Local Depot

In yesterday’s article on future shopping I outlined a concept I called a local depot. I want to expand more on that concept. The basic idea is web shopping from an urban warehouse complex with fast delivery not to your home, but to a depot within walking distance of your home, where you can pick up items on your own schedule that you bought at big-box store prices within hours. A nearby store that, with a short delay, has everything, cheap.

In some ways it bears a resemblance to the failed company Webvan. Webvan did home delivery and initially presented itself as a grocery store. I think it failed in part because groceries are still not something people feel ready to buy online, and in part for being too early. Home delivery, because people like — or in many cases need — to be home for it may actually be inferior to delivery to a depot within walking distance where items can be picked up on a flexible schedule.

Webvan’s long term plan did involve, I was told, setting up giant warehouse centers with many suppliers, not just Webvan itself. In such a system the various online suppliers sit in a giant warehouse area, and a network of conveyor belts runs through all the warehouses and to the loading dock. Barcodes on the packages direct them to the right delivery truck. Each vendor simply has to put delivery code sticker on the item, and place it on the conveyor belt. It would then, in my vision, go onto a truck that within 1 to 2 hours would deliver all the packages to the right neighbourhood local depot.

I imagine several ways the local depot might work. If it can have suitable staff, the packages can just arrive and be loaded into the back of the depot. The depot would also be something else, such as a cafe, grocery store or other local destination. In this case you would get your items by handing the ID code to an employee who would fetch it from the arrived packages. This is simple but requires a human, though mostly an unskilled one. Payment could be collected but most items would be prepaid via online payment.

Alternately, there are a number of possible ideas using simple lockers. A bank of lockers would contain items. As each item was placed in a locker, a bar-code reader would scan the item and the locker, and an E-mail/SMS/IM would be sent to the customer informing them it was ready for pickup, and providing a code number usable to get it. (For those in a hurry, a pre-message would be sent saying the item had arrived at the depot but was not yet in a locker.) Software would print on the package what size locker to use based on the software’s real time knowledge of which lockers were available. When you got to the depot, you would go to a keypad on the bank of lockers, your code would open the locker with your prepaid item. Take it, and close the locker — marking it available for use in the next round of shipments.

Ideally though, I would like to eliminate the number of steps here. Right now I have one step to remove the item from the warehouse shelves and put it on the belt. Then it must be stacked in the truck. Then it must be loaded off the truck and finally placed in a locker.

One idea would be to take blocks of lockers and load them at the warehouse. Then load the blocks onto the truck, and unload the blocks at the depot. Far fewer operations. Large items would be loaded into the large lockers at the depot. Very large items would not be sold this way — for them, home delivery is still best. This approach requires that a locker block can’t be returned to the warehouse until it has been emptied. This can be handled either by charging customers who don’t pick up their item reasonably soon without informing the system in advance of that. Or perhaps better, when a locker block is mostly empty, those few unclaimed items can be quickly transferred to a different (perhaps permanent) block of lockers. Then the empty block can be shipped back for re-use.

Another idea is to have blocks of lockers mounted on trailers. Trucks would pull the trailers to the local depots and detach them. This would require a parking space suitable for the trailer, with appropriate stairs/portal to enter the trailer. In addition, there would need to be local facilities in which to put unclaimed items when it is time to recover the trailer and take it back to the warehouse. As before, customers would have to say if they plan to pick up quickly or need more time, and may be billed extra if need be. However, as long as the number of items moved is modest, it should not be too hard.

Refrigerated lockers and trucks are possible for the purchase of perishable or frozen items.

Part of my plan is, if possible to not require disposable packaging on many of the products. All products are already UPC bar-coded, so as long as they go on the conveyor belt UPC-up, possibly on top of a reusable small tray with another bar-code on them, the system can handle them unboxed. After all, if two identical DVDs come down the belt, and there are two customers ordering that DVD, it doesn’t strictly matter who gets which. However, for exact tracking, reusable tagged boxes with RFID or bar-codes can be used at the warehouse. These also make sense with customers buying multiple items all going in the same box. Fragile unboxed items may need to be re-boxed but these are rare. Not needed packaging cuts the costs. Customers walking to the depot will be advised to bring a bag or cart (many urban dwellers own a small wheeled shopping cart) or could get them there if need be.

Local depots located near transit stops could also coordinate with the new GPS-based systems which predict exactly when transit will arrive. For example, if the system knew how long it takes you to get out the door and to your transit stop, it could inform you not only when your item has arrived, but when to step away from the computer for perfectly synchronized transit to a local depot that’s not walking distance away. Indeed, such notice could even be given before the item has been fully processed into the depot, based on knowledge of how long the trip (walking or transit) will take. Likewise, a display in the depot could tell when to leave the depot to walk to the transit stop, if one has stopped there for a drink.

For those who want to-home delivery, such as the aged, it’s still possible to set this up with delivery crews who go to the depot and do local rounds. This should be similar in efficiency to existing systems like UPS, though it need not be the same company as runs the depot — you just give the locker code to that company and they do the work.

What are the advantages of all this?

