White label parcel lockers in rural areas, an explorative study on key stakeholders’ perspectives

White label parcel lockers in rural areas, an explorative study on

key stakeholders’ perspectives

21st _{of August 2020}

Master thesis

Supply Chain Management Faculty of Economics and Business

University of Groningen

Martijn Veurink S2971976

M.B.J.Veurink@student.rug.nl

Supervisor Dr. ir. Paul Buijs

Second assessor Dr. ir. Stefano Fazi

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Abstract

The rapidly growing e-commerce intensifies the last mile logistics necessary to fulfil this increasing demand. Currently, the last mile is the most inefficient and most expensive part of the supply chain. Companies are highly active in finding alternatives for home delivery. One of these alternatives are parcel lockers. Prior research has paid much attention to the customer view on privately owned parcel lockers in urban areas. This thesis aims at exploring the stakeholder’s perspective on white label parcel lockers in rural areas. A case study is performed among three groups of stakeholders. These stakeholders include, local authorities, operators and filling companies. A main finding of this thesis is that stakeholders expect that it is harder to reach a certain occupancy rate for white label parcel lockers in a rural setting compared to private parcel lockers in urban areas. Moreover, local companies show to be willing to implement white label lockers in their business, where traditional parcel delivery companies are more interested in private owned parcel lockers.

Acknowledgement: In particular I want to thank P. Buijs for providing me with critical

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Table of Contents

4.4. Parcel delivery company ... 20

5. Conclusion and discussion ... 23

5.1. Theoretical implications ... 23

5.2. Implications for policy and practice ... 25

5.3. Limitations and future research ... 25

References ... 27

Appendix A – Numbers on public transport use in 2019 ... 31

Appendix B – Overview subset questions potential local suppliers ... 31

Appendix C – Overview subset questions parcel delivery companies ... 32

Appendix D – Coding tree for local companies ... 32

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1. Introduction

The rapid increasing online sales intensifies the last mile logistics. Predictions regarding the ongoing rise of e-commerce state that in 2022 sales will amount to 6.54 trillion dollars, compared to 3.53 trillion in 2019 (Statista, 2019). A problematic effect of the intensifying last mile logistics is the increasing amount of traffic. Currently delivery vans are the most expensive, inefficient and polluting part of the logistics chain (Macharis and Melo, 2011). This is in part due to the fact that parcel couriers face the not-at-home problem and therefore sometimes have to perform multiple deliveries. Research shows that between 12% and 60% of the first attempts to deliver fail (Song, Cherrett, McLeod and Guan, 2009). Since the e-commerce continues to grow, alternatives for home delivery have to be found (Ducret 2014). One of the more common ways to cope with this problem, and to prevent the failed first-time delivery, is the introduction of collection points (Zenezini et al., 2018).

Parcel lockers are a specific type of collection point. Parcel lockers are systems located near apartments, workplaces, car parks, railway stations etc. (Lemke, Iwan and Korczak, 2016). Customers get notified when their delivery has arrived and with a code, they can open the locker (Lemke, Iwan and Korczak, 2016). An advantage for the delivery company is that they can store at any preferred time and the risk of a failed delivery disappears (Deutsch and Golany, 2017). Prior research on parcel lockers has mainly focussed on the customer view, for example where to best locate the locker and what customers seem most important considerations for utilising the system (Lemke, Iwan and Korczak, 2016). The other side of the system is the supplying process of parcel lockers. This process depends on the operators and suppliers of parcel lockers. The operator is responsible for maintaining the system, providing software and contracting suppliers. The suppliers are responsible for filling the lockers. Where recent studies primarily focussed on the customer view on parcel lockers (Iwan, S., Kijewska, K. and Lemke, J., 2016; Lemke, J., Iwan, S. and Korczak, J., 2016; Vakulenko, Y., Hellström, D. and Hjort, K., 2018), has the supplying process received less attention in recent studies.

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have primarily focussed on privately owned parcel lockers and executed their research in cooperation with parcel delivery companies (Iwan, S., Kijewska, K. and Lemke, J., 2016; Lemke, J., Iwan, S. and Korczak, J., 2016). For instance, Iwan, S., Kijewska, K. and Lemke, J., (2016) found that parcel lockers in urban areas can positively contribute to the congestion problem and that travel distance can be reduced by implementing parcel lockers. However, next to the private label lockers, white label lockers start to emerge in rural areas. These areas face less congestion compared to urban areas and therefore it can be questioned to what extent parcel lockers can offer the same benefits as in urban areas. Furthermore, these areas have a smaller potential market, so it can be questioned whether the total travel distance can be reduced.

Where private label lockers are filled by the company owning and operating the system, white label lockers depend on other stakeholders to fill the locker. These stakeholders mostly do not include companies that operate private parcel lockers. Therefore, white label operators have to reach out for alternative collaborating parties, to supply the lockers. For example, last mile delivery start-ups, parcel hubs or parcel delivery companies. Operators find more difficulties in contracting parties willing to fill the lockers in rural areas. As the delivery volumes and therefore the economic benefit in rural areas are often smaller, a private owned locker in these areas might not be feasible. Having an alternative for making the deliveries in these areas more efficient, costs can be saved (Morganti, Dablanc and Fortin, 2014). This research aims at exploring white label parcel lockers in rural areas. Based on the perspectives of potential key stakeholders, data is obtained to gain insights. Hence, the research question that arises and this thesis aims to answer is;

What is the view of key stakeholders on white label parcel lockers in rural areas?

