Online shopping: Pass the parcel

AMANDA WOODARD
06 FEB 2013

The fulfilment of online shopping orders has spawned a fresh business model for package delivery players.

The online shopping market in Australia grows bigger every year. The volume of small parcel deliveries from overseas alone has doubled from 23.5 million in 2006-07 to 48 million in 2010-11, according to the Australian Customs and Border Protection Integrated Cargo System. Australia Post and Star Track Express report parcel volumes growing by 13 per cent from a year ago and expected the trend to increase.

Joining the consensus, a recent PwC/Frost & Sullivan report about online retail predicts the market will grow at least twice as fast as the total retail market over the next four years.

However, customers who appreciate the low prices, choice and convenience of online shopping are often frustrated by problems with receiving their purchases – a process called fulfilment – often arriving home from work to find an “unable to deliver” note in the mailbox. Such notices don’t always mean no one was home: they are often left automatically for people living in apartments, or for heavy and fragile goods.

In any case, Australia Post offices are only open in business hours during the week and often have long queues at weekends, so it’s little wonder many people opt to have their parcels sent to work.

While an occasional parcel may not cause too much inconvenience for a company, some employees receive regular and frequent deliveries. The cumulative effect is a noticeable increase in mailroom traffic at a time when ordinary “snail mail” correspondence is falling. Not surprisingly, companies question the extra costs to mailroom operations.

A$2.5bn: Estimated value of parcel delivery associated with online shopping fulfilment in 2015.

It’s a problem that has been growing steadily. Paul Carter from NAB’s wealth division wrote to staff nearly a year ago, noting that: “At least 60 per cent of all courier items currently received are not work-related, which equates to around 50 pieces of mail each day. This is unacceptable and I ask that all future personal items are directed to your home address.”

The mailroom at Rabobank also noticed an increase in the volume of packages coming from online retailers. A message was sent to its Sydney employees that the mailroom was not a drop-off point for personal packages.

“We have a relatively small mailroom,” a spokeswoman for the company says. “A message had been issued reminding employees to be considerate of our mailroom capacity in terms of personal mail.”

Similarly, Telstra sent emails to staff to ensure “our people know that they should be using the mail system for business use only”, according to a report in The Sydney Morning Herald.
This rising problem for online customers and their employers has now become a business opportunity for start-ups.

ParcelPoint was launched 18 months ago in direct response. Its research estimates that between 10 and 15 per cent of deliveries fail at the first attempt because of the alleged unavailability of the recipient.

Co-founder Julian Leach says their research shows that “70 per cent of employees who cannot receive workplace deliveries were very interested in using an after-hours parcel pick-up service”. For a handling fee of A$2.95, ParcelPoint will arrange for a parcel to be delivered to one of nearly 1000 collection points – typically convenience stores or newsagents – open over extended hours. The company sends an email to alert a customer when their package is available.

ParcelPoint has teamed with online retailers and is beginning to work directly with corporations to sign up collection points near their offices.

“In response to the news that NAB had banned workplace deliveries, we set up a ParcelPoint location next to their offices in [Melbourne’s] Docklands, providing employees with a collection point they can access during lunchtime or after work,” Leach says. “We also have a relationship with [property expert] Goodman which involves them promoting ParcelPoint to staff at a special rate.”

Australia Post is also running to meet the challenges of the online boom with a capital investment hike of 50 per cent from last year to be spent digitising its mail delivery services and increasing its parcel sorting capacity. The company already has free secure parcel locker sites where customers can pick up deliveries when they like. There are four in Victoria, three in New South Wales and one each in Canberra, Perth and Brisbane, and more will be set up.

Australia Post chief executive Ahmed Fahour has announced that by 2014 the aim is for 80 per cent of Australians in a metropolitan area to be within 10 minutes’ drive of a parcel locker location.

Parcel delivery associated with internet shopping is expected to reach A$2.5 billion in 2015, according to the Switzer Super Report 2011 – which makes sense of the postal service’s decision to invest A$450 million in consumer initiatives by increasing the number of parcel lockers and expanding services at its superstores.

Businesses that frown on personal parcel deliveries are sure to welcome any initiative that means employees aren’t taking time off to collect their goods.

Parcel catch-up
Australia is playing catch-up when it comes to online shopping and delivery and is generally considered to be about two or three years behind Britain and the US.
eBay and Woolworths were two companies that pointed to a lack of sophistication in Australia’s postal delivery system.

In submissions to a government report on the Australian online retail industry, eBay Australia and New Zealand and Woolworths were two companies that pointed to a lack of sophistication in Australia’s postal delivery system compared with overseas.

In the UK, where online shopping has been embraced with great enthusiasm, there are companies such as Collect+. It has a well-established network of more than 4500 local shops where customers can collect and drop off parcels that need to be returned.

Collect+ has partnered with big name retailers such as Amazon, eBay and Topshop to provide an optional delivery service at the point of purchase. Similar arrangements occur in the US. Convenience store chain 7-Eleven has linked with Amazon to provide lockers for parcel deliveries accessible 24 hours a day with a digital password.

What’s inside?
The vexed topic of whether it’s OK to have personal goods delivered to your workplace has been trending on the internet over recent months. Company reactions vary, with some quite happy for staff to receive the odd parcel and others strictly opposed, so employees should ask permission first.

A popular viewpoint is that organisations should offer some leeway to employees whose commuting and working hours make parcel pick‑up impossible. Consideration of their needs may be good for morale.

The occasional book or set of guitar strings delivered to the office is one thing, but there are anecdotal accounts of multiple deliveries arriving daily from Hong Kong or China, people running eBay businesses out of their office and TV sets, car tyres and a flat-pack four‑poster bed arriving in the mailroom.

Some online commentators have confessed to having an antique firearm, live tropical fish, a glass shower door, 3m of garden fencing and a set of scaffolding complete with catwalks delivered to their workplaces.

A final issue worth considering is what happens if that antique gun or DVD goes missing after it has arrived at the office? It could be hard to track down and there is no recourse with a shipping agent if the mailroom has signed for it. Buyers beware!

This article is from the February 2013 issue of INTHEBLACK magazine.