Latvia Post & uDrop: How They Do It in the Baltics

In this edition of the First-Hand Last-Mile, we look at how Baltic CEP players, including Latvia Post and uDrop, use OOH delivery to evolve their business models and meet customers where they are — read on for a first-hand take from industry experts.

From production to location

OOH delivery has been on the rise, shifting the way parcels flow between people. Its appeal lies in the fact that OOH gives customers the freedom to retrieve their parcels on their own schedule and in locations they find most convenient. This added control enhances the customer experience, which naturally translates into higher repeat business and profitability.

On the operational side, OOH helps streamline delivery by reducing costs and delays, as well as minimizing missed deliveries. It also opens the door for last-mile carriers, postal operators, parcel locker providers, and e-commerce players to strategically select locker sites and PUDO (pickup and drop-off) spots.

For Francesco Tribuni of Bloq.it, the appeal of OOH comes from the evolving customers’ behaviour, who want to have “a wonderful delivery experience — meaning self-service, 24/7 availability, via an app, with no fuss and no delays, and cheaper. Parcel lockers can absolutely make this happen.”

“OOH is a huge change that starts at checkout and ends with a consumer picking up a parcel in just 10 seconds from a parcel locker. Both the location and user experience are crucial, as is the ability to meet consumers’ needs. AP Maersk used to say ‘from factory to sofa.’ I say, ‘from production (where the parcel locker is manufactured) to location (where the parcel locker is located).’ That’s exactly what we focus on at Bloq.it.”

So what lies in store? How will OOH play into the home delivery?

In Francesco's view, pure out-of-home parcel companies are inherently successful because their entire business model revolves around OOH deliveries. Traditional parcel companies, which have focused more on home deliveries, are now shifting their volume to OOH deliveries in response to market demand. But they'll most likely continue to provide both delivery methods. “There will never be a complete shift, as consumer preferences vary based on several factors, such as X2C, by country, or by age.”

Challenges with locations

When it comes to building an OOH network, deciding where to place lockers is the first step. And this brings the big question — should you go where the established players already are or strike out into uncharted territory?

uDrop, a standout player in the Baltics with its independent parcel locker sharing network, was entering an already saturated market.

“We had to decide, either we go into the locations which we know will be successful from previous experience, with other players present, or we take the risk and go with more unknown locations that provide a new opportunity. In our field, especially as an open network, the idea isn’t only to provide a new location, but for that location to be reasonable for our partners”, says Deniss Mihailovs from uDrop.

Evelina Brazaitienė, uDrop’s Chief Product Officer, adds that the evaluation of locations is key. And while popular areas are a safer bet, it’s crucial to tackle smaller towns as well.

“We need to fulfill the needs of our partners. But, in the future, we will focus more on small towns where it isn’t worth it for just one operator to put a machine, because the parcel volumes will not be big.”

Deniss says that even though a player is already present in a specific location, it still makes sense for them to be there, as it helps manage overflows, especially during peak periods. But as he points out, being present even in places where you’re the sixth or seventh player can be a game-changer:

“For example, even if there is a location where there are lockers in a row already, it’s reasonable for us to be there to manage overflow. As from my experience, the volumes are super high during Christmas, and they’re never quite predictable.”

Choosing the location is just the start of a sometimes red tape-ridden journey.

Edgars Isaks, Head of Customer Experience and Product Development at Latvia Post, emphasizes the prep work needed before you start to physically implement your network.

“Before installation, from a bureaucratic perspective, Latvia is in a unique position compared to other Baltic countries. We need approval from the local municipality for the construction of each locker, and that can take time, as each municipality has some restrictions. For example, you can’t put a locker in a certain city because of its historical value. There is a lot of preparatory work as everything must be taken into account.”

Edgars also points out that after installation, there are peak seasons and overflows to manage — especially in bigger cities, which is another element to factor in when deciding on the location. It’s because of the changes in demand that there is a need to have more lockers there, and where post offices come in handy.

Much like uDrop, for rural areas, where not many people live, Latvia Post still has to be present, although they wish the parcel volumes were bigger.

“We are a postal operator, and I believe that the national postal operator must be the biggest network, at least in the country. We are in big cities, small cities, and all the other areas. Even in the smaller areas, we still have to be there as a responsible service provider.”

How Latvia Post evolved with OOH

Posts have been under immense pressure to modernize and adapt their services. Edgars, who’s been deeply involved in transforming the national post operator, underscores how traditional post offices are evolving — not fading away:

“I think the post office must collaborate with the parcel locker network, because the postal offices add value to locker networks and vice versa. For example, when a parcel has to be delivered to a post office, we can send a short message to redirect the shipment to a locker. Or, when a locker is overflowing and full, you can redirect the shipment to the nearest post office.”

This is an excerpt from the 2nd edition of the First-Hand Last-Mile newsletter. To continue reading, please subscribe.