WHAT’S THE STORY?
InPost vs Amazon in the UK. Who will win the battle of the lockers?
Last week, we mentioned that the Polish parcel locker box specialist, InPost, had major expansion plans for the UK. Here at Watson’s Daily, we are lucky enough to have some ambassadors who are from Poland, so I wanted to get their point of view on the company given that it is so popular over there! Here is what Zuzanna Potocka had to say:
- InPost was founded by billionaire Polish entrepreneur Rafal Brzoska. It has over 13,000 locker locations on the Polish market, which makes it the default delivery service. It began its overseas expansion several years ago.
- InPost operates 140,000 individual lockers in the UK. It plans to set up 2,000 units by the end of 2021 and reach 10,000 sites by 2024, focusing on London, Manchester and Birmingham. It has already signed deals with landlords including Tesco, Lidl, Morrisons and TFL. Its unique selling point is that it aims to integrate post handling into the “daily routine” of a customer.
- The model profits through an average additional shipping charge of £1.75 – £2.50 per unit. The charges decrease depending on order volume.
WHY IS IT INTERESTING?
InPost has been trialling lockers in the UK for several years but is set to embark on its biggest investment yet. However, not all of the factors that made it a success in Poland will work in the British market. For instance, in Poland, couriers have an unreliable reputation meaning that the public are more receptive to an alternative delivery model. The country also does not subscribe to a culture of leaving parcels unattended in “safe spaces.” Consequently, many find it easier to order directly to a nearby locker and avoid rearranging deliveries.
InPost may become a solution for customers that are concerned about leaving parcels with neighbours or on their porch. Each buyer receives a unique code via text or email that is later used to open the locker. Further protection measures include CCTV and parcel tracking systems. Nonetheless, this may not be enough to adequately address potential thefts at crowded sites such as tube stations. InPost greatly restricts its liability and under consumer-seller regulation, the retailer takes on a lot of the responsibility for lost packages.
The company’s success will also depend on an attitudinal shift, away from the convenience of home delivery and
towards environmental considerations. On average, a traditional delivery driver distributes 70-80 parcels a day while an InPost operator delivers up to 1,000 orders. InPost may have to carefully choose future partnerships to dispel wider hesitations towards online shopping. Currently, its well-established partnership with the global fast-fashion retailer, Missguided, forms part of its success on the British market.
Restrictions regarding the weight and size of the ordered object, are likely to encourage a blended model of home and locker delivery. Importantly, InPost also offers returns services. The UK public may be more inclined towards dropping off orders at nearby shopping and travel sites as part of their “daily routine” instead of facing long queues at the post office. InPost affirms that it remains on track to outnumber post office sites in its three target cities. The availability of a 24/7 service may be the tipping point required to substitute customers’ habits of handling parcels.
Finally, the expansion comes at an appropriate time of year when sales of smaller products are likely to increase before Christmas.
Delivery locker systems are not a new concept. Amazon Locker has been operating in London since 2011 and has set up 5,000 lockers across the country. Its contracts with the Co-operative and Morrisons align with InPost’s strategy. Amazon also offers an extensive number of units around university campuses. Did you know, for instance, that its largest pickup location is situated at the University of Warwick?
InPost may be able to differentiate itself by setting up lockers in locations that respond to the needs of a wider range of age groups. Assisted by a return to city commuting, it plans to surpass Amazon by the end of 2022. Interestingly, Amazon does not offer its Locker service in Poland, so this will be the first time InPost will actively compete on the market against Jeff Bezos. Instead, InPost has a strong partnership with Allegro, Poland’s biggest e-commerce platform, that has been acting as an alternative to Amazon. The deal offers Allegro customers free delivery and returns as well as an additional insurance on the products they purchase.
Regardless of the competition, a recent report by Retail Economics and Eversheds Sutherland indicates that the trend of online shopping is set to continue. Predictions concerning the sales of clothing online overtaking high street transactions, as soon as 2022, indicate that InPost should have a secure stream of long-term revenue.
It certainly looks like online purchasing isn’t going to disappear anytime soon and it may well be that consumers could take the recommendations of COP26 to heart and use InPost as a way of minimising the environmental impact of their deliveries!
Despite the high expenses of initial installations, a successful rollout is likely to incentivised other delivery companies to follow suit. DHL already offers parcel lockers in other countries, possessing experience for expansion in the UK. Parcel lockers could be the new frontier of delivery in the UK!
This article was written by Zuzanna, an LLB student at Durham University, with an unheard-of love for EU law and an even bigger passion for her morning porridge and coffee rituals (she recommends that you start adding ground sweet cinnamon to oats – it is “a game changer”).