“Parcel” aims to mediate between shipper, carrier and customer

An article in Mashable.com (February 12,2014) and available at http://mashable.com/2014/02/12/parcel/  describes the company Parcel (https://fromparcel.com/) that permits customers to have their online packages delivered to a Parcel shipping address.  Customers then provide details such as preferred delivery time, doorbell ring or not etc so that the packages arrive when customers are available to receive. The service costs about $5 per package.  Is a disintermediated supply chain with shipping efficiency and speed focus by ecommerce shippers, and customer convenience outsourced to Parcel, the optimal solution for providing deliveries to customers ? Will Parcel’s last mile convenience solution be replaced by deliveries to local locker locations with flexibility for pickup any time ? Should carriers like USPS, FedEx and UPS change their delivery flexibility to adapt to consumer preferences or accept the role of companies like Parcel ? 

About aviyer2010

Professor
This entry was posted in consumer, Cost, Ecommerce, logistics, Service Operations, Supply Chain Issues. Bookmark the permalink.

25 Responses to “Parcel” aims to mediate between shipper, carrier and customer

  1. Christine Rasquinha says:

    Parcel does provide an optimal solution to customers living in a city that do not have time to pick up their packages between 9pm and 5pm. Depending on the package size, logistically lockers would be able to work because individuals would not have to worry about waiting for their package to arrive and they would also not need to worry about scheduling the arrival of their package and being home. Not being home when a package arrives, but knowing it is still safe is a convenience that Parcel does not fully offer. If USPS, FedEx and UPS can utilize larger locker spaces in their offices to allow individuals to pick up their packages, it would most likely be better for individuals because these mailing companies would not need to increase routes and carry a “Light Truck Load of Mail” which would increase their costs. If USPS, FedEx and UPS want to be competitive and increase the number of items that are shipped through them, they need to provide a more flexible offering; however, this could simply mean having offices in central locations where individuals can pick up larger packages at their own convenience.

  2. Sarinah says:

    To add to Christine’s point, the next steps for USPS, FedEx and UPS would be to weigh the dollar expenses of operating longer hours and increasing office space as compared to increased route options. Is the new demand volume justifiable? Data would need to be gathered on the usage and volume before decisions are made on location; maybe selected geographic locations can be chosen or have pilot tests done to see the potential growth. If there are lesser users, then a flexible mile delivery seems cheaper compared to a permanent storage space.

  3. Murilo Siqueira says:

    This last mile is the most costly and time consuming for delivery companies. It is much easier to ship to a single designated location than to multiple locations that may be difficult to access or even to find. UPS invested billions of dollars trying to optimize those last mile deliveries with better routing algorithms and there is still work to be done. Adding another variable to the process – exactly when to deliver – would increase even more the difficulty to bundle deliveries in a same area. Ir order to be able to ship on time, companies would have to start using “light truck load”, as Christine mentioned, elevating costs to the final customer. The only way I can see current companies fighting Parcel would be by making partnerships to other local companies that have delivery services, delivering their products together (Amazon/UPS and some other retailers were already going for this option by using local drivers and even bundling packages with Domino’s Pizza).
    It would be pretty convenient to receive your products with your pizza, when you know you would be home.
    Another possible way would be trough the use of drones. Since it would have reduced transportation times from the warehouse, people could have an option to “deliver to me now”, as they were available to receive their products.
    Without further development on partnerships and new transportation methods, I don’t see it as a reliable initiative for current companies to enter the business and compete against Parcel.

  4. Dian Yu says:

    In China, express delivery is actually truly developed. Every carrier has his or her own district in charge and will have the phone number of each package’s owner. It is because the labor cost is low in China. I believe Fedex or UPS has already thought of it. And in my opinion, the reason why they do not want to expend the last mile delivery service business is because they feel the cost is not worth since the labor cost is high and the demand of this kind of service is not popular.

