In April 2016, Deputy Minister Tharman Shanmugaratnam announced plans to roll out a federated locker system in residential areas to improve the last-mile delivery of parcels islandwide.
“Based on IDA’s findings, the biggest problem faced by our local delivery companies is in making door-to-door deliveries and finding that no one is at home to receive the goods,” said Mr Tharman at an industry launch event.
In line with this new initiative, a parcel locker network in the Punggol and Bukit Panjang HDB estates, as well as in selected MRT stations, will be tested out in the second half of this year.
The locker system proposed will not be tied to any single operator and can be used by all couriers, potentially benefiting more than 7,600 logistics service providers in Singapore.
No Longer Need To Wait At Home For Your Parcels
Ahead of the Government’s plans, Jim Huang established his own parcel locker startup in May last year.
Called Parcel Santa, he wants to resolve the common headache of failed deliveries for both online shoppers and deliverymen.
Such failed deliveries result in a waste of time and money for the last-mile courier company, and a hassle for the customer who now has to reschedule the delivery.
Jim, who previously works in the logistics industry, said that he has witnessed existing models in Japan, United States and most notably China, where the deployment of residential parcel lockers has been widely adopted.
Noting its success, he wants to replicate this model in Singapore – specifically with a focus on the condominium market – and believe that it will lead to increased efficiencies of last-mile delivery.
With a common locker system, which is akin to extra large mail boxes, Jim said that recipients now no longer need to wait at home for their parcels.
Until Parcel Santa came along, the logistics industry had not evolved to accommodate consumers. The majority of parcels arrive at residential addresses when recipients are not at home.
These parcels often end up undelivered, stored at an inconvenient collection point, or even returned to the sender.
Bearing this pain point in mind, Parcel Santa aims to offer “ultimate convenience” to its consumers by letting them conveniently collect their parcels from its network of lockers at their estate.
Best of all? The lockers are free for use for consumers, and is accessible round-the-clock so they can collect it virtually anytime.
Condominiums A Key Market
To date, Parcel Santa’s network has grown in excess of 100 condominium estates, with more committed to come onboard in less than 9 months.
Pebble Bay, Mi Casa, Costa Del Sol, Pinevale executive condominium and Tampines Court are some of the residences that have deployed these lockers.
Jim said that he has received strong interest and support from the condominiums and stakeholders in the condominium management, such as council members and managing agents.
However, he lamented that it has been a real challenge reaching out to the highly fragmented private condominiums community in Singapore.
“But we proactively engage and listen to all requirements to provide an optimal solution to start with, and the reaction has been very positive so far.”
“We had solicited feedback from residents and managing agents, and strongly believe that we could fill a void in the last mile delivery requirements of condominiums.”
Looking forward, Jim said that he aims to expand their locker network to 500 condominiums by the end of this year.
Only Courier Companies Have To Pay
Parcel Santa is the first parcel locker company to successfully host multiple courier brand names on their platform.
They accept deliveries from DHL Express, UPS, FedEx and WMG Delivery, making it an open platform for all courier companies to use.
When the courier company receives a parcel for delivery, it can tell from the postal code whether the parcel is going to a condo that has a Parcel Santa locker system.
After placing the parcel into one of the lockers, the customer will receive a text message or email with a one-time password that they can use to unlock the locker and collect their purchase.
Without this authentication process, the parcel lockers cannot be opened.
In other words, only authorised recipients and registered couriers can access these lockers.
When asked about their monetisation strategy, Jim said that Parcel Santa currently charges courier companies for delivering parcels to their network of condominiums, ensuring a higher rate of delivery success and cost-saving for couriers.
“It reduces their risk of a failed first delivery, which can be up to 20 per cent of total delivery volume,” Jim told The Business Times in a separate interview.
Especially during peak delivery period, the delivery volume can increase up to tenfold.
With the parcel locker system in place, it can help to reduce door-to-door deliveries and deliverymen can simply “drop 10 to 20 parcels off at one single point”.
No Direct Competition For Now
The burgeoning e-commerce industry today has led to a rise of parcel deliveries in Singapore.
When asked how Parcel Santa aims to thrive in this sea of competition, Jim seems pretty unfazed.
He said that he does not see them as competitors as they are all on a different playing field and “operate very different models”.
“They employ a retail model, which utilises a publicly accessible location as a collection point. This means that consumers will have to make a detour to the nearest collection point to receive a parcel, be it rain or shine.”
“But we employ a residential model similar to that of the Federated Lockers the government intends to implement within a targeted community to be used as a delivery point.”
“Hence, I believe we appeal to a group of consumers who prefer delivery to their estate, to be collected at their convenience, rather than collecting it at a public venue.”
As he elaborates on competing in a business landscape, Jim emphasised that it’s imperative to “think outside the box” and constantly innovate in order to stand out from the rest.
As a startup, the only way we can ‘play ball’ with the big boys is to think different – this is the tagline Apple adopted when the Steve Jobs rejoined the company in 1997.
“If we think conventionally, we would forever be lagging behind. The only way for startups to survive is to achieve a quantum leap in what you offer to the market – that is only achievable if you ‘think different’ and engineer a ‘different’ solution to the problem’.
A Laundry Or Food Delivery Service Next?
By serving a specific sub-group of consumers (condominium residents), Jim said that Parcel Santa has differentiated itself by being more “personal” and is thus able to provide additional services targeted for this community.
Tentatively, it’s banking on the idea of being a delivery concierge and possibly introduce a complementary laundry or food delivery service.
“If I want something dry-cleaned, I could deposit my clothes in a locker. The dry cleaner could pick them up and deliver them back to the locker,” Jim told BT.
Jim believes that it’s a very viable business idea because of the lack of such services here.
“In the West, a lot of apartments have a doorman or concierge who handles such deliveries, but in Asia, only high-end residences have such services. Even then, they don’t work round the clock.”
Summing things up, Jim said that Parcel Santa is working towards consolidating their condominium network to provide better services to their growing list of customers.
He also shared that Parcel Santa is looking at expanding regionally by year-end, in markets such as Thailand, Malaysia and Indonesia, where e-commerce is also booming.
Featured Image Credit: Jim Huang