Will collection points become the next preferred delivery method after home delivery in Southeast Asia?
Collection points and parcel lockers have been increasing in popularity in recent years. In our previous studies on Australia, Singapore, Malaysia, and Europe, we found that collection points (as an alternative to home deliveries) were gaining acceptance amongst consumers, retailers, and logistics carriers. Especially in Europe, collection points usage has increased in 2020 along with the increase in parcel locker networks.
However, there appears to be comparatively little coverage on this topic here in Southeast Asia. For instance, how collection points started to gain traction in this region and how it has been developing over the years.
In Singapore, the government has taken a proactive approach in developing this sector. IMDA, a statutory board of the Singapore government, recently announced its plan to set up 200 parcel lockers points across the nation by early 2021; such that every locker point will be accessible within 5 minutes of walking. This move has been lauded by many, including Parcel & E-Commerce and Last-Mile Expert, Marek Rozycki.
That brings us to the question: so what about the other countries within Southeast Asia? Apart from parcel lockers, what are the other types of collection points available in Southeast Asia?
What better way to learn than to hear it from one of the key industry players in Southeast Asia? For this study, we had the honor to interview Ninja Van, one of the leading carriers offering collection points (including parcel lockers) in Southeast Asia.
Through the interview and our data analysis, we will be sharing with you the following insights:
- What are collection points
- Ninja Van’s journey into collection points
- Home deliveries vs. collection points
- What do consumers really think about collection points?
What are collection points?
Simply put, collection points is a delivery option that allows consumers to pick up orders from a convenient location, and at their own time. If offered by a retailer or logistics carrier, consumers will be able to opt for this option (as opposed to delivery to a specified address) by choosing a pickup point upon checking out. When the order is ready for pickup, consumers will receive a notification from the retailer or carrier.
For instance, Ninja Van currently offers parcel collections from Ninja Points (dedicated Ninja Van parcel shops and partner retail points) and Ninja Boxes (parcel lockers).
(Ninja Van’s branded automated lockers offer a self-serve option for parcel collection and returns.)
(Convenience stores are one of the parcel collection options Ninja Van offers as part of its Ninja Point network. )
With collection points gaining popularity around the world, Ninja Van has been rapidly increasing the number of collection points provided throughout the region. As of 2020, Ninja Van has over 5,384 collection points across Southeast Asia:
- Singapore: 1015
- Malaysia: 3472
- Indonesia: 710
- Philippines: 155
- Vietnam: 32
(Number of collection points offered by Ninja Van in 2020)
Ninja Van’s Journey into Collection Points
1. When did Ninja Van start offering collection points to consumers as a delivery alternative? And why?
Ninja Van: We rolled out our first collection point/parcel locker in 2015. Prior to this, we had already established a set of reliable processes for our doorstep deliveries so this was a natural progression for us.
The launch of this delivery option was also something we did in response to the trend that we were seeing coming through from more mature markets like Europe.
“Investing in a collection point network has provided us with added options when it comes to the last mile fulfilment process. Combining our tech systems and scalable processes, we’ve developed an established network of parcel collection points across Southeast Asia, enabling us to offer customers a choice while at the same time, creating more efficient ways of delivering a hassle-free experience.” – (Mr) Eugene Huang, Regional Head of Retail, Ninja Van
2. What were the initial challenges Ninja Van faced when setting up collection point networks?
Ninja Van: Part of building up our network involves finding the right mix in terms of both retail partners and parcel lockers, with both options presenting their own unique challenges.
Acquiring retail partners involves a change management process to persuade partners on the benefits of signing up to offer parcel pick up and drop off services. With parcel lockers, each standalone system could potentially cost tens of thousands of dollars to purchase and operate, making them a costly investment.
3. Speaking of retail partners, how does Ninja Van collaborate with retailers and marketplaces in offering collection points to consumers?
Ninja Van: There are two ways we collaborate with retailers and marketplaces: 1. offering manned retail points as a collection point option, and 2. working with marketplace platforms to see what kinds of incentives we can offer to encourage their consumers to opt for delivery via a collection point.
As for the first point, manned retail points are a strong alternative to lockers because they offer lower fixed costs and are a quick-to-scale solution. The additional foot traffic to these retail points generated by parcel pickups also makes these types of partnerships a win-win solution for retailers.
Home deliveries vs. collection points: which is better?
Based on Parcel Monitor’s research, we observed that consumers in Europe are increasingly opting for collection points due to the convenience and flexibility it brings. That said, from a carrier’s perspective, which is the preferred and most efficient delivery method?
