OOH parcel delivery: a comparative look at market leaders’ strategies

In the ever-evolving world of parcel delivery, leading players are striving to enhance customer satisfaction while reducing their costs. As the development of e-commerce skyrocketed with the onset of the COVID-19 pandemic, consumer buying habits underwent a profound transformation. This shift underscored the pivotal role played by parcel delivery companies in meeting the growing demand for flexible and diversified delivery options. Among these options, out-of-home delivery (OOH) has been experiencing significant growth in recent years. Among the delivery giants, DHL, Geopost, InPost, and GLS rank at the forefront of the largest OOH networks in Europe. In this article, we will delve into their strategies in the ever-expanding field of out-of-home delivery.

Why is Out-of-Home (OOH) delivery now inevitable?

E-commerce, for its convenience and accessibility, has become a deeply ingrained practice in consumer behavior, with ever-increasing demands. The demand for multiple delivery choices, including same-day and next-day options, advanced tracking services, and real-time notifications, has surged. Against this backdrop, OOH solutions such as parcel shops and retailer stores (also called PUDOs) or parcel lockers (also called APMs) offer a significant opportunity to add value to the customer experience, as well as for e-commerce businesses looking to expand their operations and build customer loyalty..

Out-of-home delivery offers a range of significant advantages. Firstly, it provides increased flexibility to consumers, who can choose from a variety of delivery locations based on their preference. Furthermore, it helps reduce road traffic by avoiding individual home deliveries, thereby reducing CO2 emissions and, consequently, the environmental impact. Financially, it allows carriers to optimize their routes and reduce operational costs, often resulting in lower delivery rates for customers.

Key OOH figures underscore the growing significance of these delivery options:

  • 39% of European e-shoppers now receive deliveries outside their homes, marking a 4% increase since 2019.
  • 48% of European e-shoppers utilize more than one delivery location, reflecting a 4% increase since 2019.
  • 47% of Europeans stated that their experience would be improved if more delivery options, parcel lockers, and collection points were closer to their homes (DHL study in 2023).
  • Cross-to-Consumer (X2C) parcel volumes, encompassing both Business-to-Consumer (B2C) and Consumer-to-Consumer (C2C) deliveries, reached 8.3 billion parcels in 2020, with a predicted surge to 15.7 billion by 2025 (2021 projection).
  • OOH deliveries accounted for 15% of total deliveries in 2020, with a forecasted rise to 29% by 2025 on average.

woman taking her parcel out of her car

Notably, C2C transactions are set to be a pivotal driver of OOH delivery growth, as revealed in an interview with Yves Delmas in 2021 when he was COO Europe at DPDgroup. OOH deliveries are projected to represent 45% of the X2C growth, with the number of C2C parcels expected to multiply by 14 between 2020 and 2025, potentially reaching 1.4 billion parcels by 2025.

As the e-commerce landscape continues to evolve, embracing OOH delivery solutions becomes not only a strategic choice but a competitive necessity.

Open vs closed OOH delivery network: what is the difference?

Differentiating between open (carrier-agnostic) and closed OOH networks has become increasingly relevant as e-commerce continues to reshape the last-mile delivery landscape. Traditionally, incumbent OOH networks, often operated by postal operators due to their established infrastructure, have been hesitant to open their networks to other players, perceiving them as a competitive advantage. However, this approach is gradually evolving, influenced by a growing understanding of the OOH landscape and environmental concerns that have led governments and local authorities to advocate for shared last-mile solutions.

Open networks offer various advantages:

  • Individual customers: They gain more delivery choices in the last mile and easier access to return drop-off locations.
  • Sellers and distributors: They can establish their PUDO/APM networks or leverage existing partner points for product delivery using their own transportation or logistics operators.
  • Courier companies and postal operators: Access points enable them to expand their logistics networks, activate new sales channels, optimize last-mile costs and delivery times, and enhance customer satisfaction.
  • Partners (typically retailers): They receive additional customer traffic as part of their core business by co-creating the PUDO network.

When it comes to PUDO points, it is worth noting that in many cases, a single PUDO point or parcel locker serves multiple carriers and operators. As a result, the OOH points announced by carriers may not necessarily be unique, and they could overlap in the figures reported by the various players.

While the majority of OOH networks remain closed, open networks have gained prominence, with China’s HiveBox, the world’s largest OOH network. In Europe, fully open OOH networks include Myflexbox in Germany and Austria, SwipBox in Poland, Smartmile in Finland and the Netherlands, and Quadient in the United Kingdom.

Parcel delivery leaders: what is their out-of-home delivery strategy?

Parcel delivery leaders: what is their out-of-home delivery strategy?