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insights in their view on parcel lockers, collaboration with white label operators and deliveries in rural areas. And how they can potentially benefit from incorporating parcel lockers in their business.

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2. Theoretical background

The last mile is one of the most expensive, most polluting and time-consuming processes of delivery, therefore companies are constantly searching for alternatives (Morganti et al., 2014). It is expected that the demand for e-commerce delivery continues to grow (World Economic Forum, 2020) and therefore managers have a great challenge in organising their last-mile logistics (Savelsbergh & Van Woensel, 2016). An alternative to companies performing the last-mile and the extensive need for delivery vans are collection-delivery points (CDPs). These points have shown to be an effective alternative for (failed) home deliveries (Morganti et al., 2014). A benefit that these points offer are cost savings when a company can deliver in a larger time frame compared to home delivery (Boyer, Prud'homme and Chung, 2009). Furthermore, it increases efficiency by improving vehicle capacity and a smaller number of locations that have to be visited (Punakivi and Tanskanen, 2002). Moreover, it has a carbon emission reducing effect on the last mile logistics (Edwards et al., 2010). An advantage for customers is the flexibility of picking up their products. There is no longer a need to wait for the courier to deliver at home (Kokkinou and Cranage, 2015). An example of collection points are parcel lockers. Parcel lockers offer the supplier a good solution to consolidate goods, reduce the failed deliveries and therefore reduce costs regarding the last mile logistics (Deutsch and Golany, 2017). This remainder of this thesis will focus on parcel lockers.

There is no universal term to describe parcel lockers. Many characteristics differentiate the various types of parcel lockers. Iwan et al., (2016) distinguish among five types of locker systems:

• Reception boxes, fixed to a wall of the customer’s house, accessible by using a key or electronic code. The customer gets notified when a delivery arrives. Mostly used for parcels, can be used for food if they are temperature controlled.

• Delivery boxes, owned by a retailer or the delivery company. Filled in distribution centre and then temporarily fixed to a customer’s house by a locking device. When the boxes are empty, they get collected by the delivery company.

• Controlled access systems, with a key the delivery driver gains access to a locked area where the deliveries can be dropped off. This key might be sealed in a special unit which can be opened with a code.

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are ready for pick up. With the collection point customers can even arrange a home delivery instead of picking them up themselves.

• Locker-banks are groups of reception box units, similar to collection points they are located in car parks, railway stations, apartment blocks etc. Customers are not assigned to their own locker in order to optimize usage. They get notified when their goods have arrived and with a code, they can open their lockers.

The remainder of this research uses this final definition of locker systems, and hereafter be referred to as parcel lockers. As the parcel lockers examined in this research will be unmanned and placed outside and this definition characterises the lockers most applicable.

Parcel lockers can offer various benefits for parcel delivery companies. They reduce the number of deliveries in urban areas and take away the failed deliveries. Therefore, no goods return to the parcel delivery companies and unnecessary miles are saved as no new distribution route has to be developed. Consequently, the congestion, the energy use and emissions will be reduced (Iwan, Kijewska and Lemke, 2016). Iwan et al., (2016) found in their research, when comparing traditional deliveries with parcel locker deliveries, that up to ten times more parcels could be delivered, the total travel distance could be up to 50% lower and that the fuel consumption and CO2 emission could be up to 95% lower. When customers order online and decide to pick up their goods in a parcel locker, parcel delivery companies do not have to perform multiple deliveries, as the various deliveries are consolidated and therefore the total travel distance reduces (Mangiaracina, Marchet, Perotti and Tumino, 2015). Another advantage of a parcel locker is that they are unmanned and accessible 24/7. For suppliers this also means that they do not have to take working hours into account and that the lockers can be filled at any preferred time (Zenezini et al., 2018). Furthermore, are parcel lockers more beneficial than home delivery. This is due to the fact that the wages of autonomous delivery forms are higher compared to those concerning a parcel locker system (Joerss et al., 2016).

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(Weltevreden, 2007). When placed outside, customers can also be reached beyond the working hours of the store. Thirdly, businesses can customise the lockers. They can advertise by putting their brand on the logos to promote their store. Velarde (2019) points out that for businesses that make use of (neutral) parcel lockers, thus not owned by themselves, the initial investment does not have to be made. Also, maintenance costs can be shared among suppliers or are accounted to the operator. If a lot of companies are involved in the parcel locker system, the popularity rises and consequence the number of customers increases (Velarde, 2019). Recent research paid much attention to the customer perspective on parcel lockers. However, first understanding is necessary in what modes of shopping are present and which customer characteristics influence online shopping.

