Former UPS, City Link managers setting up UK parcel shop network

A team of ex-army professionals is setting up a new nationwide network of independent parcel shops, with ambitious plans to open 2,000 outlets by mid-2013. Local Letterbox Ltd is led by commercial director Iain Wood, who has experience including time at parcel carrier City Link and UPS, and operations director Jon Chittock who worked with Wood at UPS.

The firm says it has “strong funding support”, but is not aligned with any particular parcel carrier, and says its plan is to work closely with retailers and ecommerce merchants to provide an alternative location for their customers to pick up fully tracked parcels when they cannot be at home to receive them, along with “Click and Collect” orders.

Local Letterbox sees its niche in the GBP 1bn that Britain’s 180m missed parcels deliveries are said to cost the retail industry each year.

The company is already talking with parcel carriers about delivering to outlets – with the idea of being a “carrier neutral” model – and began its search for franchisees this week, to run stand-alone parcel shops on the High Street.

“Recent figures show that 18% of deliveries are unsuccessful,” said Wood, who was previously strategic sales manager at City Link. “On top of that, 22% of deliveries are returned to the retailer, an even more time consuming task.

“People across the country need a better solution for the safe and reliable delivery of their online orders.”

Chittock said to be successful his new company would need a very rapid deployment of outlets, in order to provide sufficient network coverage to attract retailers to engage.

He said he believed one of the areas of particularly good potential would be smaller ecommerce merchants like eBay PowerSellers.

“At the moment no one wants their business,” he said. “They take it to the post office and it is inconvenient and expensive. We will be able to offer PowerSellers their choice of carrier.”

Outlets

Unlike the rival myHermes network of 1,000 ParcelShops and CollectPlus network of 5,000 outlets, Local Letterboxes would be standalone businesses, not part of an existing convenience store or filling station outlet.

The firm says its plans could lead to the creation of 10,000 jobs if the target is reached to open 2,000 franchised stores.

The new Local Letterbox stores would be open six days per week, and from 7am up to 10 o’clock at night in order to capture consumers outside normal office hours. The stores will offer both parcel mailing and receiving services, generally B2C and C2C, including returns.

Some of the first Local Letterbox stores are likely to spring up in Southampton, close to the company’s home base in Lymington, but the network is expected to quickly expand nationwide taking in both urban and rural areas. Although there is no official partnership as yet, Local Letterbox is keen on locating its outlets next to Tesco supermarket stores to provide convenient locations for customers.

Chittock told Post&Parcel yesterday that the model would be as simple as possible – with outlets unlikely to provide the kind of additional retail extras like stationery sales, found in retail mail shops like The UPS Store or MailBoxes, etc., although packing supplies directly related to mailing will be available in-store.

Franchisees will base most their business on fees for sending and receiving parcels. Chittock said product returns would likely be a particularly good opportunity for Local Letterbox outlets.

He said franchises would have “low entry” requirements, with Local Letterbox Ltd providing all the materials and support needed to set up the outlets, along with IT infrastructure. The company will provide all invoicing activities on behalf of its outlets and deal with tax issues, paying franchisees electronically.

Although competing with the parcel shop networks of carriers Hermes (which provides myHermes ParcelShops) and Yodel (joint owner of the CollectPlus network), Local Letterbox sees itself as fitting in with all carriers’ last mile operations.

Ultimately, the network would help streamline carrier networks and help with the current pressures on delivery capacity currently seen within the UK parcel market, as ecommerce shipping volumes grow by 15% a year.

Chittock said: “The British parcel network is becoming so overloaded – Yodel has had to really cut back on their capacity, and the carriers don’t really want business-to-consumer and consumer-to-consumer parcels. We will alleviate that stress from the carriers.”

He said in the long-term carriers would be able to reconfigure their courier networks to make use of Local Letterboxes, improving the quality of their own last mile services.