  • Items are sold at web warehouse prices plus a modest delivery charge. Better than big-box stores in many cases, certainly competitive.
  • All the other advantages of web-warehouse shopping — vastly greater selection, knowledge of what’s in stock, ability to research items while buying,
  • Delivery is fast, often within hours, always by the next morning.
  • Customers do not have to be home for delivery. Notified by electronic means, they just walk to pick up packages as they would normally shop in an urban neighbourhood.
  • Handling of returns is also possible locally.
  • Can handle refrigerated items, which are not practical by other options.
  • Walking is good for health, and for the environment, and for many people takes much less time than driving/traffic/parking. Of course if Local Depots can’t be frequent enough, some will drive.
  • If Local Depots are placed at transit stops, people will use transit to go to them or visit them on the way home via transit.
  • Depending on security constraints, pickup may be possible 24/7.

What are the disadvantages?

  • Sales tax must always be charged, something web-warehouse providers manage to often avoid.
  • Pickup is not instant, as it is at a local shop with local inventory.
  • All the disadvantages of web-shopping for some items — not holding the item in hand. May not work at all for many groceries or certain schedules of pharmaceuticals, or for hot items.
  • In some variations, if you can’t get to your item on the day it comes, this may add complications or costs.
  • This will outcompete certain types of neighbourhood stores, closing them down.

They already exist in Europe, after a fashion.

I've never used them myself, since I prefer home delivery
(if there is no-one home, a neighbour in the same house can
accept a delivery and the deliverer will put a note in our
mailbox saying with whom the parcel was left), but for a
while in Germany the post office has set up "package stations"
at various locations. These are lockers and one can collect
one's parcel there with the help of a code (which, one gets by
email or SMS). One can also send parcels as well.

There is even a web page in English:

http://www.dhl.de/dhl?tab=1&skin=hi&check=yes&lang=de_EN&xmlFile=53008

but check out the German version for different graphics:

http://www.dhl.de/dhl?skin=hi&check=yes&lang=de_DE&xmlFile=53008

General delivery

Yes, the post office actually has offered the concept of "general delivery" since almost forever. I presume DHL keeps the savings of not sending out trucks. My vision is a system that's cheap enough, and fast enough, to deliver a gallon of milk if need be. It should work well in urban areas, and in fact could even be adapted to the denser suburban locations, though it's harder to get enough of the population within say, 600 meters of a depot so that they consider it a quick walk. You also want enough volume of orders that it justifies a delivery every few hours rather than just daily, which may never be possible in less dense areas.

There are already systems in

There are already systems in place to deliver goods from
multiple companies right to the home -- they're called
the UPS, DHL, FedEx, etc. Why settle for some interim step?
It costs money to maintain a retail location, which would
likely eat up any cost savings gained from your proposal.

Any location with a sufficient population density to support
your proposed local depot will support a big box store.

AIUI, Walmart (and perhaps others) already have online
operations, again with delivery straight to the home, no
intermediate step.

Are you proposing that different companies would share the
remote warehouse? Why would potentially competing entities
want to do that? I doubt they'd entrust their warehouse
operations to a third party, much less one that also services
a competitor.

It's easy to set up straw men and knock them down, but there
are good reasons why the existing retail infrastructure is
the way it is. You'd have to demonstrate very compelling
advantages why business would want to change to your model,
and you've failed to do so.

Why do it?

There is not room for a big box in every neighbourhood, not even one, let alone the "standard collection" of Costco/Home Depot/Wal Mart/Barnes and Noble/Dept. Store/etc. Plus add Amazon and the like.

Home delivery is much more labour and truck intensive on the part of delivery company, and for many requires they be home to receive it. At one home I've had, it's not a problem, the area is very safe and they just leave stuff by the door, no signature. However, if they do require a signature as they sometimes do it's a royal pain when I'm not there, and stuff is delayed another day. At another house, leaving valuables by the door is not so workable. And this is for delivery that takes at least 1 day (at high cost) but usually several more. I'm talking about delivery in 2-3 hours, not 2-3 days.

The realization is that walking to local shopping is good. Leaving out the benefit to the environment, traffic and your health, walking to a local depot 1500' away is about 6 minutes, which is faster than a typical car trip to a shopping center. I started realizing this when I had a place with a tiny but nicely stocked set of stores within about 600' -- it's really a lot better by a longshot than the typical suburban arrangement, though shopping centers have more selection and better prices which is how they manage to win.

Sharing a warehouse complex is no big deal, they companies all share delivery companies, and in this case the warehouse system is the delivery system.

Japanese Convenience Stores do it.

Japanese convenience stores do something similar:
http://www.japan-guide.com/e/e2278.html

The service is called Takuhaibin. You can order stuff online and pick it up at 7-11, etc. It's part of a larger shipping service which includes shipping luggage from one hotel to another, and so on.

Interesting

Though at $12 per parcel it's more still a delivery service than a way to shop. My goal is to make a service that's very cheap (because it doesn't have to do all those home deliveries, and makes use of some existing facility as this service uses existing convenience stores) and also can bundle up items from various vendors to be even more efficient.

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