Various modes of shopping can be distinguished. Next to the traditional in-store picking, online shopping rises. These new methods impact the last mile logistics in different magnitudes. When comparing in-store picking by customers and other forms of the last mile of goods, it is argued that in-store picking is least favourable. This is due to the fact that customers use commercial vehicles and do not utilise an optimised route. Siikavirta et al., (2003) support this claim, in their research they find that when customers decide to use alternative methods than their commercial vehicles, greenhouse gasses can be reduced up to 87%. They add that there is a wide variety of possibilities in the last mile logistics to reduce emissions, compared to customer private trips. However, Kavilanz (2020) finds in her research, that comparing three major types of last mile logistics; physical store, brick and click and pure online shopping, the brick and click is least polluting. Meaning, ordering online and a physical store does the delivery. Therefore, including (local) physical stores to deliver to the parcel lockers can be beneficial concerning greenhouse gasses. Apart from different modes of shopping, recent studies have found that the characteristics of customer play key role in online shopping.

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support this claim, and find that online shopping for clothing and footwear contributes for 34.9% of total online sales. Regarding self-collection, recent studies found various important considerations and expectations towards parcel lockers from a customer view.

Iwan et al. (2016) conducted a survey in Poland to measure the customer view on parcel lockers. Their results show that price is the key driver for customers to consider using a parcel locker system. Thus, in order to attract customers, the service should be offered on lower or comparable prices to other forms of delivery (Lemke, Iwan and Korczak, 2016). Besides costs consumers indicate that location and availability are important reasons as well for using parcel lockers. Regarding the location consumers expect the parcel lockers to be close to their homes, on the way to work and that there is sufficient parking space (Vakulenko, Hellstörm and Hjort, 2018). Hofer et al., (2020) researched the estimated customer change in mobility behaviour by the use of parcel lockers. They find that customers accept a travel time up to 10.3 minutes for walking and 7.2 minutes for car travel time. Furthermore, they find that customers accept to walk 0.7 kilometres and drive 3.6 kilometres in order to receive their parcel. Regarding the acceptance rate for bicycle and public transport use these numbers for travel time are respectively 7.5 and 9.1 minutes and for travel distance respectively 1.9 and 1.2 kilometres. Weltevreden (2007) points out another advantage consumers indicate and that is that they are not restricted to be at home. By making use of a parcel locker, customers can choose their location point and determine when to pick up their parcel. Adding to this, customers are not bounded to one location and have the flexibility of picking a location that is most suitable at their preferred moment (Orenstein, Raviv and Sadan, 2019). However, it has also downsides and that is the payment options and the knowledge necessary to open a locker. Furthermore, cannot every shape and type of goods be stored in a parcel locker. And customers indicate the safety of the parcel lockers. Since they are mostly placed in public places customers fear for theft and vandalism (McKinnon and Tallam, 2003). Concluding, customers are positive as well sceptical towards the parcel lockers. Vakulenko, Hellström and Hjort (2018), find in their research that some customers indicate that once they have used the parcel locker, they will continue using it. Contrary customers indicate, that the effort they have to put in and not having a personal locker, is making them distrustful and unwilling to use the locker. A last note on the customer view on parcel lockers is that research is predominantly executed in high density urban areas, however multiple types of areas are present and can be considered.

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per squared kilometre. A rural area can be defined as an area with an address density less than 1000 per squared kilometre. Areas in between these measures are considered as suburban areas.

Most prior studies on parcel lockers do not take this distinction in areas into account. A notable exception is Lee et al. (2019) who present a mathematical model to support the location decisions of parcel lockers. They distinguished the three areas and opted for systems in urban areas, since these are most dense and have a higher customer reach. Another way to decide where and how many lockers to place is to divide the region into zones. These zones can either be geographical or based on the quantity of potential customers (Morganti, Dablanc and Fortin, 2014).

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3. Methodology

The purpose of this thesis is to explore the stakeholders’ perspective on white label parcel lockers in rural areas. Given the scarce knowledge on this topic an explorative qualitative research is suitable. This research has an inductive approach, based on a case study (Barratt, Choi and Li, 2010). Potential key stakeholders are identified and interviewed. This study mainly relies on qualitative data and will be supported by some quantitative data supporting understanding the difference between rural and urban areas.

3.1. Research setting

The research is conducted in three small rural areas in the province of Drenthe, namely Gieten, Dieverburg and Rolde. The local authorities of Drenthe started a pilot test regarding parcel lockers in rural areas. This thesis considers a setting where no locker systems are yet in place, but where the local government is setting up a pilot study to assess the (potential) value of such lockers in rural areas. The areas are small towns with between 270 and 5009 inhabitants. The parcel lockers will be placed on various public transport hubs near main roads. These hubs form a central access point to the regional public transport system, serving multiple small rural areas. Data obtained from the OV-bureau presents the numbers of exiting people at the various hubs. For Gieten, Dieverbrug and Rolde, respectively 254.473, 38.237 and 13.383 persons left the public transport at the different hubs over the year 2019, an overview of the public transport numbers is presented in Appendix A. Aim for the local authorities is that local inhabitants will use the system to find a sustainable alternative for home delivery, however also important is to keep the area attractive for its inhabitants. The local authorities look for a white label operator. This ensures that all parties can be included in the system and therefore a mix between traditional parcel delivery companies and local companies can be created. Potential operators are identified and asked to make a bid to get the contract.