DHL’s OOH delivery strategy

DHL eCommerce has unveiled its 100,000th access point, marking the establishment of Europe’s largest and most extensive parcel pickup and drop-off network. Comprising 80,000 service points and 20,000 parcel lockers, this extensive network currently spans 28 European countries and benefits from synergies with DHL Express and Post + Parcel Germany. In some European markets, over 25% of DHL eCommerce’s parcel volume is already directed to access points.

DHL has been a pioneer in the development of automated lockers, with one of the earliest parcel locker networks in Europe introduced by Deutsche Post DHL in 2003. In Germany, where DHL originates, Deutsche Post DHL leads the OOH delivery sector. In early 2019, approximately 3% of DHL’s parcel volumes were delivered to parcel locker stations, with over 23 million customers. The company plans to increase the number of parcel locker stations (“Packstationen”) to 12,500 by 2023. DHL is also testing app-controlled parcel locker stations without screens, which are expected to constitute about a third of the 2023 APM network.

DHL’s Online Locator
DHL’s Online Locator Showing Parcel Lockers in New York

In Germany, there is generally no significant price differentiation in favor of out-of-home delivery options (APM/PUDO). DPDHL does not offer any discounts for deliveries to OOH delivery compared to home delivery. In contrast, other parcel carriers provide marginal discounts to retail customers, ranging from 4% to 15%. This suggests that consumers prioritize convenience over potential price incentives offered by carriers.

Furthermore, DHL eCommerce has embarked on various strategic initiatives to enhance its OOH network across Europe:

  • DHL conducted trials of open OOH networks with SwipBox in Denmark in 2019, allowing multiple logistics providers, including DHL Express and PostNord (the Danish national postal operator), to deliver parcels to the same Nærboks parcel lockers. This open network concept aimed to provide Danes with a more convenient way to pick up parcels and was set for expansion across Denmark following a successful six-month trial in Kolding.
  • DHL Express partnered with the UK Post Office network in 2022 to provide pick-up/drop-off (PUDO) services at Post Office branches, expanding the existing network of click & collect services. The goal is to increase the number of branches offering these services to 7,000.
  • DHL Parcel acquired Instabox Netherlands in 2022, adding nearly 1,000 parcel lockers to its Dutch network. These parcel safes are strategically located throughout the Netherlands, including stores and sports clubs.
  • Quadient, in collaboration with DHL, plans to deploy a significant number of smart parcel lockers in outdoor locations across Sweden’s largest regions.
  • DHL eCommerce has recently partnered with Cainiao, Alibaba’s logistics arm, to develop one of the largest OOH networks in Poland. Under this initiative, both companies plan to invest 60 million euros in installing parcel lockers across the country, with the goal of creating over 90,000 access points. This initiative directly competes with InPost, the OOH delivery leader in Poland with over 19,000 lockers. Concurrently, Polish post Poczta Polska operates a small-scale carrier-agnostic network of parcel lockers in collaboration with SwipBox, a network also utilized by DHL Parcel and DPD Poland. Other B2C parcel carriers, including DPD Poland, GLS Poland, DHL, UPS, and FedEx, do not have independent parcel locker networks.
  • DHL’s acquisition of MNG Kargo in Turkey and its collaboration with Poste Italiane in Italy further contribute to expanding its European OOH network.

Geopost’s OOH delivery strategy

Geopost, a leading player in parcel delivery services, has been strategically expanding its out-of-home (OOH) delivery network across Europe. From November 2023, the company has established a remarkable presence with 100,000 OOH points, consisting of approximately 15% lockers (APMs) and 85% Pickup and Drop-off Points (PUDOs). Its out-of-home network currently encompasses over 17,000 locker locations across Europe, and the share of lockers is set to continue growing in the coming years, reaching approximately 25% of Geopost’s OOH network by 2025. Geopost aims to provide an OOH point within a 15-minute drive for every customer in Europe, and the company states that 95% of the European population has such access.

According to Thibault Guez, Out-of-Home Project Director Europe at Geopost, the company’s OOH delivery approach has gained dominance in European western countries, comprising less than 30% of the overall B2C and C2C market. However, certain regions have shown remarkable adoption rates, such as Poland, where 65% of B2C and C2C deliveries fall under the OOH category. In the Baltic countries, 100% of OOH deliveries are facilitated through lockers, while France predominantly relies on PUDOs for deliveries.

Geopost is actively enhancing its OOH network by deploying 100 multi-service lockers in France, including refrigerated lockers, to cater to various customer needs. These lockers will be strategically positioned in both densely populated urban areas and less dense regions, as the company continuously seeks the optimal locker deployment model.