  5. Xiaodan Liu says:

    It sounds like Parcel has provided a convenient service for those people who are not available during the package delivery time frame, especially for those expensive package that need receiver’s signature. However, the cost for the ‘appointment’ delivery will be significant since the transportation cost (fuel , labor cost, etc), compare with the $5 charge for the customer. There is a better way to benefit both Carrier and Customer, such as the Locker, which is wildly used in China nowadays. When a package been sent out, the customer will get a message told the tracking number and estimated delivery date, and the package will be delivered to the Locker, customer will receive a message with the verification code to pick up their package, the package will be left in locker 24 hr for free, after that 24 hr, each day will be charged an occupation fee. The locker has different size, which will allow some large size packages be put in. Such service can save time for both Carrier and customer, customer also don’t need to pay any fee for keeping the package in locker for a day. Normally the package will be picked up within 24 hr. It seems like $5 is a high cost if the package only worth $10, there is no other option if customer need the package to be delivered at the same day, but if there is a better option, such as the Self-Pick-Up Locker, the customer will save $5 and the Carrier also don’t need to run back and forth to deliver the package.

  6. Eric Zheng says:

    Considering the fact that the passage was posted back in 2014, I do not see Parcel’s business model as particularly attractive for either customer or 3PLs. Following the old ways, parcels can be readily left at mailboxes, offices, or even doorsteps. The only value addition of Parcel’s service is saving customers’ time to office, or reduce the potential risk of loss/shrinkage (of very low chance considering the rather favorable social condition in the US), which will cost the customer an additional $5 per parcel. The only interested party, as far as I’m concerned, may be apartment offices, who currently need to accommodate tenants’ parcel delivery, to save back office space by negotiating a contract of larger volume and associated quantity discount with Parcel.

  7. Saravana says:

    Parcel’s innovative business strategy of realizing revenues from e-commerce sector’s last mile deliveries can be successful at urban cities that have high population density. Parcel’s costs include rent which is expensive in urban areas, other operational costs and transportation costs. Parcel’s break even depends on its volume of transactions. Deliveries are scheduled according to customer’s preference. Hence, peddling and transporting parcels in smaller trucks and scooters would be essential to achieve better efficiency in transportation. Dynamic route mapping based on orders scheduled for each day, would also help reduce transportation costs.

    E-commerce giant Amazon has its own locker systems where customers can enter their code in the screen at kiosk and can pick their parcel. Fedex, UPS can aggregate deliveries (customer preferred ones) as they handle higher volumes resulting in better economies of scale. Big players in the market such as Fedex, DHL, UPS shall closely monitor Parcel’s financial growth and expansion plans before deciding on implementing this strategy.

  8. Man Lu says:

    This is a good service. When I first came to the US, I really don’t like the delivery service since I usually don’t know when I should stay home to get my package. For some important items, I always missed them, and need to go to FedEx office to get them! This is very popular in China. The carrier will call you before delivery, in order to make sure you are available to receive the package and he will not beat the air. If they are not available, they will appoint another time. This also can keep the package safe. Actually, the cost of paying for the missing package plays an important role in the whole cost for a carrier or the online store. So, this is a good way to reduce the cost.

  9. Jutong Cui says:

    Start-ups and main carriers are all trying to provide various optimal solutions for last-mile delivery.

    -The convenient service provided by Parcel would somehow provide a feasible solution for last-mile delivery problems. However, Parcel, as a startup, still needs lots of capital and labor investment to serve every last-mile when the service scope becomes larger.
    -Local locker also faces obstacles like capacity, volume, and stationing cost.
    -For carriers such as USPS, FedEx and UPS, flexible deliveries may add lots of complexity to the transportation system, and increase the operation cost.

    A better way is to corporate with local stores as ‘last-mile delivery stations’, such as supermarkets, gas stations, and etc.. Customer can choose to pick up the packages whenever those 24-hour delivery stations are open. This is a win-win situation for both parties, which reduces the cost of build up stores for carriers, and also brings traffic for supermarkets and gas stations.

  10. Kody Kleine says:

    With the recent introduction of Amazon Fresh, Amazon is able to provide a similar service. They will allow you to select a 1 hour window for delivery. This also gives customers much more control than the existing delivery services. If they see value in this service, they may try and implement it in as a part of their core business. They have proven to be aggressive in all areas of their business, so this added delivery detail may be a possibility. They could also try and work with delivery service providers (UPS, FedEx, …) to establish a similar system to compete with Parcel. However, given their implementation of local locker pickup, this strategy would be unlikely unless Parcel proves the demand for the service warrants the strategic change.

  11. Huaijing Lin says:

    The Last Mile problem can be interpreted in 2 aspects. 1. Damaged goods due to bad weather and lost items due to patio thieving, as deliveries were unattended by recipients. 2. Increased costs for deliveries to remote or sparse locations. Parcel definitely provides a promising solution to address the 1st issue by reorganizing available resources, but it did not help with the 2nd one.