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3.2. Data collection

To answer the research question various methods of obtaining qualitative data have been used. This includes four interviews, one with a white label operator, two with local companies and one with a parcel delivery company. The interviews took place in May and June 2020. Semi-structured interviews provided the data necessary to answer the research question, however it left room for discussing more dimensions based on the answers of the interviewee. A subset of questions, for the local companies and for the parcel delivery company have been constructed before the interviews and can be found in Appendix B and C. Quantitative data includes information on public transport usage and data on the number of inhabitants. These data have been used to support distinguishing factors of rural and urban areas.

Throughout the whole process of this thesis, from March till July, bi-weekly meetings took place between the researchers and the local authorities involved. These meetings contributed to understanding the motive for local authorities to implement white label lockers in three rural areas. Adding to the meetings is their program of demands, which contributed as another source of data to understand their requirements and expectations.

A white label operator has been interviewed as they operate parcel lockers in rural areas. Here insights are gained on how they sell their product to potential suppliers, how they think the supplying process will be executed, and most important by whom. Furthermore, the white label operator has been asked what collaborating parties are required to work with their parcel lockers.

Local stores have been interviewed to question them on their view on parcel lockers. These interviews provided insights in what requirements they demand and how they expect their business will change if they decide to implement parcel lockers in their system. Furthermore, potential opportunities or threats have been discussed.

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are not willing to collaborate in a white label setting, questions have been asked about why there is no interest for this.

Thus, there are two potential supplying groups that have been researched, the local companies and the parcel delivery companies. All data in this study is primary, as it is collected through interviews. Since multiple stakeholders have been questioned data triangulation is ensured. Various views on parcel lockers are presented to avoid a one-sided opinion. Different interviewees also contribute to the internal validity as opposing opinions might be addressed. Since different cases have been examined theoretical replication is expected.

3.3. Data analysis

The interviews with the local companies are transcribed and uploaded in Atlas.ti to perform a qualitative analysis. Similar statements were added together in first order concepts. These concepts are further added together to develop themes. Finally, these themes have been merged in aggregate dimensions (Gioia, Corley and Hamilton, 2012). Funnelling the data step by step resulted in overarching dimensions that could be interpreted. The coding tree is presented in Appendix D. The concepts found and discussed are potential opportunities and threats regarding the parcel locker usage for the local companies. This enabled that the positive and negative view of the stakeholders on parcel lockers could be analysed.

For the interview with the operator and the local authorities, notes during the interview and meetings have been used and analysed to provide insights regarding their perspective. Adding to the scheduled meetings with the local authorities, is their program of demands. In this program further demands and expectations have been identified and used to enrich the obtained data. For both groups questions regarding their role have been asked in order to place certain statements in perspective. Similar as to the local companies the potential opportunities and threats have been discussed to analyse the view of these two stakeholders.

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4. Results

In this thesis various stakeholders have been identified. These include, local authorities, a white label operator, local companies and a parcel delivery company. All fulfilling a different role in the parcel locker process. The various stakeholders show to be interested in the pilot and have a positive opinion regarding parcel lockers. Based on expectations they identify possibilities and opportunities. However, besides this positive view, the stakeholders also indicate and expect certain threats and difficulties concerning parcel lockers in rural areas. Starting with perhaps the most important stakeholder the local authorities of the province of Drenthe.

4.1. Local authorities

The province of Drenthe is the initiator of the pilot test with parcel lockers in rural areas. Currently, they are actively involved in executing improvements to their public transport hubs. After seeing positive results of similar cases in Belgium, they decided that public transport hubs could be improved by placing parcel lockers. The aim for the province is to improve the experience for public transport users and contribute to a more efficient and less polluting last mile logistics. Moreover, is their aim to improve the attractiveness of rural areas for their inhabitants by increasing the services offered.

The province is involved as they invest in the locker system. Based on a tender, they seek for an operator. This is necessary as the project is too expensive to be financially covered by the authorities itself. Besides their role as pilot test initiator, the province also contacts local companies to cooperate with the parcel lockers. Consequently, before the actual implementation of the parcel lockers the province is highly participating in the project. However, after implementation they want to limit their involvement. That next to optional financial aid in the lockers and contacting local companies to participate, they want to outsource the responsibility for the daily operation of the lockers. If during or after the pilot test positive results are obtained, the province hopes that companies will upscale the concept of parcel lockers in rural areas throughout the province independently. Finally, throughout the pilot test the province is also part of the research team.

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province expects that only parcel delivery companies filling the lockers are not sufficient enough to reach a break-even point in rural areas. Therefore, reaches the province out for alternative filling stakeholders.

Next to parcel delivery companies filling the parcel lockers, also local companies will be included in this process. This creates a mix of national and local offer of products. The province expects that this variety in offer can increase the popularity among the customers. But more importantly, they believe it increases the occupancy rate of the parcel lockers and enhances the potential.

