Will store pick-up alter the course of home delivery?

By Tom Ryan

OCTOBER 15, 2014

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Designed to cut down on delivery stops, United Parcel Service announced last week it is launching a service that allows customers to pick up their packages at dry cleaners, convenience stores and pharmacies as well as UPS stores.

UPS Access Point network, already available in Europe, has been expanded to New York City and Chicago and will extend to all major U.S. metropolitan markets during 2015. Self-service lockers are also being tested in Chicago. In January, all 4,400 UPS stores in the U.S. will become access points.

For consumers, the service solves the problem of customers missing package deliveries or having them stolen after being dropped off on a doorstep or in a lobby. Its 2014 UPS Pulse of the Online Shopper study found that 37 percent of U.S. online shoppers wanted alternate delivery locations when they're not at home.

If unable to deliver a package, drivers leave a note informing customers when they can expect to collect their package at a nearby UPS Access Point location. Typing the tracking number on ups.com identifies the pick-up location. UPS wrote in a press release, "These local businesses, primarily neighborhood convenience and grocery stores with evening and weekend hours, fit a consumer's busy lifestyle."

The pick-up spots are expected to be no farther than a 10-minute walk away in the city or a 10-minute drive in the suburbs. Customers can also select the UPS Access Point location as their preferred delivery address instead of home or work. UPS is also working with online retailers to enable customers to select an access point as their delivery location.

For the Access Point pick-up stores, the Wall Street Journal reports that Danny's Pharmacy in the Bronx receives 50 cents per package but the bigger benefit is expected to come from new customers and the traffic the pick-ups bring.

For UPS, significant cost savings are expected since less repeat delivery attempts will be required by drivers. Packages delivered to homes are also less profitable since consumers often aren't home and order fewer packages than businesses. Logistical margins are also eroding due to free or cheap delivery options.

FedEx offers pick-up and drop off options at many of its 2,400 locations in the U.S. although UPS's Access Point program promises to be much more expansive.

Amazon also has lockers in convenience stores and parking garages across the country to handle deliveries and returns. But the lockers don't provide same-day delivery and many stores are said to be apprehensive about partnering with a competitor like Amazon.