Parcel lockers vs. home delivery: a model to compare last-mile delivery cost in urban and rural areas

Abstract

PurposeThis paper investigates the economic performances of two business-to-consumer (B2C) e-commerce last-mile delivery options –parcel lockers (PLs) and traditional home delivery (HD) in contexts where e-commerce is still at its early stages. It analyses and compares two different implementation contexts, urban and rural areas.Design/methodology/approachThis study develops an analytical model that estimates delivery costs for both the PL and HD options. The model is applied to two base cases (representative of urban and rural areas in Italy), and sensitivity analyses are subsequently performed on a set of key variables/parameters (i.e. PL density, PL fill rate and PL annual costs). To support the model development and application, interviews with practitioners (Edwards et al., 2011) were performed.FindingsPLs imply lower delivery cost than HD, independently from the implementation area (urban or rural): advantages mainly derive from the higher delivery density and the drastic reduction of failed deliveries. Benefits entailed by PLs are more significant in rural areas due to lower PL investments and annual costs, as well as higher HD costs.Originality/valueThis paper offers insights to both academics and practitioners. On the academic side, it develops a model to compare the delivery cost of PL and HD, which includes the analysis of urban and rural contexts. This could serve as a platform for developing/informing future analytical/optimisation contributions. On the managerial side, it may support practitioners in making decisions about the implementation of PLs and HD, to benchmark their costs and to identify the main variables and parameters at play.

Determining locations and layouts for parcel lockers to support supply chain viability at the last mile

“…This is in line with the results of Seghezzi et al. [58] , who report an amortization time of 1.3 years.…”

Last Mile Logistics Innovations in the Courier-Express-Parcel Sector Due to the COVID-19 Pandemic

“…Of course, solving the last mile problems with parcel machines also highlights other aspects of their operation. There are also considerations about the superiority of parcel machines, or collection points in general, over home deliveries for economic and environmental reasons [51]. One can consider here the energy consumption of parcel machines and the need to use renewable energy sources so that we can talk about greater care for the environment.…”

Mobile parcel lockers with individual customer service

“…To avoid the high cost of deliveries and failed deliveries, another common way of last-mile services is fixed parcel lockers (FPLs), which are filled by the logistics provider regularly, for example, once every morning. FPLs promise a flexible pickup time for the customer, lower costs for logistics service providers [20], a positive impact on ecological sustainability [5], and the possibility to manage the constantly increasing transportation volume better [26]. From a customer perspective, on the one hand, the customer has the advantage of being able to plan his or her daily schedule more flexibly; on the other hand, he or she needs to become active and travel to the parcel locker for pickup.…”