Another feature and potential of the pilot test could be that it provides insights in new business cases. For example, companies serving fresh products have temperature restrictions and demand that these can be fulfilled. As for now, the lockers are not cooled. During this pilot test, the province aims at exploring new business cases like cooled lockers, to further improve the potential. However, the province is also aware of threats and uncertainties that could influence the potential of parcel lockers in rural areas.

The local authorities opt for a white label operator for the parcel lockers. The availability of these kinds of operators is limited. There is only one major company active. They believe that this is a challenge concerning their tender. Adding to this challenge is the requirements and in particular the financial contribution they demand from the operator. This can influence the willingness and ability of operators participating in the project.

As this is a pilot test in three rural areas, the local authorities are also interested in the results of the lockers. They demand the operating company to share outcomes and results and want them to be part of the research team. However, it is uncertain to what extent operating companies will share information. Operators might have contracts with the filling companies that withholds them from sharing sensitive data. This can interfere with their research and limit their ability to find a business case for upscaling and so the potential for parcel lockers in rural areas.

4.2. Operator

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regarding the operation of private parcel lockers two main players are active. When it comes to white label parcel lockers, there is only one major company active.

Regarding the role as a white label operator, the operator views itself as a neutral and independent partner of companies delivering products. The operator says they offer the platform for the parcel lockers and next to offering this software they bring their network of companies willing to deliver in their white label lockers. The operator adds that basically their operating process is not different from how they operate in urban areas. However, as the area features a smaller market the offer of collaborating parties is lower and therefore reaching a sufficient occupancy rate is more difficult. Furthermore, they predict no difficulties being responsible for the products that are delivered in the lockers. They claim that their lockers are secured in such a manner that only the justified owner of the parcel can access the locker and that fraud cannot be committed. Regarding maintenance of the locker system, they state that it is part of their role and therefore that they are responsible for executing this. The operator claims that parcel lockers in rural areas are possible and shows an interested view on the process.

The operator is more willing to explore a parcel locker in a rural area because it is part of a pilot test. Conducting this test with three locker systems in three different areas must provide the data that is necessary to decide whether upscaling is possible. This data can be presented in other areas to convince the local authorities there for upscaling. And next to upscaling whether it is possible to operate these systems without support of the local authorities. “Our main goal is to operate these systems without interference of any authorities

and construct a profitable model for upscaling. The best-case scenario is that we do this in as little time as possible” (Role operator).

The operator also shows interest in finding out to what extent local companies are willing to cooperate. He hopes to find out whether these companies are open towards more online sales, and whether these companies are willing to make certain investments, like a website in order to collaborate. Furthermore, is the operator interested in gaining insights what type of products or quantities local companies are storing in the lockers.

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local authorities contact local companies. “It is impossible for us to contact and get companies

involved for every rural area separately. Every area has its own local companies and it is not like if it works at one spot it will work at every other spot” (Threat operator). The current

national network of the operator is not big enough to make the lockers feasible in rural areas, so these local companies are necessary. As a certain occupancy rate has to be reached for break-even and profit generation beyond that rate.

Regarding working together with parcel delivery companies next to already collaborating companies, it is unsure for the operator whether these are interested. However, with their current network, including another large parcel delivery company, they manage to make the lockers successful in urban areas. Collaboration with the biggest parcel delivery company therefore is not necessary, however logically interesting.

Another unsure factor for the operator is to what extent customers in rural areas utilise parcel lockers. Adding to this is the uncertainty of type of orders, for example what share of orders will be at local companies and what share will be online ordered parcels. Therefore, the operator is unable to make any claims or predictions to what share various filling companies have to be accounted for to make the lockers successful.

Finally, the operator claims that one of the downsides of this being a test, is that data will be shared by the province. This is due to the fact that governmental aid is provided. The operator says that they will put effort in the test, without the insurance of returns and that after sharing data this effort can be copied or used by competitors. This influences their willingness to participate in the project. As when the pilot test turns out successful, competitors can enter the market and their effort might have been for nothing. This is specific for the case studied in this thesis, however important to understand regarding the willingness of the operator to participate in the test and how it influences the operator’s view on parcel lockers in rural areas.

4.3. Local companies

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their business. As one manager states: “I know what we are doing now (regarding home

delivery) that it is not profitable” (Manager 2) and “Every week it costs us around 300 or 400 euros” (Manager 2). Therefore, are improvements regarding the last mile logistics desirable.

Both managers indicate that their willingness to work with white label parcel lockers in rural areas is high and that they expect to benefit in at least a cost saving manner from incorporating them in their business.

The location is another important aspect regarding parcel lockers for local companies. One claims that with a strategic location a whole new (rural) area can be served with his products and therefore it enables introduction to a new market share. For less effort than home delivery, this new area can be provided with products in an approachable manner. The manager shows interest in trying parcel lockers to expand his current market. Currently, this manager serves three rural areas and therefore sees interest in parcel lockers in rural areas to expand this market.

Another factor that local companies consider to be important is service. When including parcel lockers in their business, they believe to increase the amount of service they offer by introducing various methods for receiving goods. They offer a system that is 24/7 available, and therefore reduce the stress on customers for being at home or pick up the goods in working hours of collection point locations. Also concerning delivering goods, restrictions are lower as no delivery time frame is present anymore. This argument is applicable for parcel lockers in general, it is however interesting as it increases the positive view of stakeholders on parcel lockers and it increases their willingness to cooperate.