    In foreseeable future, alternative solutions such as drone/robot delivery could be more flexible while incurring lower cost than Parcel’s service mode does, moreover, it could potential solve 2 issues of problem together. Consequently, bigger players (e.g. UPS, FedEx, Amazon) would enter this niche market with their drones and take Parcel’s business away.

    Understanding potentials of drone, Walmart, UPS and Amazon have introduced different type of drone delivery for experiment and demonstration. For now, drone delivery is still far from mature because it is facing problems such as short range, limit of weight, item size limit, aviation regulations, short of facilities, high cost of initial investment and public concerns. However, their determination to overcome these technical issues should not be under estimated as long as online shopping activities keep increasing.

  12. Amitesh Mishra says:

    The question companies need to ask is how important is last mile delivery when measured with customer convenience. Before jumping onto any conclusion, I would like to state that I agree with Murilo’s point that optimizing the last mile delivery already has lot of variables and adding couple more is going to even complicate the process more and add substantial cost to the supply chain. This will ultimately reflect onto the price that is charged to the customer. This is where parcel comes into the picture and $5 charge seems very little from a general consumer point of view. But is it really that convenient for most of the customers for UPS, Fedex etc to adopt to that type service? Maybe. Maybe not. Also, it needs to be considered if UPS and Fedex have already considered multiple delivery attempts into their routing algorithms and are countering the reduced service level provided to end consumers.
    Looking at what Walmart launched earlier this year – pickup towers for online orders.
    http://www.retaildive.com/news/walmart-expands-pickup-towers-for-online-orders/447628/
    This provides 24hr anytime pickup for consumers. Walmart adhered to its omni-channel strategy by providing the convenience to consumer to order online, check inventory in local or nearby stores, order, get notification when the package is delivered to the store and ready for pickup. And at what cost? No additional cost, no delivery cost and no $5 sit at home and wait cost. This model might suit more to current consumers’ needs as it is not only less costly but also convenient. A person can pick up the package on their way to work or when they are on their way back from work. Walmart stores are spread throughout US and they are taking advantage of that.
    Parcel is working well in Manhattan, maybe it will work in densely populated areas such as downtown LA and San Francisco but carriers such as USPS, UPS and Fedex need to find out what matters to most consumers. Does it make sense to invest in a model like Parcel everywhere or maybe only in densely populated areas or switch to deliveries to local locker locations for full flexibility for pickup times.

  13. Saumitra Kumar says:

    Parcel, is a good idea but there are many caveats to its success. It is an option chosen by customer for its convenience and in fact companies like Parcel has tendency to benefit e-commerce. Option of local locker facilities has its own drawback. There are many limitations with locker facility such as locker size, locker availability and closeness of locker facility to customer’s premise. These limitations frustrate customers and in turn affect customer service. Additionally, customers have to spare time for pick up or drop off unlike in the case of Parcel. The setting up cost for widespread network of lockers would also be an extra burden to e-commerce companies if lockers are offered for no fee. So, lockers in present scenario do not seem to be potential threat to companies like Parcel in developed countries. However, in developing countries like India companies like Parcel would find it harder to do business. Courtesy to joint family culture in India and customers attitude, buyers find a workaround solution to get the packet received by neighbor or get it delivered to office. If, among customers, there is high acceptance of services like those of Parcel then companies like UPS, Fed-ex should also think of adding these facilities to their portfolio.

  14. Manita Dagar says:

    While going through the company website and details about the transition of the company,Parcel Inc. seems to reinvent their strategy over time. Rather than focusing on individual customers, they moved on to e-commerce retailers to provide solutions for last mile delivery. Its a clever transition and optimizes the last mile delivery solution as a whole for the whole supply chain.

    Coming back to the idea of inception of this company, the concept of delivering to individual customers at customers’ convenience was game changing and helped the company gain foothold in the market. Although from point of view of operations strategy, the main focus should be what is adding the most value to the supply chain with most cost-efficiency. To some customers, having a locker service is more convenient, while others would like to have a customized delivery to their doorstep. Any company in the business of last mile delivery needs to adopt the specific model that adds more value to their operations. There are pros and cons of each model.

