Same-day ecommerce delivery is becoming a normal expectation in many cities, but fulfilling orders within hours is still difficult. The spaces might be far away from customers and missed deliveries, as well as non-uniform addresses, extend the time delays.
Parcel hubs in the neighbourhoods could provide a more local delivery option. These customer-facing hubs may help ecommerce companies to organise faster and more flexibly in the last mile of the journey while moving the packages closer to customers.
Bringing the Delivery Network Into the Neighbourhood
Typical ecommerce systems typically rely on large-scale fulfilment centres that provide service in a wide region. While it’s fine for regular shipping it wouldn’t be ideal for same day delivery when there are long travel distances.
Small-scale transfer hubs in neighbourhoods can serve as connections in the logistics chain between larger distribution centres and local distribution areas. Packages might come in consolidated groups and be spread out over the streets in the area.
Reducing the distance could safeguard delivery time.
Once packages are at a local “hub”, the couriers would no longer have to start each route from the far away warehouse. The area they service could be significantly reduced and become more focused.
This may be beneficial in areas of high density where potentially hundreds of orders could come in within a fairly short distance.
Five Ways Hubs Could Speed Up Same-Day Orders
The proximity of parcels to their destination can impact multiple delivery aspects at once.
- Minimize travel distance between Parcels and Customers
- Make smaller and closer routes for couriers to deliver the mail.
- Provide more speedy sorting based on neighbourhood zones.
- Easily re-assign urgent orders locally
- Keep failed deliveries close to their destinations
Some products may be sitting at the same location already.
Parcel hubs can not always be limited to serving as sorting centers. There may be limited amounts of often-used items, too, in larger facilities.
Micro-Inventory May Be Shaped By Demand Data.
Retailers may be able to use the data to gain insight into what people are buying and when, which allows them to target certain stores to specific neighbourhoods and products that are frequently purchased. Household goods, accessories, packaged items or basic items could then be placed near potential customers, as they are moving at a very fast pace.
Neighbourhood facilities would not be able to replicate the scale of the major fulfilment centres so there would only be a limited amount in each neighbourhood.
Local Stock Might Reduce Fulfillment Time
The regional warehouse might be able to be eliminated from an order path if that same product is already in stock at a local warehouse.
The product may not even have to be transported throughout the city, but only the last few kilometres.
Parcel Lockers Could Add Another Delivery Option
The advantage of doorstep delivery is that people can receive their orders at their doorstep, but when they are not at home, it becomes inefficient. The courier may have to make another delivery or pick up the package at a remote facility.
Lockers with secure access that are tied to neighbourhood hubs could be another option. Customers would be given a digital code and pick up packages at convenient times without the need of a package handler.
Five changes that will affect local couriers.
Neighbourhood hubs may also impact the way delivery teams manage their vehicles, routes and daily activities.
- Couriers might run routes in smaller geographical areas.
- There may be more stops that are clustered into smaller routes.
- The cargo bikes could be used for appropriate short-range deliveries.
- Routes may change between parcels and couriers may change parcels during routes.
- Deliveries may be made to hubs close to them that were unsuccessful.
Smaller Vehicles Could Handle the Final Kilometres.
Large vans are still very handy when consolidating shipments, but they aren’t necessarily good for narrow neighbourhood streets. There may be limited parking and congestion in the area, affecting short-distance deliveries.
The Cargo Bikes may be suitable for dense delivery areas.
Riding delivery bikes and small electric cars may start to make more sense as deliveries start locally. The fact that they have a short-range is not a problem when the customer is only a few kilometres away.
But the size of the parcels, weather conditions, infrastructure and the number of orders would be the answer to determining where these vehicles make sense.
Routing Software would Have Connected Hubs
Digital coordination is key to the successful operation of a distributed network. Logistics platforms would need to monitor items throughout the entire process from fulfilment centres, neighbourhood hubs, couriers, lockers to the customers.
Routes Could Respond to Conditions in Real Time
Routing systems could bundle similar deliveries together and re-schedule deliveries if there are changes in traffic or couriers. If a parcel is awaiting pickup at a local pickup center, another courier might be able to pick it up.
This flexibility would be difficult to obtain in the case of parcels being shipped from far away warehouses.
There is a cost equation for the Model.
The more extra facilities you have the more expenses they entail. Everything from rent to staffing, security, utilities, technology and sorting equipment and transportation between facilities should be taken into account.
High Order Density Could Make the Difference
Neighbourhood hubs will be most successful in situations of high density of orders in a limited area. Large parcel volumes can be split up by more deliveries, thus reducing the infrastructure costs.
However, in lower density areas, extra facilities may not lead to sufficient improvements in delivery efficiency at a high enough cost.
Conclusion
Same-day ecommerce deliveries may be brought closer to their customers if neighbourhood parcel hubs are able to place packages and some stock nearer to their customers. Reducing the distance couriers need to travel, having lockers, micro-inventory, smaller vehicles and flexible routing may all help to improve last-mile operations.
The key to their success would be a combination of order density, operating costs, suitable location, and logistics technology. Neighbourhood hubs don’t necessarily need to take the place of huge warehouses, but can be added as a stepping stone between centralised networks of fulfilment and customers who demand ever faster delivery times.
FAQs
1. What is a neighbourhood parcel hub?
Neighbourhood parcel hubs are small local centres that sort, temporarily store, pick up or deliver parcels for ecommerce that are local to them.
2. Do parcel hubs shorten the same day delivery time?
Yes. Placing packages near customers can reduce the last-mile delivery distance for packages and enable packages to be delivered within smaller geographical areas.
3. Is a parcel hub equivalent to a parcel locker?
No. lockers are primarily used for self-service parcel collection and a hub can be used to sort and store parcels in addition to parcel dispatch and returns as well as other local logistics activities.
4. Could parcel hubs reduce delivery costs?
When company order density is high, they may be able to save some last mile transportation expenses, but companies must also consider the costs of additional facilities.
5. Are local parcel hubs going to supplant the big warehouses?
No – large warehouses would still be essential for holding stock and for fulfilling large orders, and neighbourhood warehouses would still be important for distributing stock to local customers.