Regarding the willingness of their customers to use the white label parcel lockers in rural areas, the expectations differ. One manager states: “Yes, I think that many will make use

of it. Speaking for myself, products that cannot be delivered in the post box I will let them be dropped off at a pickup point. So that I do not have to be at home” (Manager 2). The other

manager is a bit more careful in his predictions: “I do not know whether people will really

make use of it, but I do see possibilities”, adding to this he says: “People can order online, and that comes with home delivery. Regarding online ordering products, people are spoiled and want to get them home delivered” (Manager 1). Besides different expectations regarding the

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Companies processing fresh products, for instance farmers or supermarkets prioritise the availability of a cooled system. In order to maintain the quality of their products certain temperature restrictions have to be met. A manager claims that customers have to pick up the products in time to guarantee the quality. He says that this is a trade-off as he wants to offer his customers good quality products, but not restrict their freedom in picking up the products. Adding to this problem, is that currently parcel lockers do not feature a cooled system yet.

Besides the need of a cooling system, the supermarket manager showed his concerns about the size of the lockers. The groceries are delivered prepacked in boxes and this way delivering the goods does not need much handling in terms of packing. These boxes do have a considerable big size and therefore he is unsure whether these will fit in one locker. Also, when the number of boxes is high, multiple lockers are necessary to drop off all the groceries, besides multiple types of lockers being necessary (cooled and regular) to store the different types of products. This can lead to an expensive and inefficient process. Both concerns, the cooled locker and size of the locker, are generally applicable for parcel lockers. It is however interesting as this gives insights in new possibilities for expanding parcel locker usage. Moreover, companies in areas can be categorised to what extent they are able to deliver in parcel lockers and therefore whether an area is interesting to place parcel lockers.

A manager also speaks out his concerns regarding the market size in rural areas. He questions to what extent it is valuable to drive to these areas and whether demand in these areas will be high enough. Another manager adds that he thinks the location will be an important factor for demand. As rural areas can be large, a manager questions whether one location is sufficient to serve the whole area. He thinks multiple locations are necessary to serve a broad rural area, as customers should not have the feeling to make a big effort to pick up their goods. When this effort is too high, customers will favour home delivery.

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the locker. The costs will be too high when customers do not pick up their goods. This concern is explicit for white label lockers, as private owned lockers are filled by companies itself and therefore do not have the risk of investing in products that will not be picked up.

As mentioned, service can increase by offering customers multiple options to receive their goods. However, experienced service can also decrease for the fact that the contact between customer and seller disappears. According to the supermarket manager clear guidelines and protocols have to be developed to offer similar service to customers as they experience when getting their groceries home delivered. Countering this, the manager argues that customers decide whether to make use of parcel lockers instead of getting the goods home delivered, so he does not expect any major problems regarding perceived service.

4.4. Parcel delivery company

Another stakeholder group that may serve as a party filling the lockers are the parcel delivery companies. The manager of the parcel delivery company is positive concerning the parcel lockers and their research showed positive results regarding customer satisfaction in rural areas. However, he indicates difficulties regarding working together in a white label setting and foresees threats in the potential of parcel lockers in rural areas.

The parcel delivery company has conducted research concerning the customer satisfaction on parcel lockers in rural areas. The manager indicates that their results show that customers are more satisfied and positive towards parcel lockers in rural areas compared to urban areas. In urban areas customers expect parcel lockers to be present, where in rural areas customers feel appreciated and feel not to be forgotten. Therefore, parcel delivery companies are running tests to obtain insights into whether a profitable business case is achievable and increase their service offered in rural areas.

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lockers. This claim counters prior research in which for example it was found that travel distance could be reduced up to 50% (Iwan, Kijewska and Lemke, 2016). Therefore, this statement is interesting for future research, to find out to what extent parcel lockers in rural areas can contribute to reducing total travel distance. Adding to this statement the manager indicates that congestion faced in rural areas is about nothing, when compared to urban areas. He therefore questions to what extent parcel lockers in rural areas can contribute to congestion problems in rural areas, as these problems are less present. Besides questioning the impact of parcel lockers in rural areas on the congestion problem, the manager indicates more threats concerning parcel lockers in rural areas.

The manager of the parcel delivery company states that parcel lockers in rural areas are fragile processes. Compared to urban areas, certain differences are present. First, he states that the culture in rural areas is different than in urban areas. Second, the absolute volumes are lower compared to urban areas. Finally, the demographics of the customers are different. He claims that rural areas are known for elderly inhabitants, mostly buying their products in physical stores instead of ordering online. This statement has been examined by researching the demographics of the various involved, the percentage of elderly people in these areas ranges between 59% and 64%. When comparing these numbers with larger cities in the province, it is found that here the percentage ranges between 48% and 52%. Therefore, the statement can be confirmed. In appendix E, an overview of the age distribution in these areas is presented.

