Innovation and Collaboration Key to Developing Europe’s Growing B2C Parcel Delivery Market

August 12, 2010. The business-to-consumer (B2C) parcel delivery market is one bright spot in the sluggish European logistics market, thanks to the ever-increasing popularity of consumer e-commerce. Online retailing in Western Europe is estimated to grow around 10% over the next few years, driving growth of Europe’s B2C parcel market at about the same pace "“ particularly in the UK in Western Europe and Poland or Estonia to the East. What are some key market developments?

Considerable competition exists today. National postal services have been battling to keep their share of the pie in a contest that features local logistics companies, Deutsche Post, DHL and UPS, as well as TNT Post and German parcel operator, Hermes, who have recently started to expand their European networks.
In spite of strong market barriers and industry restraints, the good news is that the B2C parcel delivery market will continue to grow, ensuring that the pie will be big enough for everyone ““ at least for the near term.

Online retailing is limited to purchases where touch or product trial is less important.

Drivers

Restraints

  • Increasing penetration of internet usage
  • Security issue related to online payments
  • An aging population
  • Higher costs, in cases such as food retail
  • Better online offerings eg. assortment, online shopping centres etc.
  • Online retailing is limited to purchases where touch and product trial is less important
  • Improving shopping experience eg. web technologies, payment solutions, delivery solutions
  • Competition from retailers who offer more brick and mortar options such as discount outlets, big shopping centres etc.
  • Lower costs
  • Limited delivery options
  • Reduced national barriers and regulations (relevant to regional players)
  • Reduced national barriers and regulations (relevant to local national postal services where foreign competitors enter market)
  • Improving receiving options: new parcel pick-up point solutions
  • High costs of building delivery networks and relationships with key online retailers

Looking further ahead, market development will depend on the overall supply chain; such as how much retail companies will invest in online sales; how web site technologies and payment methods will develop; how efficient the logistics is and how conveniently consumers can pick up their parcels etc. Two developments are worth special mention.

The first is the development of new innovative delivery modes and technologies. Self-service parcel terminals, where consumers can pick-up their own deliveries, are altering the market. Several European national postal service companies have already set up small networks of the terminals or have at least a pilot project. Deutsche Post DHL operates the biggest network of “˜Packstations’ in Germany (approximately 2,500 terminals). Other examples include Post Danmark A/S (120 terminals) and Norway Post (40 terminals).

A Packstation in Munich, Germany (Source: Wikipedia)

packstation

The second is the collaboration amongst industry players to ensure a smooth shopping experience for consumers. Significant business opportunities are available for companies that are able to offer total “360” solutions. For this reason, large companies such as TNT aim to offer a full range of services along the supply chain, from online marketing, managing web stores and online payments to e-fulfillment, physical delivery and after-sales customer service.

A Typical B2C Parcel Delivery Supply Chain

A Typical B2C Parcel Delivery Supply Chain

Further development of innovative delivery modes and technologies and collaboration amongst key players will be key to developing Europe’s fast growing B2C parcel delivery market.

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