Optimizing Parcel Lockers Networks with Dynamic Pricing

As out-of-home (OOH) delivery booms, a major challenge is optimizing the use of the parcel lockers networks. Some carriers are already seeing that many locations are saturated, leading to operational disruptions (last minute deliveries to alternative sites and late notification causing consumer dissatisfaction).

Dynamic pricing (DP) is a possible solution to reduce these problems and optimize the use of parcel lockers capacity. Here are the different possible levers:

1. Differentiate the price by location based on the density of parcel lockers (including competition) in the area and their attractiveness for the consumer. A higher price could be charged in locations with low locker density or in those that are preferred by consumers.

2. Forecast parcel lockers daily utilization by location and size of box (ex: A, B, C). Price increases with a higher utilization that can vary by day of week, season and special event. If? utilization forecast is high for large compartments (sizes C or B), then the available capacity decreases for small parcels (size A) leading to a higher price for A as well.?

3. Leverage the time of use of the lockers (between provision and pickup). Standard locker delivery offers include a deadline for pickup (e.g. 48h). After this deadline, the parcel is returned to sender or, better, could be routed to another locker location with available capacity. Alternatively, the deadline could be extended upon acceptance by the consumer of a supplement (e.g. 2€/24h). The extension surcharge can be priced depending on utilization forecast and the pickup deadline adjusted accordingly.

Most locker networks owned by carriers have all the operational data necessary for DP to work and the technology is already available to distribute dynamic prices to e-commerce platforms. They still need to implement the DP tools capable of forecasting demand and setting the right prices for each location and each date. But they also need to find common ground with e-commerce platforms and merchants on how best to implement DP for the common benefit of all stakeholders (carriers, e-commerce platforms, merchants and shoppers). This includes defining contracts providing for variability in rates; defining procedures for controlling invoices based on these rates; and managing the payment of pickup deadline extension supplements by shoppers (either via the carrier's app, or by the merchant). The case of carrier-neutral parcel lockers is more complex because capacity is shared between different carriers and it involves an additional stakeholder. The case of lockers owned by e-commerce platforms is simpler, since the platform has all the data to optimize dynamic prices by measuring the price sensitivity of shoppers at checkout.

For more information on dynamic pricing applied to parcel logistics, you can visit openpricer.com