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Indoor versus outdoor

18.11.2013

Convenience is the first thing that comes to mind when talking about automated parcel lockers. Customers demand extended opening times and self-service technology. So far, most automated parcel locker producers promote 24/7 outdoor lockers. But all the successful networks are based on indoor lockers – why is that?

Indoor parcel lockers open up important new opportunities. The service is convenient for the end user. It is also profitable for the operator. Indoor lockers are much closer to customers’ daily routine. They do not have to walk or drive to a special location just to pick up their parcel. People can pickup parcels while out shopping.

Light indoor lockers are easier to install. In addition, there are fewer environmental and regulatory requirements for siting a locker. In some countries it may be difficult to find a good location for indoor lockers. However every retailer of every type is making the move towards multichannel retailing. It is interested in having a parcel delivery service available to customers. The general understanding is that indoor locker operating costs are high because of the rental costs. However, increasingly supermarket chains are requesting to have automated parcel lockers in their stores. This without asking the operator to pay rent.

Calculating costs

The cost of an outdoor locker is up to three times that of an indoor model. However the lifespan, due to exposure to the weather, is half as long. This is an important factor for operators when calculating their long-term investment return. The maintenance of outdoor lockers is more expensive and challenging for the operator. It can lead to unforeseen costs and lost business. Indoor lockers have up to three times lower risk of technical failure. The biggest challenges for outdoor lockers are extreme temperatures, dust, sun, humidity, traffic and security. With indoor lockers there is no need to worry about these factors damaging delivered parcels. What matters most for the end-user and the operator is for the package to reach its destination in good shape without unpleasant surprises.

In cold weather many parcels may be at risk as the contents cannot withstand subzero temperatures. Any parcels containing electronics or liquids may be seriously damaged. In hot weather, the temperature inside a locker may be very high. Thus putting at risk sensitive items such as cosmetics. Most retailers who sell cosmetics and electronics don’t delivered to outdoor parcel lockers. According to a study by PostNord, top 10 e-commerce products in the Nordic region include home electronics and cosmetics, with the former holding the top spot.

Although parcels are protected from rain inside the locker, they may become wet while being inserted or removed. Outdoor lockers are also accessible at night. So there is a greater risk that someone might attempt to damage them. Burglars may not succeed in breaking into a locker, but they can cause expensive damage. Indoor lockers, however, can be connected to in-house security. Therefore there is no need for special security components or monitoring.

The only advantage of an outdoor parcel locker is that it can provide 24-hour service. But there is such little demand for such services. The investment made to provide 24-hour service will not pay off. Studies shows that fewer than 5% of customers use the service between 11:00pm and 8:00am.

Furthermore, 24-hour service comes along with the demand for 24-hour client support. This in return will further increase fixed costs for the delivery service and the cost to send a parcel.

Parcel lockers have been on the agenda of postal and parcel logistics companies for a long time. Many projects have been launched and many shut down. Operators who use indoor lockers are currently the only profitable automated parcel delivery service providers. Thus this demonstrates that it is reasonable to provide clients with a parcel delivery and collection service from parcel lockers installed indoors.

Published in Postal Technology International

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