La Poste's parcel locker

One key focus for Geopost is improving the interconnectivity between various delivery services, allowing customers to make flexible decisions about their deliveries. For instance, if a customer initially selects home delivery but won’t be available during the delivery window, Geopost aims to enable customers to switch to OOH delivery with as little notice as 30 minutes to 1 hour before the scheduled delivery. This flexibility enhances the customer experience.

Moreover, Geopost faces the challenge of monitoring locker/PUDO capacity, as these locations serve not only for receiving deliveries but also for customers to drop off parcels for sending, necessitating the anticipation of volume fluctuations.

In a broader context, Yves Delmas, COO Europe at DPDgroup, underlines the importance of prioritizing parcels during peak seasons and adapting the sorting process to accommodate low-cost (C2C) parcels separately from regular shipments. This approach ensures the right level of grouping for efficient deliveries. Additionally, when areas lack suitable retail locations for PUDOs, implementing automated lockers proves to be a viable solution.

Furthermore, Geopost has forged key acquisitions and partnerships to strengthen its OOH network:

  • In October 2020, DPD expanded its UK Pickup network by adding over 3,000 Collect+ parcel shops through a partnership with PayPoint, extending the network to over 6,000 stores nationwide.
  • In August 2021, Post Office collaborated with DPD to offer ‘Click and Collect’ services, leveraging the extensive physical retail network and logistics expertise to provide convenient parcel collection options for customers, contributing to increased foot traffic to Post Offices.
  • In September 2021, DPD reached an agreement with PUDO in Portugal, a significant locker chain belonging to the Swiss group Kern AG, acquiring a 25% stake. DPD had planned to reach 250 lockers and double the number of Pickup stores to 1,500 points by the end of 2022, and then install hundreds of additional lockers in the following years.
  • In July 2022, DPD partnered with Quadient to introduce a smart locker network in the UK, with initial plans to install 500 secure locker stations in 2022 and expand to 5,000 in the coming years. This initiative complements DPD’s existing network of 6,000 Pickup shops.

Geopost’s commitment to innovation is evident in its testing of a new locker type, the ‘locker robot,’ at the Veenendaal depot (Netherlands). This innovative locker design optimizes locker volume usage, aiming to enhance the overall customer experience.

InPost’s OOH delivery strategy

InPost has developed a robust out-of-home (OOH) delivery strategy, solidifying its position as a key player in the European parcel market. In 2022, InPost witnessed significant growth in its parcel market activities, handling a total of 508.4 million parcels, marking a 20% increase. Among these, 424.1 million were delivered through automated parcel machines (APMs), reflecting a 20% YoY growth, while 84.3 million parcels were delivered to recipients’ doors, showing a 21% increase.

Image from InPost 2022 annual report
Image from InPost 2022 annual report

The company’s strategy revolves around several key pillars:

1. Network expansion: InPost has been actively expanding its network of APMs and pick-up and drop-off (PUDO) points across Europe. In 2022, it counted 28,000 APMs (a 37% YoY increase) and 26,000 PUDO points (a 21% YoY increase), resulting in a total of 54,000 OOH points throughout Europe.

2. Market domination in Poland: InPost holds an impressive market share of 48% in the Polish B2C parcel market, with an astonishing 98% of deliveries made to parcel lockers. The company has strategically deployed 19,300 APMs in Poland, making it a dominant force in the country. This achievement is especially notable when considering that the unique number of APMs in Poland is 28,880 according to the “Out of Home Delivery in Europe 2023” report by Last Mile Experts.

3. Consumer convenience: InPost’s success lies in its commitment to providing convenience to consumers. As of the end of 2022, 59% of the Polish population could reach an APM location within seven minutes from their homes (walking time), with even higher accessibility in urban areas, reaching 85%. The company added 5,000 new retailers, totaling 47,570, further solidifying its presence.

4. Strategic acquisition of Mondial Relay: InPost’s acquisition of Mondial Relay in July 2021 has significantly contributed to its growth and market expansion. Within less than six months, InPost deployed over 300 machines in France, and by the end of 2022, it had further expanded to 2,417 APMs in France, achieving a 32% total population coverage within a seven-minute walking distance from an APM or PUDO. Notably, the average parcel stay time in InPost’s French APMs is just 7 hours, compared to 22 hours in traditional pick-up and drop-off (PUDO) locations.

5. International expansion: InPost has extended its reach beyond Poland, with a particular focus on the UK. Over 51% of residents in core cities in the UK now live within a seven-minute walk of an InPost OOH point. The company has also expanded its partnership with Vinted and launched the InPost Shop, enhancing its OOH collection options.

