UPS to install parcel lockers at 300 locations by year's end in program expansion

UPS Inc. said it plans to install self-service parcel lockers at 300 locations around the country by year's end, a significant expansion of a trial program begun in 2014 with nine locations in Chicago.

Atlanta-based UPS began the staggered rollout last month with lockers in Illinois, New York, Pennsylvania, Virginia, and Washington state. Eight states, including California, Texas, and Florida, will be added by the end of the year, UPS said. The lockers will be placed in urban and suburban locations, the company said.

Further expansion will depend on the success of the program's new phase, Kalin Robinson, director of UPS' product development team, told reporters yesterday at an event in Atlanta.

UPS said the 300 locker locations will supplement the company's "Access Point Network," which in the U.S. is comprised of more than 8,000 alternate delivery locations such as convenience stores, dry cleaners, grocers, and delicatessens where package pickups can be made during off-hours like weekends and evenings. There are 24,000 such points in UPS' worldwide system.

Many of the lockers will be located adjacent to 7-Eleven convenience stores, UPS said. Independently owned and operated retailers will also participate in the program, UPS said. UPS said it will pay 7-Eleven nominal rent for the locker space. Each location will have between 47 and 68 individual bays, depending on the configuration of each location's modular settings.

Retailers can embed locker delivery addresses in their web checkout process to give consumers a nearby pickup location when they are not at home and front-door deliveries are not an option, often because their buildings do not have security guard or concierge services. Package receivers in the U.S. who are enrolled in UPS' "My Choice" program, which allows users to direct package deliveries, can also specify that they want their shipments brought to a locker. In addition, UPS drivers that have made unsuccessful deliveries at a residence can notify receivers that they have brought their packages to a nearby locker location.

Once a package is delivered to a locker, the customer receives a digital pickup code via e-mail or text message. After the customer enters the pickup code and personal identification on a touchscreen at the lock kiosk, either an assigned door will open automatically for package collection, or the customer will be prompted to enter the compartment number once it appears on the touchscreen. Parcels will remain in lockers for seven days, after which time they will be returned to the shipper if not retrieved.

UPS said the program could help reduce delivery costs by reducing the number of driver trips to a particular residence. The 7-Eleven network should benefit from increased foot traffic as consumers picking up packages may also make purchases at the stores, UPS said.

According to a recent study commissioned by UPS, more than half of "avid" online shoppers, defined by the study's methodology as those making two or more online purchases in a typical three-month period, are interested in alternate delivery locations with extended hours. About 35 percent said they would want packages sent to locations other than their homes, compared with 26 percent two years ago.

A robust menu of alternate delivery locations could become a factor in which retailer a customer selects and which delivery company handles the goods.