PickPoint founder and CEO Nadezhda Romanova:
“Whether you’re a domestic or foreign player, you cannot overlook self-pickup in Russian e-commerce”
What is your vision of the Russian self-pickup point market?
Self-pickup as an e-commerce delivery method appeared in Russia later than courier and postal delivery: it became an important channel only around 2013 — even though PickPoint pioneered the market in 2010. Initially, online retailers tried to build their own logistics, but their resources were not sufficient to reach all their customers, so third-party operators emerged to address the new market needs.
Self-pickup points have been deployed mostly in cities with an active online consumer population. (PickPoint, the market leader, has 540 cities covered.) Today, the average distance between two self-pickup points in Moscow and the surrounding area does not exceed 1.2 km. In other large Russian cities (one million inhabitants or more), the distance is around 2 km, and 3 km in other cities. Therefore, more than a half of the population can use parcel lockers to pick up their orders from online stores.
There are several types of lockers currently being used or tested in Russia. The cell size — 60×60×60 for PickPoint’s largest type of locker — poses a physical limit: not all goods can be delivered in that way. For example, we won’t deliver large equipment and furniture. Fresh food is also problematic, we don’t deliver it either.
Are lockers all of the same type?
There are variations. PickPoint’s lockers offer a complete functional range, from delivery to return, and all types of payment including cash, bank cards, and online payment means. The lockers of our partner, QIWI, have a more limited functional range and accept only cash payments. The OZON smart boxes deliver only pre-paid parcels. Recently, Yandex Market launched technologically-advanced lockers. Users can manage them via a mobile app — instead of a screen on the locker.
Do self-pickup points work in Russia in the same way as in other countries?
Unlike those in most other European countries, Russian lockers are generally installed inside buildings — typically a store or a public transport venue. This is to protect them from vandalism and extreme temperatures.
Self-pickup is not yet as widespread in Russia as it is in certain other countries. In Germany, Poland and Spain, 30%-35% of e-shoppers use lockers. The proportion reaches 20%-25% in the Baltic States and 35%-40% in the US, while just around 14% of Russian e-shoppers use them.
Should foreign players retailers consider self-pickup points as a delivery channel in cross-border e-commerce?
Whether you’re a domestic or foreign e-commerce company doesn’t really make a difference: you cannot overlook lockers in Russian e-commerce, they have become so familiar to online consumers! Online stores often come to work with us because their customers ask to be delivered through a self-pickup point. Some may give up on making their purchase if there is no such pickup location nearby.
The success of this type of delivery reflects certain changes in online consumers’ behavior. These lockers provide a single-standard level of service, full pick-up time flexibility and convenient nearby locations. Plus, Russians like to use new technologies and gadgets in their everyday life, and many people had rather use a locker than have a stranger ring at their door for a delivery.
PickPoint’s service satisfaction index has been maintained at 86% for the past four years. Note that, in just three years, our user base has more than doubled to 7.5 million people in May 2019. More than 96% (up to 99% depending on the season) are delivered in time. Here is a fundamental point: consumers want to see their order at the time they expect it, not earlier and not later. Otherwise, both the online store and we, as a logistician, expose ourselves to a negative perception.
As for unredeemed orders, lockers offer one of the lowest rate among delivery methods: 6% on average. It varies according to product types — from around 4% for household appliances to some 11% for fashion items.
At bottom, lockers function as a multifaceted instrument for interaction between online retailers and consumers — involving also, in a sense, brands and manufacturers. We regularly develop and integrate useful options and tools, conduct joint marketing campaigns with retailers, etc. All this contributes to establishing self-pickup as the closest, safest, most reliable and modern delivery channel.
How did PickupPoint start a decade ago? And how did it reach this leadership position?
I discovered these machines in 2009, while visiting the Post Expo exhibition in Hanover. They were developed by KEBA and deployed by Deutsche Post. They triggered my interest because there was no automated delivery method in Russia at that time. Self-pickup lockers had an obvious potential.
In July 2010, we launched our company under the PickPoint brand name. It took us six months to adapt the system and install the first lockers in Russia.
Launching a totally new logistics service — unknown to most Russian e-commerce companies and online consumers at that time — required to address certain issues. We redesigned the lockers so they integrate payment functions by cash or bank card. Payment on delivery, not pre-payment, was the rule at that time due to low user trust, and it has remained so today to a large extent.
We began installing our lockers in shopping malls, supermarkets and hypermarkets in order to ensure constant temperature and ensure their physical protection.
Foreign companies were among our first clients (Yves Rocher was the very first one). They had experience with lockers in other countries, setting the example for Russian online retailers. Some five years later, self-pickup points had become a standard in e-commerce delivery. Several big e-commerce companies, especially in the fashion and beauty segments, began considering us as a strategic partner since our lockers accounted for roughly half of their deliveries.
Tell us about your client portfolio.
We serve more than 5,500 online retailers, including 1,500 on a daily basis. Among them are TMall, Mango, BonPrix, ASOS, iHerb, La Redoute, OZON, Yves Rocher, Reebok, Puma, Adidas, La Roche-Posay, KIKO Milano and many others.
The fashion category accounts for 38% of the number of deliveries, while beauty products and children’s goods account for 26% and 5%, respectively.
Who owns the company? Did you receive external funding.
Let me keep this information confidential.
Do you have any international expansion plans?
We are currently expanding to Russian-speaking countries under a franchise model. The first lockers have already been deployed in Belarus; we also target Kazakhstan, Azerbaijan and some other countries, where we see a clear interest in our solutions.
Interview conducted in June 2019
Founder and CEO PickPoint
Nadezhda Romanova is an expert in the logistics sector, consumer and e-commerce markets with 18 years of experience in logistics companies. Prior to founding PickPoint in 2010, she held the position of Deputy General Director of SPSR-Express. In 2017, Mrs Romanova was distinguished as “Top Manager of the Year” by Standard Chartered Rating GmbH Germany and International Rating Association. In 2018, she received the “Businessman of the Year” award from the Economic Development Council, Euro Consulting and Business Rating agencies for her contribution to the development of the Russian economy.