How to Maximise Profitability: Economic Benefits of Pickup Solutions for Retailers

Looking to boost your bottom line and streamline your delivery process? Pickup points are proving to be a game-changer for retailers. By offering customers the option to collect their online orders at convenient locations, businesses can significantly reduce costs, minimize delivery headaches, and improve overall efficiency.

Significant Savings on Transportation Costs

It comes as no surprise that transportation is one of the biggest expenses for retailers, especially as ecommerce continues to grow. The last mile – delivering products from a local distribution centre to the customer’s doorstep – is notoriously expensive and logistically complex, accounting for 41% of total logistics supply chain costs (Capgemini, 2023).

Pickup Points, where multiple packages are delivered in a single drop, is ideally placed to optimise processes and costs in this area— meaning retailers can enjoy significant savings on shipping costs. Also according to Capgemini, if 30% of deliveries and returns are routed through pickup services, it could boost profit margins by 8% due to efficiencies in delivery and return logistics.

On top of that, economies of scale mean retailers often receive discounted rates from carriers when delivering to centralised locations, such as stores or designated pickup points, rather than individual homes. These savings are especially crucial during peak shopping seasons, where home delivery surcharges can leave a lot of untapped potential in profit margins.

From a sustainability standpoint, pickup points can also help retailers minimise the environmental impact of their operations. Fewer deliveries to individual homes mean fewer vehicles on the road, leading to an 85% reduction in carbon emissions. This not only helps retailers meet sustainability goals but also appeals to environmentally conscious consumers, bringing with it an easy opportunity to gain brand affinity.

Elimination of Delivery Surcharges

Delivery surcharges can add a significant cost burden to retailers​​, especially during peak when further fees can be imposed to manage high demand. With a multitude of surcharges like residential delivery, delivery area, and peak surcharges, Pitney Bowes suggests that surcharges can comprise 30 to 40 per cent of shipping costs.

By retailers offering pickup options, many of these surcharges are eliminated. This significantly reduces transportation costs that typically eat into retailers’ peak profits.

Enhanced Customer Satisfaction and Higher Conversion Rates

So we’ve established financial benefits for retailers are significant, but the impact of pickup points on customer satisfaction and conversion rates can also drive long-term economic benefits for retailers.

We’ve said it many times before – convenience and flexibility are right at the top of the consumer agenda. Our latest user research identified that convenience and flexibility was a top priority delivery option for 23% of shoppers and 63% listed it within the top three priorities.

Customers are more likely to complete a purchase when they know they have a reliable and secure pickup option available—with one NRF report demonstrating that 83 per cent of consumers say convenience while shopping is more important to them now compared with five years ago. Pickup options can meet these customer demands, leading to higher conversion rates and greater customer loyalty.

Cutting the Costs Associated with Missed Deliveries

Failed deliveries are a costly problem for retailers, leading to a whole heap of expenses including customer service support, replacement shipping, and return processing. The impact is significant: a failed delivery not only disappoints the customer but also increases operational costs, slices into profit margins, and can damage brand reputation -ultimately risking customer churn and the acquisition of new customers.

Pickup point solutions drastically reduce missed deliveries. When customers opt for this option, they are responsible for collecting their orders at a time that suits them, minimising the risk of missed deliveries or stolen packages. This shift in onus doesn’t just put consumers in control, but it also reduces the need for costly redeliveries and the potential loss of goods.

Additionally, pickup can alleviate the burden on customer service teams. Fewer delivery issues mean fewer calls to customer support, allowing these teams to focus on higher-priority queries or other value-added activities. This efficiency can translate into significant cost savings for retailers. Furthermore, by decreasing failed delivery rates, retailers can also reduce the costs associated with return shipping.

Conclusion

Pickup Point solutions offer plenty of economic benefits for retailers, from significant transportation savings to reduced risks of missed deliveries. By eliminating costly surcharges and enhancing customer satisfaction, retailers can significantly boost their profitability while meeting the growing demand for flexible and convenient shopping options.

HubBox powers out-of-home delivery for online retailers, globally; making delivery simple and accessible for ecommerce businesses and shoppers alike.

Through one simple integration to all major Pickup networks, online retailers can easily connect their customers to over 250,000 pickup points in 24 countries – giving them the delivery experience consumers have come to expect: flexible, convenient and secure.