Paul Kenyon logs onto his computer every week, places his weekly grocery order from Walmart, and selects “pick up in-store.” A few days later, he drives to his local Rhode Island Walmart, which is roughly 8 miles away and picks up his order.
It’s a habit he developed at the outset of the COVID-19 pandemic as a method to maintain social distance. Kenyon, on the other hand, is an outlier. He lives in a suburban neighborhood and is often older than the average customer who chooses an additional pickup place for his online transaction.
According to recent research, customers picking up their products at alternative locations tend to be younger, therefore the capacity of providers to reach people like Kenyon may influence how ubiquitous alternative delivery locations (ADLs) emerge in the future.
The function of ADL in e-commerce
Rensselaer Polytechnic Institute’s research has thrown some insight into the concept of alternative delivery locations (ADL) and whether it is a method that e-commerce customers will support.
ADL works on the principle that a delivery service can drop several parcels in a single spot — picture an Amazon Locker, retail store location, or even a mini-warehouse or storefront on a busy city street — and the client will come to that location to pick up their goods.
It saves fuel, decreases congestion, and has the potential to minimize the cost of commodities for the end-user. Furthermore, it can be especially beneficial to pure-play e-commerce firms without physical shop locations, assisting in the reduction of transportation costs.
However, it is not extensively utilized in the United States – at least not yet.
“There is a target group of frequent online consumers who are more of a strain to the freight system and the environment overall,” Cara Wang, an associate professor of Rensselaer Polytechnic Institute’s Department of Civil and Environmental Engineering, said in a press release. “Cities must find a means to encourage populations to grasp the benefits of ADLs, whether through new technology or establishing incentives.”
Wang and doctoral student Woojung Kim recently published research on New York City mobility data and how it relates to ADL in the region.
“The results show that because various populations use ADLs differently, transportation planners cannot deploy a one-size-fits-all approach to every neighborhood, every city,” Wang said. “We’re a long way from having all the answers,” says the researcher, “but the findings of our study should help policymakers in congested urban areas better design plans for ADLs as a method to minimize negative externalities generated by delivery trucks.”
“The Adoption of Alternative Delivery Locations in New York City: Who and How Far?” was recently published in Transportation Research Part A: Policy and Practice. The authors say it is the first study to completely evaluate ADL behaviors from the users’ perspective, but Wang told Modern Shipper that it is just one of a series of articles on last-mile delivery that she is working on.
Only in my immediate vicinity
Wang stated that her team is considering a variety of last-mile delivery methods, such as crowdsourced deliveries and consolidated deliveries. However, the ADL paper discovered some apparent demographic trends for users.
The authors discovered that those who receive more parcels are among the least likely to use ADLs by reviewing data from the New York City Department of Transportation’s 2018 Citywide Mobility Survey database. Those who are younger and have more incomes, on the other hand, are more prone to use ADLs. It was also determined that older populations would use the service, but only if it was offered within a two-block radius of their home.
“ADL works in some circumstances but not others,” Wang explained. “We wanted to know how, why, and where.” “From there, we looked at people’s desire to utilize ADL, and based on [certain data], there is a clear difference” between demographics.
“In general, individuals employing alternative delivery have a higher possibility in midtown Manhattan, but it must be located within a short distance of their apartment,” Wang added. “In the downtown area, [people] are willing to travel somewhat longer distances” to retrieve their items.
Wang stated that the study examined a variety of data points, including gender, age, occupation, income level, order volume, and how frequently consumers used their smartphones.
“In the end,” she said, “most of these characteristics did not appear to be as essential as age and career.”
The inconvenience of ADL
Satish Jindel, president of SJ Consulting and an expert in last-mile and parcel deliveries, questioned the authors’ underlying conclusions, telling Modern Shipper that it doesn’t make sense why Americans who can have an item delivered to their homes would generally choose to have it shipped somewhere else.
Shippers and merchants, on the other hand, are looking for ways to cut e-commerce transportation costs. One component of this is an effort to encourage more individuals to consider buy-online, pick-up-in-store (BOPIS) choices. Alternatively, there are attempts underway to transition to a buy-online, pick-up-anywhere (BOPA) model.
That’s what Via.Delivery is attempting to achieve, hoping to recreate a model popular in Europe in North America. Via.Delivery announced its first BOPA Index in February, finding that 18% of US online customers pick BOPA when given the option at checkout, and 50% of those that choose BOPA to save money on delivery when compared to residential shipping choices.