6. Capacity growth: The company continues to enhance the capacity of its APM network, increasing the average number of lockers per APM from 139 in 2020 to 150 by the end of 2022. These efforts include multi-parcel delivery, multiple refills, data-driven initiatives, and innovative solutions like robotized indoor machines.

In the future, InPost plans to increase network density, expand its cross-border operations, and further develop its APM network, among other initiatives. With a strong focus on customer experience and convenience, InPost is well-positioned to continue its growth and expansion in the European OOH delivery landscape.

GLS’s OOH delivery strategy

The GLS Group has implemented an out-of-home (OOH) delivery strategy to strengthen its network of sending and receiving points across Europe. Currently, it has more than 42,000 points across Europe, with over 5,000 integrated into the Polish Szybka Paczka network.

In Italy, GLS has acquired 100% of ProntoPacco, one of the largest Parcel Shop networks in the country, with over 6,000 collection and drop-off points. ProntoPacco will remain an open network, continuing to offer its services to other last-mile operators.

In France, GLS has entered into a partnership with Quadient, providing GLS with privileged access to its open parcel locker network. From November 2023, GLS started using this network for parcel delivery and as well as exclusive reserved spaces in priority geographic areas. GLS France plans to offer its customers up to 1,500 Quadient drop-off and pick-up points by 2025. This partnership aims to meet the growing demand for convenient 24/7 delivery solutions and expand GLS’s range of delivery services in France and potentially other parts of Europe.

In Austria, GLS now delivers to A1 Paket Station parcel lockers. The parcel lockers complement the existing ParcelShop network, which includes over 800 locations in Austria.

In Spain, GLS has integrated a large number of PUDO, Hapiick, and PDN360 terminals into its network, bringing the total number of automated locker points to over 200. This expansion allows consumers to use over 5,700 collection and delivery points across Spain.

It is worth noting that GLS does not have its own network of automated lockers in every country where the company operates. For example, in Denmark, GLS chose not to participate in the Nærboks open parcel locker network used by DHL.

woman taking her parcel at a locker

What about the other major players?

Major logistics players like UPS, FedEx, and Amazon have all embraced out-of-home (OOH) delivery strategies to cater to the growing demand for flexibility and convenience among customers. For instance, UPS boasts over 15,000 access points across Europe and more than 20,000 in the United States. Recognizing the cost-efficiency of out-of-home (OOH) delivery compared to home delivery, UPS took deliberate steps to promote OOH delivery during its peak season in 2019. As part of this initiative, U.S. UPS customers who opted for alternative delivery locations like parcel lockers and pick-up/drop-off (PUDO) points during the peak season were enticed with rewards valued at up to $35. This strategy to increase the number of deliveries per address is ongoing, leveraging technologies like machine learning, but OOH delivery is also considered as a very good alternative.

According to the “Out of Home Delivery in Europe 2023” report by Last Mile Experts, UPS and FedEx appear to focus their OOH strategy in Europe more on PUDOs than lockers, favoring the use of open networks, especially for FedEx.

Online marketplace giant Amazon has also deployed and operates its own locker networks in certain countries, primarily in major cities in Austria, Germany, France, Italy, Spain, and the UK, as part of its last-mile operations through Amazon Logistics. While obtaining data can be challenging, Last Mile Experts estimates that Amazon has approximately 8,000 parcel lockers in the UK and around 9,500 “Amazon Counter” locations, with numbers steadily increasing. In France, Amazon has approximately 2,800 lockers, including a recent partnership with SNCF. In Italy, it is estimated that Amazon has roughly 11,000 “Amazon Counter” locations and 2,500 parcel lockers. Amazon has also begun developing new parcel locker networks, with Germany having around 2,000 parcel lockers and Austria around 300 units.

In summary, the leaders in the parcel delivery industry in Europe have adopted similar strategies to expand their out-of-home delivery networks. Their common goal is to expand their geographical presence while controlling costs, utilizing open networks, and establishing partnerships or acquiring companies already established in the field.

The major challenge for these companies is to optimize the location of their PUDOs and lockers for efficient parcel distribution. This optimization needs to be integrated into their delivery routes, taking into account parcel collection and drop-off at these locations, in addition to home deliveries. This approach not only meets the flexibility needs of consumers and e-commerce businesses but also contributes to environmental goals by reducing the distance traveled for each delivery.

Ultimately, these companies aim to create comprehensive and efficient delivery networks that offer a wide range of options to customers while optimizing logistics processes for environmentally responsible delivery. This shift towards out-of-home delivery solutions is expected to continue shaping the future of the parcel delivery industry in Europe.

Carriers and locker providers will look to balance the efficiency and convenience that PUDO networks offer with the needs of consumers for accessibility and consistent and good customer experience when they plan the most optimised PUDO networks.