OOH delivery boom dominates Leaders in Logistics discussions

Demand for out-of-home (OOH) delivery is booming as customers seek more convenient and frugal last mile options while carriers consolidate volumes to reduce their emissions and cut costs, according to experts at last week’s Leaders in Logistics Last Mile event in London.

The standout OOH figure which got everyone talking during the event came from Geopost’s CEO Yves Delmas, who revealed during his keynote speech that customers’ preferences for OOH parcel delivery had risen from 15% in 2017 to 44% in 2022, according to the firm’s e-Shopper Barometer - an annual study of European e-shopper habits.

“OOH is becoming more and more popular across Europe and globally,” Delmas said. “We believe that OOH will grow three times as fast as home delivery in the next five years. To meet this demand, we have 95,000 PUDO points across Europe, and a strong willingness to keep on pushing this segment and strengthen our offering.”

Cainiao in Poland

Another keynote speaker was Dennis Li, General Manager of Europe at Cainiao Network, who revealed more about the OOH delivery plans of Alibaba Group’s logistics unit.

During his presentation, Li spoke in particular about Cainiao’s work with DHL in Poland – a country which is well known for leading the way in OOH delivery – to launch a locker network in the region in “the coming years.”

Cainiao currently has 35,000 parcel lockers globally, including 8,000 outside of China. In addition to its locker network, the firm has a network of smart PUDO points across China, called Cainiao Post, which currently handle the delivery of 28% of all parcels in the country.

Cross border trade

Cainiao’s overseas locker network is part of the company’s focus on bolstering its cross-border network. Cainiao currently delivers four million cross border parcels per day through a network of first mile and domestic warehouses, line haul transportation (including around 300 chartered planes per month and eHubs in Liege, Kuala Lumpur and Hong Kong) customs clearance facilities, and 15 overseas sorting centres).

“We have also started our own last mile delivery in Hong Kong and Spain,” Li said. “In the other countries we partner with local delivery firms for the final mile.

“We see a drastic increase in cross border trade coming from outside of Europe,” he continued. “Looking at our data, Alibaba’s cross border volume coming into Europe from our home market of China has increased by 75% year-over-year (YoY). Going forward, this remains one of our key priorities.”

C2C driving OOH growth

One of the key drivers of OOH growth in general, according to speakers, is C2C commerce. In an exclusive interview with CEP-Research last week, Yodel’s CEO, Mike Hancox, revealed how the firm is seeing “spectacular growth” in C2C volumes where it claims to be a “pioneer” after investing in its network, IT and drivers dedicated to out-of-home (OOH) service.

“I think C2C, and re-commerce, will grow faster than industry predictions. Statista predicts that C2C marketplaces are going to generate half of all marketplace traffic by 2035,” he said. Yodel has seen the percentage of its volume going to OOH delivery points increase from 15% in 2018 to 25% in 2023.

Speaking about the benefits of OOH, both for C2C and other e-commerce sectors, Hancox added: “It is rare to find an initiative such as OOH that is beneficial for the retailers, the seller, the buyer, and the carrier, and one that is green at the same time.”

GeoPost’s Delmas added: “C2C is closely linked to the growth in OOH. We believe this is all about cost. Given the current economy, where cost of living is high, people are looking for bargains, and this is driving C2C growth, which in turn is driving OOH growth.”

Vinted’s proposition

Meanwhile, Lithuania’s second-hand fashion marketplace Vinted has been leading the way in the C2C market in recent years. The firm’s new shipping arm, Vinted Go, was set up to support the marketplace’s growth and has a big focus on OOH delivery.

Earlier this month, Vinted Go acquired Dutch delivery scale-up Homerr, which has a network of social and commercial PUDO points, and in August the company announced the launch of a new over-the-counter parcel collection service in the UK alongside InPost.

Vytautas Atkocaitis, Vice President of Vinted Go, told event participants: “We are witnessing a clear trend where consumers are shifting to PUDO because it is more convenient, sustainable, and equally as reliable as home delivery. At Vinted, OOH is our main mode of shipping. In 2021, we shipped more than 200 million parcels across 80 countries and over 80% of that was to PUDO points.”

Atkocaitis noted that for OOH delivery to grow more retailers need to “remove any friction for the consumers at the checkout”. “Customers need to be educated on why PUDO/lockers are good,” he said. “For example, people don’t realize that OOH delivery is often much more sustainable than home delivery – this should be presented clearly at the checkout so consumers can make sustainable choices.

“Carriers also need to adjust their operating models to leverage the efficiencies that PUDO points bring,” he added. “If you look at the UK, for example, home delivery is often too cheap and PUDO is too expensive – it doesn’t make sense. Once those two things are sorted, there is no question that PUDO will become the preferred delivery offering. I also believe that free home delivery will become a thing of the past.”