Adding to the fragility of parcel lockers in rural areas is the impact of alternatives. The parcel delivery company states that when for instance a new store opens and includes a collection point, high or even all volume in the lockers might be lost. As the market in rural areas is smaller, it is harder to achieve a certain occupancy rate to reach break-even and eventually profit. Furthermore, parcel delivery companies have contracts with web shops, and these web shops decide whether parcels may be delivered in the locker. Thus, volume is also lost when web shops are unwilling to have their parcels delivered in lockers. Adding to volume being lost when customers decide to get their parcels home delivered, an expected low potential share of deliveries in the parcel locker remains. The arguments for losing volume in parcel lockers can also be applied in urban areas, however the manager claims that the impact is more severe in rural areas.

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customer or employee makes a mistake, does the right company get notified or the operator? Does the parcel return to the right company? Or what company will be contacted when problems occur, the parcel delivery company or the operator? He states that all these uncertainties add up to the complexity of a white label setting. Clear contracts and agreements have to be made in order to prevent these problems from happening. Besides the good flow of data, agreements have to be made on maintenance or reparation of the lockers, the operator might have other standards than the involved companies. Concluding, the parcel delivery company wants to have control over their parcels and operate independently. They did not fully reject the idea of white label lockers, but for now they do not see potential for them.

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5. Conclusion and discussion

This thesis complements current literature by being the first to explore the stakeholder perspectives on white label parcel lockers in rural areas. During this thesis a pre-implementation phase of a pilot test in the province of Drenthe is considered. In this phase various stakeholders are approached and interviewed about their expectations on parcel lockers in rural areas. Furthermore, stakeholders that are currently active in operating parcel lockers have been interviewed about their experience and about the difference between urban and rural areas.

This thesis concludes that majority of the stakeholders shows interest in white label parcel lockers in rural areas. Local authorities expect that parcel lockers can improve customer experience in their public transport and the overall satisfaction of its inhabitants by increasing the amount of services offered. Furthermore, the white label operator believes that parcel lockers in rural areas are feasible and is highly interested in the pilot test to find out whether upscaling is possible. Local companies primarily expect time and cost saving benefits through the consolidation of goods. Moreover, local companies can potentially expand their market through parcel lockers in an approachable manner. Finally, the parcel delivery company expects difficulties regarding working in a white label setting and is primarily interested in privately owned parcel lockers in high density urban areas.

5.1. Theoretical implications

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Prior studies found a positive customer view on parcel lockers, Lemke, Iwan and Korczak (2016), Iwan, Kijewska and Lemke (2016) and Vakulenko, Hellström and Hjort (2018). These studies are predominantly executed in urban areas. Research from the market leading parcel delivery company interviewed in this thesis suggests that customers in rural areas tend to be more satisfied towards parcel lockers than the customers in urban areas. Customers in urban areas expect parcel lockers to be present, where customers in rural areas show to be more pleasantly surprised to have certain systems in their areas. This study therefore found the potential indication of higher customer satisfaction on parcel lockers in rural areas. However, it requires further research to confirm this statement and find out whether this also applies to white label lockers.

This thesis also reveals certain threats managers indicate regarding parcel lockers in rural areas. They indicate that in order to make the implementation of lockers interesting for them, a certain (potential new) market share has to be served. It is questioned to what extent rural areas can offer this market potential compared to urban areas. Furthermore, is the threat of customers not picking up their goods discussed. Managers speak about their concerns regarding customers paying at the locker and losing investments costs when customers decide not to pick up their goods. These threats, combined with a small market potential and customers not picking up their goods, have not been considered in prior studies and therefore form novel insights. However, these potential threats can be applied to parcel lockers in general and do not only concern parcel lockers in rural areas.

Another novel insight from this thesis is the concern regarding the demographics of inhabitants of rural areas compared to urban areas. The manager of the parcel delivery company states that inhabitants of rural areas are known to be older compared to inhabitants of urban areas. This statement is confirmed, and an overview of the age distribution of the rural areas and urban areas can be found in Appendix E. According to Hashim, Ghani and Said (2009), customers in the age ranging between 30 and 39 are most active in ordering online. As inhabitants in rural areas fall slightly outside of this group, it can be questioned to what extent rural areas offer the same potential market as urban areas regarding the age of potential customers.

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highest potential company profit, managers in this thesis argue that for rural areas central locations on main roads should be selected. A manager indicates that in order to attract customers, the effort to pick up their parcel should be as low as possible, therefore locations near main roads should be able to combine trips for customers and reduce the effort to be made. This claim is in accordance with Hofer et al., (2020) who found that customers, to a certain extent, are willing to make an effort in order to pick up and receive their parcel.

5.2. Implications for policy and practice

This thesis has several implications for policy makers and managers in practice. Firstly, for managers of local stores, parcel lockers can form an interesting amendment to existing sales channels, especially for home delivery. Managers expect that parcel lockers can offer a time and cost saving alternative to home delivery. Furthermore, parcel lockers do increase customers satisfaction by offering an additional service of receiving goods. However, as rural areas offer a smaller market and a lower density of addresses, managers should analyse these areas to obtain insights in whether it is feasible to serve new areas or obtain expected time saving benefits.