“Buy online, pick up anywhere” addresses significant difficulties that arose during the pandemic and related supply chain issues, according to Mitchell Nikitin, CEO, and co-founder of Via.Delivery, in February. “At a time when shipping to a home location can cost up to 30% more than shipping to a commercial address, BOPA provides a lower-cost alternative while also allowing consumers to mail products anywhere for quick pickup.”
BOPA results in cost reductions.
According to Via.Delivery, 50 percent of individuals who choose BOPA do so for the cost savings, while 15 percent mention increased security and 15 percent cite convenient delivery as reasons for doing so. Another 15% stated that they utilized BOPA to keep gifts hidden.
While many people are unaware of alternate delivery options, the BOPA Index discovered that 93 percent of Americans reside within a 5-mile radius of a BOPA location, and 54 percent live within 1 mile. This includes Amazon Lockers, which can be located in a variety of locations, including 7-Eleven outlets.
For many years, UPS (NYSE: UPS) has provided its Access Point network. The company now has roughly 21,000 Access Point locations in the United States and more than 52,000 globally, all of which are meant to provide greater convenience for customers while lowering costs for brands.
The shipping giant also mentions the advantages for businesses, stating that Access Points draw shoppers into physical locations. UPS, which has Access Points in major businesses such as CVS, Michaels, Advance Auto Parts, and, of course, The UPS Store, claims that 90 percent of U.S. consumers live within 5 miles of a site.
Following the lead of European trends, Nikitin believes BOPA will become a viable choice in the United States.
“Well, in European countries, alternative shipping choices are not only popular but, in some circumstances, the dominant choice, garnering up to 70% of deliveries,” he explained to Modern Shipper. “I have a buddy in Denmark who gets nine out of ten of his shipments delivered to locations other than his home owing to convenience and cost savings.” So the only real question is how quickly the United States will adopt some EU patterns.”
While BOPIS and BOPA are very different in many respects, the idea is the same: entice the consumer to go out of their way to retrieve the things, lowering logistics costs for the brand/shipper. According to Nikitin, Via.Delivery data indicates that BOPIS is penetrating as much as 45 percent of online orders for omnichannel retailers, citing Target as an example of a business that has found a happy medium.
“Alternative delivery location isn’t quite BOPIS, but the user experience of ordering online and picking it up somewhere else is already marching through U.S. retail,” he explained.
Nikitin believes that in order for BOPA to get on, companies must help lead the drive-through education and incentives. Highlighting the environmentally friendly side of alternative delivery – local pickup can lower CO2 emissions by up to 40%, according to Nikitin — at the checkout may persuade some customers. Others may be lured if the free delivery barrier is reduced from $35 to $20, for example, if the delivery is to an alternate delivery location.
Is there a rural BOPA position available?
While the RPI study only looked at data from New York City, and Wang believes that alternate delivery locations work best in dense metropolitan regions, Nikitin believes that marketers should not abandon the idea of rural venues entirely.
“You are correct that rural areas are more difficult for BOPA owing to a decrease in pickup location closeness,” he stated. “At the same time, some rural communities have lower income levels.” As a result, the cost of delivery becomes even more crucial.
“In general, the greatest plan is to be where customers are going anyway as part of their lifestyle: gas stations, pharmacies, convenience stores, and grocery stores,” Nikitin noted. “As part of the daily (or at least weekly) routine, these locations do not create extra pickup trips.” As a result, additional distance is regarded as less harmful.”
What is evident is that BOPA and BOPIS are still in their early stages as delivery choices, but brands, shippers, and delivery partners are vital to their success. More vehicle stops result not just in greater delivery costs, but also in an environmental toll as costs climb. According to EcoCart, which provides ecologically friendly shipping choices for e-commerce firms, the last-mile delivery expansion would increase carbon emissions by 30% from current levels by 2030.
The combination may appeal to providers seeking strategies to reduce both impacts. Merchants, according to Nikitin, will need to be inventive in order to achieve these goals.
“As brands gain from lower delivery costs and lower porch piracy losses, further discounts or incentives for subsequent orders may be offered as another approach to incentivize the usage of BOPA,” Nikitin explained. “In many cases, this method may even boost overall long-term value by raising the average number of orders per client.”
Merchants who succeed with ADL may encounter more Kenyons in the future.
