Mail It In
Imagine you needed a particular piece of clothing: a hat. A green one. You pull out your phone, search and find it. The price is fine… for a hat.
When you click through to checkout though, you find out shipping is pricey. It’s going to cost more than the hat! The hat's price goes from fine to rather steep, for a hat. You grumble and buy it anyway, because you still need this particular thing.
Everyday some clever merchant figures out how to send more and more different things through ecommerce.
What hasn't adapted as much though, is delivery.
25 years ago, delivery was a guy in a truck driving around to maybe 150 addresses or so and putting packages at the doorstep. Today, delivery is mostly still a guy in a truck driving around to 150 addresses or so and putting packages at a front door.
There haven't been many inroads to improve efficiency in the last mile of delivery. That last mile was built for letters, not for hats. It’s the most expensive part of delivery too. 80-90% of delivery costs grind into that last mile.
But what if you could, somehow, squeeze 800 deliveries or more into a driver's day. What if you could also cut back on things like fuel costs? What if you could just cut out the last mile?
Seven minute mile
InPost is a Polish company that runs a network of automated lockers — mail boxes for parcels — in Poland, France, the UK and Italy. For websites that sign up for the service, consumers can click a button to pick up their order at an InPost location. By batching deliveries to one location, the company reduces shipping costs. Then it shares that savings with consumers.
InPost bolts their lockers into dense urban areas common in Poland, France, the UK and Italy and handles the last bit of logistics for shippers to eke out the lowest cost. It can deliver 150 packages an hour to one of its locations versus that many in a day for the traditional style of delivery.
Customers like it because they can save money and many of them live in buildings that don't or can't offer delivery access. So, they'd have to walk somewhere to get parcels anyway.
The lockers also boost foot traffic for a given location. Landlords like this because some of that foot traffic trickles into more customers at nearby stores that happen to be tenants.
InPost works in these places because of dense populations. In its home market of Poland, 80% of the population lives within a seven minute walk of one of their lockers. InPost has achieved most success in that market and is now looking to copy/paste in France — another market with dense cities and residents happy to walk a few blocks to pick up a parcel.
Free returns
The business of delivering savings to customers is one that works in many industry zip codes. It works for InPost too. Building a lower-cost parcel delivery option has proven compelling for customers who save, merchants who can offer more shipping choices and should prove a happy one for investors too as the company's cash flow march higher from its large installed network and customers looking for an evening stroll.
Disclaimer: None of this is investment advice. It's meant to illustrate ways LCM thinks about investing. Things that LCM decides are good investments for LCM and its clients are based on many criteria, not all of which are covered here. Some or all of LCM's ideas may not be suitable for other investors. LCM does not recommend investing either long or short any position mentioned. LCM may own positions in some of the companies mentioned. Some of its ideas will lose money — investing entails risk. See full disclaimer here.