British OOH delivery market heads for crucial “tipping point”, industry experts predict

The out-of-home (OOH) delivery sector in the UK is heading for a crucial “tipping point” after a slower than expected start, according to experts at the Leaders in Logistics Last Mile event held in London last week, with the industry gaining a lot of attention currently and an increasing number of players looking to get a slice of the market.

“I think we can all smell that there might be a tipping point coming soon when it comes to OOH delivery,” said Royal Mail’s Chief Commercial Officer Nick Landon. “The uptake of OOH has been slower than expected in the UK, which may be due to the convenience of home delivery, but change is coming. Exactly what that change is will depend on OOH network density, price and convenience.”

Landon was speaking in a panel discussion at the Leaders in Logistics Event on whether OOH was taking over the UK. Fellow panellist Alan Barrie, Chair at carrier agnostic locker provider YEEP! noted that currently only around 5-10% of parcel volumes go to OOH locations in the UK, but with other countries, such as Poland, which Barrie dubbed as “locker land,” seeing figures of around 70%, the OOH potential is huge.

“We were hoping for an explosion in the UK when it came to OOH,” said Barrie. “But that hasn’t happened. In an established e-commerce country like the UK consumers are set in habits and expectations, which could be holding back OOH delivery adoption.”

Driving consumers to OOH deliveries

Barrie, along with other speakers at the Leaders in Logistics event, agreed that incentives might be needed to help drive more consumers to OOH delivery options. “Don’t assume that people will automatically move to OOH,” Barrie said. “Some age groups will need incentives, whether they are environmental, price, or convenience. This will all take some work to move things along.”

Also speaking during the conference, Anna Malley, Royal Mail’s Out of Home Director, believes that the move to OOH will be gradual as there is a lot of “habit out there that we need to break.” She added: “Certain demographic groups are faster adopters of lockers, such as Gen Z, but others are not. We need to appeal to all customer groups, and we need to take some responsibility and shout a bit about what the different delivery options are.”

Malley noted that although price is an important factor when it comes to delivery, convenience will drive OOH adoption. “People will have different reasons for wanting to use OOH networks, but I think building a dense network, that is open when people want to use it, is going to be the biggest single driver and price then becomes a differentiator once the networks are built. In the UK we haven’t got dense networks yet. That is the first thing that needs to be developed,” she explained.

Network density

Barrie believes that lessons must also be learned from the UK’s PUDO network, which consists of around 40,000 locations. “This network is under-utilized and there must be reasons for that,” he said. “I believe one of the reasons is that they have been developed as closed networks, so consumers often have to go to different locations to pick up different parcels.”

Barrie believes that a carrier agnostic approach is essential for OOH delivery to become the norm in the UK. YEEP!, which Barrie co-founded, is developing a new hyperlocal, carrier-agnostic network across the UK and has already signed up some big carriers, including Royal Mail.

Looking at what kind of density a carrier agnostic network would need for it to be successful in the UK market, Barrie said: “We have mapped the whole of the UK, and we believe that around 50,000 locations are required. Collaboration will be essential to be able to reach this figure.”

Learning from other markets

Adam Tomczak, Group Head of Delivery Sales at Allegro, which is a Polish e-commerce platform that also has its own courier, APM and PUDO network, believes that the UK can learn a lot from Poland when it comes to density.

“Poland has 50,000 APMs and 60,000 PUDOs,” he said. “We have 1.3 APMs per 1,000 inhabitants – in the UK that figure is 0.3 APMS. The UK is a smaller country than Poland, but it has more people with huge urban centres. Theoretically, this is the perfect setting for deploying an OOH network.”

Tomczak noted that space is a big issue in Poland when it comes to rolling out new OOH locations, and therefore like Barrie he believes a carrier agnostic approach is the way forward. “Authorities in multiple countries are also looking at mandating this,” he said. “Poland is one of the countries most interested in this because of lack of space.”

Allegro, which alongside Poland is active in the Czech Republic, Slovakia, Hungary, Croatia and Slovenia and handles more than 500 million parcels in Poland alone, is also set to open its APM network firstly in the Czech Republic.

“We have around 300 APMs in the Czech Republic currently,” Tomczak said. “We all need to stop fighting for the best space and instead just collaborate and use it together for the convenience of consumers.” Allegro also has 4,000 APMs in Poland.

Authority involvement

Speaking alongside Tomczak in a session on “Planning an out-of-home network strategy” at the Leaders in Logistics event, Tim Davies, Head of Out of Home and Indoor Accounts at Geopost, added that in the UK the DPD brand will be pursuing a carrier agnostic approach when it comes to OOH and it will be making sure “the authorities are along for the journey,” he noted.

“If we really want OOH to work in the UK then we need to find street locations and for this we need support from local authorities. For me, the UK is a really exciting market at the moment. This is the time to get it right. I think the agnostic approach is the way forward,” Davies concluded.