Parcel Delivery: A Modern-Day Miracle?

Exploring the evolving role of parcel delivery companies in the retail sector

Approximately 4.2 billion parcels were delivered in the UK last year. That’s 80.2 million parcels per week, or 11.4 million per day. If my maths is correct, that equates to 132 parcels delivered each and every second! Whichever way you look at the numbers, this is a huge volume of complex deliveries – with the majority of parcels delivered on time and undamaged.

In the past few decades, the parcels delivery market has grown at a rapid rate. Since 2014 – when 1.7 billion parcels were sent – the industry has ballooned by more than 140%, and according to McKinsey, the ratio of letters-to-parcels is expected to shift from 13:1 in 2005 to 1:1 by 2025.

But how did we get here? In my mind, there have been three major turning points. First, the widespread adoption of ecommerce, which transformed the way consumers shop and heralded a new era for global logistics.

Second, the introduction of Amazon Prime. Launched in 2005, the tech giant’s signature membership programme offered customers unlimited two-day shipping on more than one million items, raising the bar for what customers expect from ecommerce. Now, businesses which can’t deliver the next day, or at least in the same week, are considered unresponsive and slow to most customers.

Third is, of course, the pandemic. Covid-19 increased immediate demand for parcel delivery: according to US technology company Pitney Bowes, the number of global deliveries exceeded 131 billion in 2020 – a 27% increase from 2019. While the volume of packages has since receded, lockdowns did have a long-term impact on the deliveries landscape, giving rise to new concepts and permanently changing consumer behaviour. Before the pandemic, for example, only 16% of people over 65 used delivery services on a weekly basis. Fast forward to today, and more than two-fifths of this group send or receive deliveries each week.

Today, seven big players – Royal Mail, Evri, DPD Group, Parcel Force, DHL, Yodel and UPS – are responsible for the vast majority all UK deliveries, with Royal Mail still commanding more than half of market share. For these organisations, success means driving growth and maximising efficiency without losing sight of the customer.

Indeed, today’s customers definitely have high expectations of parcel delivery companies. They demand a choice of methods to send and receive parcels; flexibility on dates and times; complete oversight of their parcel’s progress; and for their packages to be delivered at rapid speed.

To meet these needs, many companies are focusing on automation and AI in fulfilment. In September of this year, for example, Evri opened its new automated parcel distribution hub, which increased the company’s overall parcel processing capacity to 4.2 million parcels a day. Similarly, The Very Group, which has the same owners as Yodel, opened a new automated fulfilment centre last year, which slashed dispatch time down from four hours to thirty minutes, allowing the ecommerce giant to move the cut-off time for ordering next-day deliveries from 7pm to 10pm. We’re also seeing businesses roll out sophisticated package tracking services. DPD’s customer app, for example, allows users to see exactly where their parcel is at any given point, and to change the day or place of delivery from their phone.

While significant thought and investment has been channeled into outbound delivery, the same cannot be said for reverse logistics. Returning parcels to retailers remains a relatively underdeveloped, and consequentially highly costly, process. While there are certainly pockets of innovation – Amazon has developed returns lockers, in-store returns kiosks, and label-free returns – most businesses are still in very early stages.

Leaders in the sector are also faced with navigating how home delivery fits into a more sustainable future. Last-mile delivery represents one of the most polluting and carbon intensive components of the retail supply chain, and the World Economic Forum has estimated that if the rate of online shopping growth continues, emissions from last-mile deliveries will increase by a third by 2030. Swapping to electric vehicles and using alternative, greener, fuels will play a part in becoming more planet-friendly – as will utilising local resources, like the Post Office,

It is hard to imagine UK retail without delivery companies, which play such a critical role in our retail community. So here’s saluting the achievements of Royal Mail, Evri, DPD Group, Parcel Force, DHL, Yodel, UPS, Collect Plus and the Post Office. We are all quick to complain on the rare occasion things go wrong with home deliveries – but we shouldn’t forget the billions of occasions when delivery companies get things right!

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This article was also published in The Retailer, our quarterly online magazine providing thought-leading insights from BRC experts and Associate Members.

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