. Having the ability to adapt to consumer demand is also key, which is why the company has developed its Next locker solution to be modular.
Launched in June 2024, Next allows clients to easily configure the number of locker columns as demand grows, and select door layouts that best accommodate the expected types of parcels.
“We prioritize our partners’ user experience, empowering efficient operations for couriers while making sure the solution is adaptable enough to provide a pleasant and customizable user experience to the final user,” explains Ricardo Carvalho, the company’s CTO and co-founder.
The role of technology
Technology plays a huge part in the optimization of locker networks. Take data-driven placement, for example. By using advanced algorithms and historical data, companies can predict the best locations, which is particularly useful in developed markets, where there’s competition for space. Sharing data will also be important for creating more open, convenient locker networks.
“The future of logistics is powered by open networks, a transformative shift benefiting both businesses and consumers,” explains Carvalho. “Companies will seamlessly share prime locations and optimize locker compartments through integrated data, achieving unmatched efficiency.
“For consumers, this means no more driving to multiple locations for pickups or drop offs because their parcels will be conveniently located within a slipper- distance locker. This means a total redefinition of the delivery experience: as businesses exchange more data, they’ll gain deeper insights into consumer needs and will consequently deliver more customer centricity.”
Geospatial analytics and AI are also useful when determining potential locker positions and operational efficiency, according to Kardinal’s Bouaziz. “Our platform can predict locker use patterns, helping businesses reduce idle time, improve turnaround and maximize ROI. By analyzing traffic data, we also ensure lockers are in locations where couriers can easily access them, reducing delivery bottlenecks,” he adds.
Data analysis is also beneficial in terms of optimizing existing locations. “This naturally gives us insights into how much each location is used, which in turn helps us improve capacity utilization and plan our network,” Bouaziz continues.
Locker design
In terms of the lockers themselves, the units often have a modular design to make them scalable and customizable, allowing for the easy addition of new compartments to meet changing needs.
“Our strategy is to create modular and flexible hardware and software, yet produce them as standardized as possible,” notes Reinhard Kempinger, product manager at Austrian automation solutions provider Keba. “That means providing one hardware platform for all locker types – autonomous and classic – and software products that are extensively customizable.
“Operational efficiency is a result of hardware, software and service combined,” he continues. “For the lockers, we offer flexible base elements for different applications and power supply solar panels to make them autonomous, easy to install and cost-efficient.”
For Bloq.it, the main focus is on enhancing the user experience, understanding that user-centric design is crucial for widespread adoption and growth. It has been working to address the challenges associated with improving battery performance without diminishing the usability and convenience for end users.
When creating its Next locker solution, the company says it dedicated substantial resources to the research and development of smart power management solutions; by leveraging low-power IoT technology, it delivers an optimal experience, even in off-grid locations.
“Next comes as a natural step for us as we knew we wanted to create a solution that offered our clients more flexibility with the same capabilities,” explains Miha Jagodic, Bloq.it CEO and co-founder.
The lockers are equipped with vibrant color touchscreens, QR code scanners and barcode readers, making interactions seamless and intuitive, according to Jagodic. The company has also integrated accessibility features to support a universal service offering, regardless of the user’s age or technical ability, as well as label printers that remove challenges associated with illegible shipping labels printed at home.
When it comes to installation, Bloq.it’s locker is battery powered with an integrated concrete base, enabling it to be installed almost anywhere, “We know that site preparation is one of our clients’ biggest pains as it delays expansion and complicates processes, so it was important for us to solve this. With Next, you simply need to select a location and place the locker. It’s that simple,” adds João Lopes, the company’s CRO and co-founder.
Looking to the future
Experts agree that demand for OOH delivery, and automated parcel lockers in particular, will continue to grow. “In markets such as Asia, it’s already common practice for parcels to only be delivered to parcel shops or self-service stations,” notes Austrian Post spokesperson Markus Leitgeb. “This trend is also becoming more prevalent in Eastern Europe. We’ll continue delivering directly to households or businesses in the future, but we’re also constantly developing our delivery options, from drop-off authorizations and parcel redirections to self-service stations.”
In response to this, manufacturers expect lockers to evolve significantly over the next five years, driven by customer expectations and technological advances.
“On the consumer’s side, lockers will gain even more popularity, as they are easy to operate, available around the clock and a convenient option to return parcels,” says Keba’s Kempinger. “And if that demand is met well by our industry, we also think that rising parcel numbers and difficulty in finding delivery drivers will push the number of parcel lockers even more.”
For software platform provider Koloni, technology advances will be key to the success of future locker networks. “I believe the technology focus will continue to be on platforms that are easy to use for large and small locker owners to better manage their locker transactions,” says company CEO Brian Dewey. “We need to continue to improve the end user experience as well. Last, but perhaps most disruptive, the creation of a data standard and AI will be a game-changer regarding shared networks.”
Bloq.it agrees that advances in AI and the evolution of robotics, as well as increasingly stringent environmental regulations that are shaping the future of the industry, will affect the development of locker networks.
“As we look ahead to 2029 and beyond, we foresee even greater advances,” confirms Daniel Starkey, head of business development at Bloq.it. “Innovation will be fueled by advances in technology and artificial intelligence, leading to new products and business models tailored to meet the demands of consumers. For instance, we envision AI-driven analytics that can predict peak delivery times and optimize locker placement, creating a more efficient and responsive system for end users.”
Industry opinions
Industry insiders share their views on trends that will shape the future of locker networks
Sustainability
“The need for autonomous parcel lockers is unmatched. What’s not that clear today is which mode of energy supply will be the successful one – solar-powered or battery-powered. However, if the trend of sustainability continues and further legislative rules emerge, the path looks set. Solar-powered systems are more eco-friendly and reduce maintenance efforts.” – Reinhard Kempinger, product manager, Keba
Battery tech
“Battery technology is improving all the time, allowing us to provide screens, scanners and internet connectivity without compromising the customer experience in terms of functionality and fast, smooth transactions.” – Noël Shapton, CEO and co-founder of Yeep!
Contactless and seamless experiences
“With the rise of e-commerce and consumer expectations for convenience, we anticipate more advanced locker networks that offer entirely contactless experiences, including voice-controlled or app-based access.” – Jonathan Bouaziz, CEO of Kardinal
Consolidation
“I believe that consolidation is necessary to achieve customer satisfaction and operational efficiency, albeit this is often difficult for perceived competitive issues.” – Marek Różycki, managing partner of Last Mile Experts
Open networks
“The future of logistics relies on open networks, bringing benefits to both businesses and consumers. Companies will share locations and use data to make deliveries more efficient. For consumers, this means no more driving around – smart lockers will be close by, making pickups and drop offs easy. As businesses share more data, they’ll better understand what customers want, leading to a more personalized delivery experience.” – Ricardo Carvalho, CTO and co-founder of Bloq.it
Read the full article in the December 2024 issue of Parcel and Postal Technology International
