Blue Dart launches parcel locker services

News Clip: Mint, Mumbai

16 October, 2015

The round-the-clock service is expected to benefit customers who may be away from the shipping address for long hours

Courier service provider Blue Dart Express Ltd on Thursday introduced a locker service at Gurgaon's Cyber Park to store parcels in an attempt to address the high failure rates in delivering parcels (15-18%) in the e-commerce sector. The addressee can collect it at a convenient time.

The round-the-clock service is expected to benefit customers who may be away from the shipping address for long hours. The timing is significant given that the e-commerce firms are running sales campaigns ahead of the festival season.

"The e-tailing industry and the logistics companies are experiencing a big challenge in delivering the shipments to the customers. Generally, we find that the husband and wife both are working so their availability to collect becomes difficult,"said Anil Khanna, managing director, Blue Dart Express. "What we have also seen is that increasingly it is becoming difficult to get the right delivery staff. Therefore there is a need to look at alternative methods of delivery which are convenient for customers and improve delivery strike rate as well."

The $20 billion Indian e-commerce market is expected to reach $300 billion in sales by 2030, according to a study by Goldman Sachs in May.

Blue Dart's service is similar to the ones offered by global companies such as Doorman in the US. The start-up allows customers to provide an online retailer the shipment address of one of Doorman's warehouses. The products are stored there and delivered to the customers depending on their availability, especially during odd hours.

India too recently saw the launch of a similar start-up. DoorGuy delivers products to customers at odd hours for a basic fee of Rs.19 per package.

Blue Dart's service, however, is free for customers and will be open for all the e-commerce vendors it works with. The company works with Flipkart, Snapdeal and Amazon India. The current facility in Gurgaon has around 50 compartments.

While Khanna did not specify by when the company will launch its second centre, he said the company was figuring out areas with the highest concentration of failed deliveries.

The service being offered will be linked to the mobile phone of the user. As soon as the package is delivered to the parcel locker, the user will receive a unique security code though a text message, which she can use to open the locker and collect his parcel.

While the service is now limited to online transactions, Blue Dart plans to extend it to cash on delivery. It plans to provide an automated payment collection consoles to facilitate cash on delivery. The firm gets more than 25% of its business from e-tailing. It expects online retailing to account for half of its total business in the next five years.

The service is already present in developed markets such as Germany. DHL, the parent of Blue Dart, launched the service in 2001. Since then, the company claims that over four million active users have registered for more than 2,750 parcel lockers throughout the country.

Delivery has always remained a key pain point for e-tailers. To address the issue, firms such as Amazon started working with kirana stores in Bengaluru for in-store pickup of products. Jabong has also carried out a similar exercise. Snapdeal launched assisted outlets to address this need last year.

A spurt in online shopping activity in India has made online retail one of the fastest growing segments for courier firms, necessitating the introduction of such a service.

"Given the amount of cash on delivery that happens in the country, the service may pose bit of a challenge. Thus, for now, it seems to be targeting a pretty much evolved urban consumers for whom receiving parcels is a big enough challenge,"said Rohit Bhatiani, director at consulting firm Deloitte in India, adding that the accessibility of these lockers will be a concern as a consumer may not want to travel 4km to pick up a parcel.

Bhatiani said Blue Dart would be able to sustain the free service only if the volume of shipments are enough to sustain the cost of maintaining the locker. Otherwise, somebody will have to payeither the companies or the customers.