Pass the parcel

By Zhang Ye Source:Global Times Published: 2013-8-9 5:03:03

A student opens an computerized locker to retrieve a parcel at Renmin University of China in Beijing. Photo: CFP

A student opens an computerized locker to retrieve a parcel at Renmin University of China in Beijing. Photo: CFP

As the world shifts to online mode for everything from business to personal shopping, Chinese delivery companies are doing everything they can to get their hands on more parcels.

Entering the emerging sector has taken Shanghai automated locker startup Shanghai Baoqing Intelligent Technology Co a painstaking two years to move into - and it's still facing the challenge of securing a position in the market of providing consumers with a reliable last-mile delivery system via its key product.

The company produces automated lockers linked into a computerized system - some of which even include a touch screen - and are meant to hold parcels safe until customers can arrive to collect them at their convenience instead of being confined to wait for a messenger all day.

When a parcel is placed inside a locker, an automatic text with a secure onetime code is sent to the retriever, which is used when a customer goes to collect it, said the company's founder Hu Qing.

"It's a new product, and not just for consumers, but also within the domestic delivery sector," she told the Global Times. "We're doing all we can to survive."

Hu said that perseverance has kept her company afloat since setting foot into the market in 2010, noting that the market is slowly expanding in China as more domestic e-commerce firms and delivery companies grasp an understanding of the potential role lockers could play in enhancing the delivery service market under the lead of their foreign competitors.

US leading e-commerce company Amazon first introduced US and UK customers to "Amazon Locker" in September 2011. And last year, in order to enhance its e-commerce delivery service, US Internet giant Google announced its acquisition of BufferBox Inc, a Canadian operator of similar products.

Perhaps inspired, domestic e-commerce platform, also launched pilot trials of its automated delivery service in select residential communities and office buildings around Beijing last year, after which rival Alibaba dipped its toe into the market by installing self-service parcel delivery stations at 11 universities around the country.

All of this has led to a greater awareness of such services, which has proven well for business, said Hu, adding that early signs of company profit is appearing. She was further optimistic the booming online shopping market would help carry momentum.

In fact, data from China e-Business Research Center released in January indicated that the number of online shoppers through 2012 rose by 21.7 percent year-on-year to 247 million, estimating the number would climb to 310 million by the end of this year.

With those expectations, Hu predicted that her company's locker products could go for as much as 60,000 yuan ($9,840) in the market - "and maybe even one day contribute to making locker pickup stations more crowded than ATMs." 

Market push

Though it may take some time yet for customers to fall in line with expectations, based on the growing trend of online shopping and results from trial operations, the outlook for the automated locker business is promising, Xu Yong, chief advisor of China Express and Logistics Consulting, told the Global Times Tuesday.

According to a pilot at Renmin University of China - where 50 lockers were set up in March by major domestic express delivery companies to provide the service to students and teachers - the move has cut waiting time for couriers who no longer need to wait for people on campus to pick up their packages.

"This could mean that we're able to send couriers out with more packages and earn more money from moving more goods, as it will contribute to a lower operating cost," a public relations officer for YTO Express, one of the companies involved in the pilot, told the Global Times on the condition of anonymity on Tuesday.

Huang Qian, a junior at Remin University of China, said that the locker service has made life a bit easier.

"We used to have to go and get our parcels almost right away, which wasn't always easy," she told the Global Times. "And when we were able to get to the pickup place in time, we'd always find a bunch of parcels scattered all over the floor and no one would be able to find their package."

Seeing the opportunity in the market, CEO of Beijing-based Collect & Return Corp's Wu Fangzheng is also trying to make his way into the same market as Shanghai Baoqing Intelligent Technology Co's Hu, albeit using a different approach but with a similar product branded as "Angel."

Wu told domestic IT news portal on August 2 that instead of simply trying to offload the locker to buyers, the company plans to lease them to other businesses.

YTO Express' public relations officer also admitted that, at this time, given that the lockers are still new to the market, the company prefers to reduce risk for the time being by "cooperating with third-party operators rather than investing in the purchasing of a locker for the company to run."

But Hu maintained that her company's role as a seller is a better option in the developing market, which may be unable to support the business prospects of a leasing strategy until further maturity. 

Charting new territory 

Due to the young nature of the business, delivery companies who are eager for new ways to earn profits are less excited about investing in something that is not a sure thing, however.

This creates a wider industry challenge as delivery companies are expected to share the costs, but are unwilling to. They feel that other parties, including consumers, e-commerce platforms and property management companies, also benefit from the product, and therefore should bare some of the expenses, too, said Hu.

"The involved parties don't want to pay additional fees for a service that they don't think they absolutely need, so locker-leasing firms have been left to promote the lockers at a loss," she said, worried that if the service isn't given a fair chance, its future could be over before it even begins.

Meanwhile, companies like Alibaba are also trying to figure out how to best maneuver its year-old locker service through the market so that the company can start to see financial gains from the move, acknowledged Zhang Lei, one of the company's public relations officers.

"Like many of the other players in the field, we're still searching for the business model that will deliver the most satisfying results," she told the Global Times.

For China Express and Logistics Consulting's Xu, it is a plan that may not meet all consumer requirements given that some people still expect door-to-door delivery service if they order bulky goods online. But the lockers do offer a new approach to humanizing last-mile delivery services, he said.

And if proven successful enough, maybe local governments would even be convinced to offer support expansion ventures either through subsidies or relaxed policies to allow the service to reach out to more communities, he said.

Posted in: Industries, Insight

blog comments powered by Disqus