  15. Xin Wen says:

    In my point of view, the Parcel makes some people’s life easier because customers could choose when and how they want to receive their packages. However, this will increase the costs for both customers and suppliers. The USPS, FedEx, and UPS should consider to offer this kind of service but do not need to offer this service for every delivery. In the meantime, they could do like Amazon. The PMU has an Amazon Pick up station, which customers could choose when to pick up. I think there could be a better way.

  16. Vinay Gundam says:

    Multiple delivery attempts for a package will definitely frustrate a customer and is the reason why customers are willing to pay extra for their convenience. Most customers will be at work when the delivery is attempted and are likely to choose a delivery time after office hours or on weekends. Currently Parcel is serving only a part of New York and it will be increasingly difficult to employ more people for a short window of time all at the same time and has limited flexibility to optimize delivery costs. With the current $5 charge, I don’t think Parcel can sustain the current service level for a long time. Moreover it can create unnecessary complications for carrier companies in integration with several service providers like Parcel in different cities. Instead they can invest in more pickup centers or provide similar services themselves as they have better chance of leveraging economies of scale.

  17. Shashank Chinnolla says:

    The business model of Parcel is an interesting one as it charges a premium for an added on service. This I believe is dependent on a lot of factors:
    1. The location of the service being provided. This would be useful in cities like NY, Boston etc where the customer would be ready to pay a price for customized delivery or in locations where the customer is located far off in the outskirts of the town.
    2. What is the value of the goods being shipped? Would a customer be willing to pay an extra $5 for a product worth less than $20?
    3. What other services can the customer get for the extra $5 like change of delivery location at the last moment or change of time of delivery at the end moment?

    The above service can be incorporated into the delivery service of companies like Amazon, UPS etc by adding a variable to their current logistics model with certain constraints and this not exceed $5 per delivery. The concept of pickup by the customer in college towns is a big challenge for Parcel. A survey can be conducted if a customer is willing to pay a premium for a customized service and it can be incorporated into the current logistics model with any major investments.

  18. Akanksha Soneja says:

    I agree with Christine that this is indeed a very good solution for those who are working are are unable to receive orders. It is not uncommon to receive packages when we are off to work and the package delivery cannot be rescheduled during weekdays as the delivery timings coincide with our office timings and thus the delivery of the package become difficult before weekend. Also, sometimes the packages get returned to the seller because the receiver is unavailable for a stipulated number of times. This solution will be useful if they are not restricting the delivery to 9 am to 5 pm time slot. Additionally, it is convenient both for the delivery agent and the receiver. The delivery agent need not carry the items which he is sure he will not be able to deliver on a particular day and the receiver need not be worried about their being unavailable. This will help in efficient utilization of the carrier and thus reduce the overall transportation cost.
    As far as pickup fro lockers is concerned, it may a feasible solution for less bulky low cost items if the locker is available at a reachable distance for pickup.
    In order to understand if UPS, Fedex should change their flexibility or take up role from companies such as parcel, an in-depth analysis need to be done in terms of operations and costing and its impact going further.

  19. Saumitra Kumar says:

    Parcel, is a good idea but there are many caveats to its success. It is an option chosen by customer for its convenience and in fact companies like Parcel has tendency to benefit e-commerce. Option of local locker facilities has its own drawback. There are many limitations with locker facility such as locker size, locker availability and closeness of locker facility to customer’s premise. These limitations frustrate customers and in turn affect customer service. Additionally, customers have to spare time for pick up or drop off unlike in the case of Parcel. The setting up cost for widespread network of lockers would also be an extra burden to e-commerce companies if lockers are offered for no fee. So, lockers in present scenario do not seem to be potential threat to companies like Parcel in developed countries. However, in developing countries like India companies like Parcel would find it harder to do business. Courtesy to joint family culture in India and customers attitude, buyers find a workaround solution to get the packet received by neighbor or get it delivered to office. If, among customers, there is high acceptance of services like those of Parcel then companies like UPS, Fed-ex should also think of adding these facilities to their portfolio.

  20. Emily Zhang says:

    By adding $5 more per package for just having a customized delivery time sounds not attractive at all. And because of high labor cost for delivery guys, those large delivery companies may also not even consider about adding this feature. However, I am thinking that companies like UPS, USPS, FedEx could introduce a feature like Prime Amazon that if customers pay $50 per year for example, they would get customized delivery time. If I am an online shopping person who do not have front office or big mailbox and not at home at regular hours, I would consider this option. For company, if the customer base becomes large, this annul fee would cover the high labor cost, especially hiring college students for delivery.

