E-box Post-expo 2004-présentation 250904

“Fresh Start for the Last Mile”

25/09/04 A.MERCIER & P.JOURNEAU « Hot » start for the last mile

“Fresh Start for the Last Mile” or..‘Hot’ Start for the Last Mile

Antoine MERCIER, CEO, E-BOX

Philippe JOURNEAU, International Marketing Director, E-BOX


25/09/04 A.MERCIER & P.JOURNEAU « Hot » start for the last mile 2

1 - Which Fresh start ?

2 - Yet the Issues Remain

3 - In Search for the right Technology

4 - Allowing industry revamping

5 - In relation to e-commerce take-off

6 - Through new Business Models

7 - Close to Fast deployment

8 - Aiming at win-win delivery new chains

SUMMARY



1 - WHICH FRESH START, SO FAR ?MIXED EXPERIENCES?• Royal Mail’s Nottingham positive but currently not developed• Deutsche Post’s Germany currently developed yet not much priced• E-Box own Parisian Automated Parcel shop brings original results

IN SPITE OF CONCLUDING STUDIES• Last-Mile is the feeblest (quality) and costliest link in the chain• Focusing frustrations of customers, suppliers & carriers altogether• Solutions deemed possible and absolutely necessary

MAY BE RELATED TO E-COMMERCE FRESH START• Beyond mere quality/cost improvement of current equilibrium• ‘Last Mile’ is critical for the fast growing e-commerce industry• Where it may now expect to weigh in the store/e-tail balance• Even though customer has the final say• And will allow getting out of the chick and egg dilemma



2 - YET THE ISSUES REMAIN !QUALITY• Over 25% non-quality home deliveries (Coventry : 10 to 50%)• Whether addressee not reached 1st time, wrong address or else• Not even including losses, thefts or damaged parcels• Hence industry sales missed because uncertainty is too high

COST• Minimal ‘technical’ over cost from 2 to 4 € (scheme p. 5)• Pollution and traffic jams will add other costs and barriers• B2C cost versus drop-point/store B2B costs (UPS exemple)• Night delivery & 24h/day may become required (London ‘case’)

SATISFACTION• Customer cannot choose + rely on a delivery date/hour• Wether traffic jam or else may delay• Or staying at home makes the cost/constraint unbearable



SHARED RECEPTION BOX CONCLUDED AS OPTIMAL SOLUTION

Mikko Punakivi’s 2003 comparison of the cost effectiveness of delivery processes -Helsinki University of Technology

2 - YET THE ISSUES REMAIN !

6,6 6,4

5,6 5,65

4,64,2 4,1 3,9

3,3

5,95,5

4,7 4,9 4,74 3,7

3,3

3,63 2,9 2,7 2,6 2,6

2,2 2 22,7

2,2 2,2 2,1 1,9 2 1,8 1,7 1,4 1,5

2,92,8

1,9

0,0

1,0

2,0

3,0

4,0

5,0

6,0

7,0

0 20 30 60 90 120 180 240 360 540 720

Numbers of orders per day

Hom

e de

liver

y co

st /

orde

r (EU

R)

Attended 2h time windows 8-22Delivery box concept B 8-16 (pick up on next day)Reception box concept 8-16 & delivery concept A 8-16Shared reception box concept 8-16

1.8 €

3.9 €



3 - SEARCH FOR THE RIGHT TECHNOLOGYMARKET OVERALL EXPECTANCY

• I.S. Interoperability, open systems, multiple actors intertwining• Physical delivery burden and overall cost reduction

SUPPLY CHAIN TECHNOLOGICAL CHALLENGE• Market has already concluded to new drop point node need• Yet opened and multi-actors integration versus vertical not given• And market still waiting for cheaper and wider technical solution

E-COMMERCE EXPECTATIONS• Considerable improvement in quality/cost ratio• For timely and safely delivered items• Or how could they warranty a 48h J.I.T. as an example ?

CUSTOMERS DECISION• Pay less for the total ‘e-tailer + specific delivery’ order cost• To which add date of use certainty + no cost of staying home



4 - ALLOWING INDUSTRY REVAMPING

I am more competitive and I can share with my customers

I can save and I will more and more buy through the Internet

I save time thanks to e-box

I am more efficient and I increase profitability

I save time thanks to e-box

I am more efficient and I increase profitability

Customers

Carriers

Customers

CarriersMerchantsMerchants

«The promise : »

I am more competitive and I can share with my clients

I lower my logistic costs

virtuous circle

E-BOX contributes to e-commerce take-off !

virtuous circle

E-BOX contributes to e-commerce take-off !