With consumers now increasingly expecting flexibility and optionality when it comes to the delivery experience, Ninja Van believes that both deliveries via collection points and doorstep delivery can co-exist and provide balance in meeting expectations from both business owners and consumers.
According to Ninja Van, doorstep or home deliveries are typically seen as a more premium service offering. Against the backdrop of the global pandemic, brick-and-mortar businesses that are now taking an online-focused approach view doorstep deliveries as a way to provide shoppers with a differentiated brand experience. On top of that, doorstep deliveries also provide uninterrupted service in the event of lockdowns brought on by the pandemic.
Collection points are the clear winner when it comes to efficiency
It is widely accepted that collection points bring greater efficiencies by aggregating deliveries to a single point instead of individual homes. Particularly given how substantial last-mile delivery costs are; which comprise 53% of total delivery costs.
Indeed, Ninja Van points out that collection points do offer greater efficiencies by: (1) reducing the need to reschedule parcel deliveries; and (2) cutting down on the time 3PLs spend on deliveries by giving them the option to drop off multiple parcels at a single collection point.
Moreover, based on Parcel Monitor’s research, we found that parcels delivered to collection points generally have a shorter delivery time; with countries like Singapore and Thailand seeing a 40% difference in average transit times.
(Transit time % difference for deliveries made to collection points vs. regular deliveries in H2 2020)
Whilst there are clear benefits for consumers, retailers, and carriers in opting for and offering collection points as an alternative delivery method in theory, in reality, what do consumers really prefer?
What do consumers really think about collection points?
To find out what delivery method consumers preferred in Southeast Asia and why, we partnered with Rakuten Insight Global who surveyed approximately 85,000 consumers from China, Hong Kong, Indonesia, India, South Korea, Malaysia, Philippines, Singapore, Thailand, Taiwan, and Vietnam.
Here are some of the key findings:
Which countries have the widest adoption of collection points in Asia?
- 62% of Chinese consumers have used collection points more than 5 times in the past year. Only 5% of respondents indicated that they did not use a collection point at all.
- Almost half of Singaporean consumers have used collection points more than once in the past year (48%). This is the highest in Southeast Asia, but nevertheless lower than China (85%).
- More than half of Thai consumers have not used collection points in the past year (53%). This is the highest percentage out of all countries surveyed.
What are the reasons why consumers will use collection points in SEA?
- Filipino consumers care highly about the availability of delivery options when ordering online (76%), followed by Malaysian consumers at 50%
- Most consumers in Southeast Asia selected “Convenience” as the top reason that will motivate them to use collection points, except in Indonesia where “Speed” and “Cost of Delivery” are bigger reasons to shift
- “Cost” was a more compelling reason for Vietnamese consumers
Will collection points ever reach widespread adoption in Southeast Asia?
As compared to other parts of the world, the collection points space in Southeast Asia is still at a relatively nascent stage.
Apart from pushes from the government as in Singapore’s case, Mr. Eugene Huang, Regional Head of Retail of Ninja Van, rightly points out that public education and ecosystem collaboration is crucial in driving wider adoption in Southeast Asia.
“Public education is one way to encourage greater usage of collection points. If other e-commerce ecosystem players such as marketplace platforms are also able to push this as an alternative to doorstep deliveries, it’s likely we’ll be able to see more traction in terms of consumer demand for this type of service and as a result, we expect it will be more widely adopted across Southeast Asia.” – (Mr) Eugene Huang, Regional Head of Retail, Ninja Van
About Ninja Van
Ninja Van is a tech-enabled express logistics company providing supply chain solutions for businesses of all sizes across Southeast Asia. Launched in 2014, Ninja Van started operations in Singapore as a last-mile logistics company. Since then, it has become one of the region’s fastest-growing tech logistics companies, powering businesses with innovative solutions that optimise e-commerce opportunities. Today, Ninja Van has grown its network to cover six countries: Singapore, Malaysia, Philippines, Indonesia, Thailand and Vietnam. For more information, visit www.ninjavan.co.
About Rakuten Insight Global
Over the last two decades, Rakuten Insight Global has remained at the forefront of consumer market research data collection in the region. Rakuten Insight’s online panels have been developed throughout 12 major Asian markets and regions, all of which are managed by dedicated local support teams and meet the highest standard of the industry.
About Parcel Monitor
Parcel Monitor is the global knowledge-sharing community dedicated to E-Commerce Logistics for retailers, logistics carriers, and end-consumers. Join now for the latest news, data-driven insights, and hottest events for all things e-commerce and logistics!