  21. Senthil says:

    The service provided by Parcel will not always be an optimal solution. Customers wouldn’t always bother when the package is left in the doorstep even they are not available. This depends on the products they are ordering online and history of unattended package safety in the doorstep. However, Parcel Company targets an important area in package delivery where customer service can be improved. If a customer is ordering some valuable products which couldn’t be lost, this is the situation where the service provided by Parcel comes handy. As mentioned in the mashable article, if the carrier comapny couldn’t deliver a package, the driver needs to come back again (up to three times usually) to catch the customer. This leads to unwanted transportation cost and time for delivery man.
    There is a convenient factor for customers in selecting Parcel’s service instead of local lockers. So, it is unlikely that the solution provided by Parcel will be replaced by locker locations. Yes, big shipping carrier companies should adapt more to give some flexibility in deliveries. If we miss a package delivered through these big carriers, if we couldn’t stay home during normal business hours, then we have to go to nearby warehouse/ regional office to collect the package. Most of the times, there is a charge, less than $10 per package, for this service. This adds frustration to the customer. So, big carriers should be flexible to deliver packages as per customer preferences or outsource the preferred deliver services to company like Parcel.

  22. Amer Nasrawi says:

    Despite the attractiveness of Parcel to the customer, volume of such mail class is still not clear. Whether it makes economic sense or not for these companies to adapt in order to eliminate the threat coming from Parcel shaving off some of their market share. Currently, there’s an alliance between FedEx and USPS for last mile delivery where USPS is capable of delivering such convenience to customers’ mail boxes or even offer office pick ups for valuable shipments. This partnership allowed FedEx to save on their last-mile deliveries and offer a wide base of customers a safe and convenient way of receiving their shipments.
    I can see similar partnerships happen across the major competitors, or between the major competitors and Parcel, hence, they are in a strategic alliance that will curb the competition from Parcel or probably be beneficial to all parties at the same time.

  23. Kyle Fithian says:

    I do not feel that this is the optimal solution to providing package delivery. The target user of this service is people who are not home during working hours. At $5 a package, the price is significantly high considering the increased use of online ordering by this target group. Many companies are offer free shipping and customers have become used to this being a standard of online ordering.
    Locker delivery is a much more attractive option for many users. It is a free service and the locations are becoming more convenient (gas stations and grocery stores). For many people, these locations are places they already visit and use on a daily basis. They also have the convenience of being able to pick up packages on their own schedule. Parcel still requires a time for you to be at home and holds the driver to that window, a risk for the delivery company.
    With the increase in online ordering and package delivery, it will be increasingly difficult for companies to adapt specifically to consumers. Lockers are a step in the right direction. A premium service similar to parcel may be worth considering, but based on the convenience of lockers high cost, the market segment is likely too small for large carriers.

  24. Koustuv Pal says:

    Service providers like Parcel are the optimal solution for customer convenience or last mile connectivity if the traditional logistics service providers such as UPS and Fedex are already not doing so.
    Locker locations would not be replaced by Parcel like service providers unless locker locations are cost competitive(meaning charging less than Parcel) and availability of locker locations close to customer service areas so that the opportunity cost of customers is lesser compared to Parcel.
    Companies such as UPS and Fedex should change there delivery convenience to match or surpass that of companies like Parcel because last mile connectivity by delivering the right product at the right place and the right time is one of the core competencies of the traditional logistics firms.

  25. Vipul Goyal says:

    On a simple note, one of the key advantage with the online retailing firms was lower return rates and thus, savings on reverse logistics cost, as opposed to brick and mortar model. This happened because the online retailers made online reviews, book preview and ratings available to the customers before purchase. Parcel is trying to address customer convenience wherein return due to non availability of customers at shipping address leads to reverse logistics. However, they charge a premium of $5 to break even with the reverse logistics cost and less than truckload shipments. Therefore, they lose on the pricing advantage that online retailers have over the traditional brick and mortar model. One way to attend the customer convenience and price advantage at the same time is to ask the customer’s availability at the time of item purchase. If this mechanism ensures FTL or EOQ for most of the shipments to the delivery areas, then make the time availability check-in part of the product purchase. If not, then identify the delivery locations where items can be dropped to lockers, slot them in deliveries where the transportation is LTL and keep deliveries with FTL or EOQ with time slots untouched. This will bring down the cost of reverse logistics and ensure customer convenience

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s