This thesis also revealed implications for policy makers in rural areas. Firstly, parcel lockers could increase the satisfaction of their inhabitants. Research of the parcel delivery company showed that customers in rural areas tend to be more satisfied with parcel lockers than customers in urban areas. However, the operator indicates that reaching a certain occupancy rate is harder in rural areas. Therefore, more effort is expected from the local authorities, thus it has to be considered to what extent local authorities are willing to provide support and make an effort. The local authorities interviewed for this thesis indicate that after the implementation of the lockers they want to outsource the responsibility for the system and reduce their involvement. This has to be managed carefully so that no misunderstandings about roles and responsibilities occur.

5.3. Limitations and future research

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also be researched to what extent and how parcel lockers in rural areas impact the business for cooperating companies. Moreover, it can be measured to what extent parcel lockers in rural areas contribute to reducing problems occurring coming with last mile logistics. This can support the expectations of managers that mainly time will be saved and that the total travel distance remains the same.

Furthermore, is the data obtained regarding the local companies, based on the food processing sector. Perspectives from other sectors, non-food, have not been considered in this thesis. Therefore, the results of this thesis have to be placed in the perspective of food processing companies and this might bias the results. Future research can consider multiple sectors of filling companies to obtain a more holistic view on parcel lockers in rural areas. Moreover, the impact of different types of lockers can be researched. As for now only one type is present, however it can be researched to what extent multiple types of lockers, for instance cooled, could influence the impact and potential of parcel lockers in rural areas.

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Appendix A – Numbers on public transport use in 2019

Appendix B – Overview subset questions potential local suppliers

1. Are you known with the concept of parcel lockers? 2. Do you have an online web shop? Why or why not? 3. Where do most of your customers come from? What area?

4. Do you make use of home delivery or some sort of delivery/ pickup system? Why or why not?

5. Do you see potential in using parcel lockers in your business? Why or why not? a. If yes; what requirements do you demand from the operator? What agreements

and contracts have to be developed?

b. How will it affect your way of doing business? What changes in logistics etc. do you expect?

c. What do you expect to earn/ benefit from using parcel lockers?

d. Do you foresee any problems or difficulties when implementing parcel lockers in your business?

6. To what extent do you think customers will make use of parcel lockers in rural areas?

Area Gieten Dieverbrug Rolde

Entering public

transport 256551 38479 13459

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Appendix C – Overview subset questions parcel delivery

companies

For parcel delivery companies

1. Are you using parcel lockers? Why or why not?

2. Where are most of these lockers located? Or where would you place them if you decide to use them? Why?

3. How does your logistics differ in rural areas compared to rural areas?

4. How does using parcel lockers influence your logistical processes and costs? 5. How do you benefit or expect to benefit from parcel lockers?

6. Do you have parcel lockers located in rural areas? Why or why not?

a. If yes; why and how does this influence the logistical processes in these areas? b. If not; why not?

c. If not; are you considering placing them there or are you willing to cooperate with white label operators? Why?

7. Do you see any potential downsides in white labels start to operate parcel lockers? Please explain.

Appendix D – Coding tree for local companies

First order codes Second order themes Aggregate dimensions

People decide whether they want their products delivered in a locker. This way they can decide whenever they pick up their goods. When we offer to deliver our products in a locker, we basically offer them an extra service.

What for me is interesting about this concept, is that I can deliver multiple deliveries for a lower price, and that I do not have to look after it anymore.

We will mostly save time, not per se on the distance, if we can unload all deliveries at one place. For a home delivery I ask 5 euros, but in practice it costs me around 6 euros to deliver. I know that what we do now (regarding home delivery), that it is not profitable. Every week it costs us around 300 or 400 euros.

It is an easy and approachable way of expanding my market.

Look, the margin is this low that we have to deliver successfully at first try, this is a problem we have to solve.

When customers pay in advance, their incentive to pick up the goods is higher. Yes, I think that many people will make use of it.

A disadvantage for me is how do I handle cooled products? I have to arrange with the customer that they pick it up in time as I can only guarantee quality to a certain extent in the locker, this however limits the freedom you want to offer the customer.

It depends on how many customers I have in this new areas, for instance I can deliver if I have 5 customers on a day, but I cannot drive 5 time if I have one customer per day.

For instance, I have one cooled, four regular and one box of frozen groceries, then I at least need 3 different lockers, if it all first. You do not want to unpack the groceries in the locker as you handle the products twice then, and that is what you do not want.

I think that our volumes are too big for a locker, so this will be difficult.

The question is where do you place it in a large rural area? When do customers switch from visiting the store to delivery in parcel lockers?

It should be centrally located, where people drive past. It should be on main roads, otherwise people will opt for home delivery if they have to pay a euro more and not having to make that effort.

Payment at the locker is a beautiful idea, however my investments are too high, so in practice it will not work for me.

I do not know whether people will really make use of it, but I do see possibilities. People can order online and that comes with home delivery. Regarding ordering products online, people are spoiled and want to get them home deliverd.

Opportunity

Threat

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Appendix E – Age distribution

Area Gieten Dieverbrug Rolde Assen Emmen