The e-commerce revolution has changed consumers’ shopping patterns and generated downstream repercussions that business leaders like Steve Jobs, Jeff Bezos and Warren Buffett were out in front of early on. These e-commerce icons, of course, are early adopters of new technology who made fortunes by anticipating the opportunities associated with e-commerce. Back in 1996, Steve Jobs said, “The heart of the web will be commerce.” Warren Buffett sees online retailing as a massive growth opportunity, as evidenced by Berkshire’s recent acquisition of online retailer, Oriental Trading. Jeff Bezos, a founding father of e-commerce said this: “Your margin is my opportunity,” meaning his goals are to flood the marketplace with as many online purchases as possible (increasing package deliveries as a ripple effect). Is it working? In the United States, of all e-commerce growth in 2014 and 2015, Amazon accounted for 60 percent.
The explosion of online purchases seems easily predictable in hindsight. This year, consumers and businesses will make more purchases online than in brick and mortar stores. However, many businesses and consumers are bumping into a bothersome bottleneck that occurs at the back end: package delivery and acceptance.
Naturally enough, with their embrace of online purchasing, consumers have grown impatient with the delays and obstacles interfering with their receipt of packages. Virtually all e-commerce buyers now expect and even demand package delivery to their front doors the next day, or at most in two days. It is not surprising that a majority of those surveyed confirmed that efficient package delivery management positively influenced their decisions to expand e-commerce relationships with preferred online merchandise providers.
Even if the Post Office (USPS) attempts delivery to an apartment resident’s door, assuming there are no controlled access issues (like a high-rise building), most of the time the recipient is not at home, and the package is left at a leasing office or taken back to the Post Office to wait for pick up. Millions of online purchasers receive notices telling them, “attempted delivery, contact your [insert shipper].”
Amazon is attempting to solve this headache, too. Their innovative deployment of drones and same-day delivery subscriptions are not its only package delivery innovations (although it’s difficult to see drone deliveries as anything more than a marketing tool); they are quite active in the package locker space as well (amazon.com/lockers).
Amazon Prime provides free services to college students (for the first six-months; literally “priming” the market with future online shoppers) who are likely to have discretionary income and likely to live in your apartment communities. Our company sees the average millennial receiving ~21 packages per year and with a typical student housing apartment community housing 700ish students, that translates into a total package management burden of nearly 15,000 packages annually (with an internal cost of acceptance & delivery at $31,500+). Most conventional apartment communities see numbers only about 10 percent less than student, with luxury communities seeing equal or greater than student.
In apartment and condominium communities, package management services are an important priority for residents – topping the 2015 list at #2. Simply put, timely package delivery management is an expectation and no longer thought of as an optional amenity, like fitness rooms for example.
Speaking as a package delivery management entrepreneur who started Postal Solutions out of my college apartment seventeen years ago, I have the perspective of an early adopter of technology integration in the package management space, and have led in developing package management technology that consumers are increasingly demanding. Out of our mail & package delivery service management option, grew the development of our PackageLog® software. And along with the growth in online shopping (which last year topped $335 billion), came the natural increase in package deliveries and an increased workload for those who accept them on the behalf of others – leasing offices and receiving departments. To date, our software has already logged over 3 million packages.
The average conventional apartment resident receives roughly 20 packages per year and the time lost handling those 20 packages manually is about two hours per resident, per year (with a manual cost to process of ~$2.10 per package). The need for efficiencies for a package management solution is a competitive necessity for apartment and homeowner management companies. Take high-rise residential buildings for example. Due to controlled access issues, on average they spend 13+ hours each week on only package acceptance and deliveries.
If you’re thinking that accepting packages on the behalf of others seems like a burden and a tremendous non-revenue generating expense; you are right, it is, and it’s growing at 15 percent or more year-over-year. But there are options to mitigate the time you’re spending. There are even options to monetize the workload if you were so inclined. We see that apartment communities are beginning to establish annual package services fees to cover their storage and handling costs (acceptance, returns, monthly charges, etc). Many are providing package accepting / delivery services via leasing offices or electronic package lockers and those forward-thinking communities are exploring the collection of package acceptance fees, and even fees to drop a package for outbound shipping, all typically paid for by those utilizing the service or equipment (often the apartment resident). Accepting fees is not the answer for every business or apartment community. There are pros and cons to collecting fees relating to package deliveries and that decision should be taken seriously before implementation.
I hope that I have convinced you that the increase in online shopping and therefore package deliveries is not slowing down and that this is something warranting your immediate attention, as those who shop online are expecting you to accept and deliver their packages. So, what’s your package management plan?
Craig Meddin is president and CEO of The Postal Solutions Cos.