Inside



EXPECTED e-COMMERCE ROCKETING HAD BEEN POSTPONED• Equipment often was not yet here (cheap Internet, safe payment)• or average customer learning curve again been overestimated• But papers explain that the logistic and client service sides usually had

merely been forgotten :– Customer demand was linked to tracking, delivery certainty,– Flexibility/ease in return management may be the key factor

• Delivery to customer is B2C cost while delivery to drop-point and to stores as well are much cheaper B2B costs !

ALTHOUGH IT SEEMS ON THE VERGE OF ACTUAL TAKE-OFF• U.S. Retail e-commerce sales were $ 15.7 billion during second quarter

of 2004, up 23.1% from Q2 2003 says US Census Bureau• As compared to total retail sales of $ 919 billion, a 7.8% increase from

same period last year




U.S. Census Bureau 1999-2004 Retail e-commerce evolution


US $ billion



5 - BUT TECHNOLOGIES ARE NOW AVAILABLE

A FIRST GENERATION• It already has shown valuables results and started deployment• even with 1st generation costs and limited learning curve• yet customer’s behaviours favourable, retrieval accelerated to a day• even though database replication and other technical issues left

ALTHOUGH LARGE CITIES MAY REQUIRE INDOOR SYSTEMS• whether street outdoor space is not available / affordable• or because of ultimately limited customer satisfaction (distance)• when apartment buildings would prefer downstairs shared vaults• or each business level may require such level of convenience also• or malls or a great diversity of points requiring flexibility, range• and final density of points might be # 1 key success factor



5.1 - COMPARED AVAILABLE TECHNOLOGIES

These characteristics are appreciated only for the use as automated parcel delivery equipment, not for other uses.

BYBOX E-BOX KEBA PARCELDEPOT TOWER 24Outdoor ++ + +++ +++ +++Indoor + +++ + + -Equipment Economy ++ +++ ++ + -Maintenance + ++ + - -Flexibility ++ +++ + + +Architecture ++ +++ ++ ? ?

In ‘Architecture’ is most valued the real-time advantage although a positive value is given when local computer offer a combination of advantages and drawbacks (including ‘boot-up and recovery’)



5.2 - E-BOX SPECIFIC CHARACTERISTICS

MAIN POINTS OF DEMAND AS ANALYSED BY E-BOX• Has to be profitable with a mere 2 € per delivery• Therefore use extremely low cost, long term resisting components• And maximise ease of use, installation, change, adaptation• To undergo very agile and lean adaptation to all cities• And finally reach the optimal density, a key factor• Which may be several times density reached with heavier systems

HENCE, MEAN FEATURES OF E-BOX SOLUTION• Industrial components/manufacturing for cost/long term solidity• No local computer, disk, licenses further reduce both hardware

and software risks and added costs• Seamless physical connectivity (bus), IS Integration & scalability• Through web servicing comprehensive interoperability• While a range of sizes & box combination fits all locations



5.3 - E-BOX SPECIFIC WEB SERVICING/IS. OPENNESS

WEB SERVICES HARDWARE



5.4 - E-BOX WIDTH OF HARDWARE RANGE



6 - THROUGH A NEW BUSINESS MODEL

FIRST RESULTS OF CURRENT EXPERIMENTATION First results of E-Box study on the willingness of local Internet users

prospect base are (*) :• Although on-line buying habit is still slow (70% below 4 orders per

year)• Over 80% highlight current difficulties in parcel retrieval (with

actually roughly 11% without such problems)• Only 26.3% already have used a parcel drop point but most of

these have been satisfied of such experience (a figure o 84.2%)• With extended ‘open hours’ mentionned as number 1 advantage

(by 55.8%)• And 71% stating instant email/SMS warning as a must• Resulting in a favourable feeling by 65.7 %

(*) ISC promoetudes survey, Paris, September 2004




NEXT RESULTS OF CURRENT EXPERIMENTATION• There is therefore an inclination to go forward to use it by 58%• With a general consensus about monthly but preferably per

transaction payment at the beginning• And an interest in a discount from e-tailer at a significant level

starting 2 €• With a generally well perceived specific advantage of E-Box

concept by 69.2 %• And a ‘feed back effect’ of 29.2% who would consequently

increase e-shopping • So that the ‘below 4 e-orders per year’ falls from 70% to 21.4% (a

result showing that the previous 29.2% might indeed be much greater)

• And finally a 49.3 % stating a willingness to go to E-Box site for more (a figure to be recouped with the 58% ready to go forward)




SUMMARY OF RESULTS ABOUT THE “VIRTUOUS CIRCLE”

• Market study in neighbourhood confirms the 2 € reward trigger

• UPS (UK example) B2B versus B2C price cut is slightly above 2 €

• Minimum average cost saving close to 2 € according to Punakivi study

• It is a sharp increase on last year’s E-Box own model’s assumptions

• Not including many qualitative and money worth advantages



6.1 - E-BOX MODEL : CUSTOMERS RENT BOXES

Drop-point

Drop-Point Network Operator

e-tailer 2

e-tailer 1

Carrier 2

Carrier 1

Postal Group

ClientAddressee

2 €

2.5 €

2,5 €

2.2 €

2.5 €

2,2 €1 €



Euro balance of each actor’s costs and revenues, per delivery (Example)

Carriers and postal groups are the first and foremost beneficiaries.

Moreover, through e-tailers actions, everybody will win from an acceleration of transactions while e-commerce costs fall.


PAYS THEN GETS BALANCE- Customer 2 2.2 from e-tailer = + 0.2 �- Carrier 2.5 2 to 4 as cost sunk = + 0.5 �- e-tailer 2.2 2.5 from carriers = + 0.3 �



As an example, major e-commerce companies already have launched such new policy. For example Nespresso asks 3 € instead of 4.42 € when a delivery is made to a drop point.

Many further costs reductions for carriers are not taken into account within the 2 € to 4 € bracket. For example the round the clock, bulk delivery and drop point learning curve effects, which may add another €or more to the savings.

Since e-commerce strongly supports all options to leverage more sales - such as often partly subsidising deliveries - we can expect them give to customers the upper side of the bracket or even more.

Finally, E-Box technological ‘bet’ on most durable / cost efficient long term components and architecture is expected now to pay-off.




7 - CLOSE TO A FAST DEPLOYMENTAS A SUMMARY, ALL LIGHTS ARE NOW GREEN :• e-commerce is taking-off• It openly expresses requirement for far better service• And lower costs, better reliability, customer convenience as well• It begins to subsidise drop-points• Yet customers will prefer denser networks, closest to their door• therefore suggesting fast ambitious deployment planning• Since adequate and safe technology is available

THE ONLY RISK IS ABOUT DEMAND FINE TUNING PER LOCATION• Therefore flexibility to vaults/columns additions/retrievals is key• Or even to change of location (cf. Royal Mail Nottingham results)

OR MIGHT BE THE RISK OF DELAYING DECISIONS• Explaining that E-BOX has decided to go to deployment(s)• With joint-ventures according to countries



7 - CLOSE TO A FAST DEPLOYMENTImplementation and deployment of e-box PRCA

« my parcel where I want, where I want & when I can »

« By my home» (Apartment, Townhouses, Post office)

« Along my daily way to work»(Gas or Railway station, parking)

« At my shopping center» (Mall, market street)

« Besides my work place»(Offices, Restaurant)



8 - AIMING AT WIN-WIN DELIVERY NEW CHAIN

Manufacturer

Wholesaler Warehouse Store

Drop-Point Network Operator Drop-

point

Customer

Scheme displaying the whole range of customer accesses to goods

Last Mile RadiusLast Mile Radius

e-tailer

Postal Group



SUMMARY

• Multi-actors Shared Automated Parcel Pick-up Points are cost optima

• They also bring additional client convenience and revenues for all actors

• First have come outdoor points such as already currently being deployed

• Or even closer through indoor shared reception box systems such as M1Cs

• Such densest network can therefore be expected to be most successful

• And easily earn a slice of the holistic distribution chain, between drop points and stores

• Yet in ever moving neighbourhoods, as shown in Nottingham,

• Network equipment & deployer’s agility will be the key success factor