In recent weeks, just keeping up with the flurry of announcements from Doddle has left me feeling more than a little like one of its team of runners. New stores, community-based services, and that team of runners I’ve already mentioned – pounding the mean streets of central London – are just some of the developments from this (relatively) new kid on the delivery block.
So when I caught up with Tim Robinson, the founder and CEO of Doddle, I was keen to hear where the idea came from, and intrigued to learn it’s nowhere near as new as one might think.
With a career history dominated by the rail industry, Robinson might be an unlikely disruptor of the delivery sector. But with change comes opportunity, and as the use of physical space within railway stations was changing, an opportunity presented itself.
“The broader idea of using the UK railway estate as pick-up/drop-off locations is something I’ve been playing around with for quite some time, as far back as 2007 in fact,” Robinson tells me.
Changes like the growth of online ticketing, closure of many ticket, introduction of automatic ticket barriers and online ticketing systems, were some of the changes Robinson observed.
“I had this view that there must be other services that would fit well within an infrastructure which is universally known to all, that sits in the middle of town centres and often benefits from parking and great connectivity.
Tim Robinson, Doddle
“So back then, in the mid part of the 2000s, I was looking at what can you do to generate new value out of that. I was running my own business at that time, an independent consulting business, and one of the obvious opportunities was to refresh and modernise the retail experience that you had at most railway stations. While the big London stations have had huge investment and are now fantastic destinations in their own right, the reality is that in your average regional station, even big commuter ones, the retail offer has been pretty bland over the years; you can buy a café latte from four different brands and a croissant, but other than that there’s not a lot going on.”
Locker lowdown
What happened next was a long series of exploratory meetings and conversations with retailers over the potential use of railway stations as shopping destinations. At that time, however, the high street was in a state of flux and retailers were absorbed in their own, more immediate, problems of trying to make sense of their store networks, the changing nature of shoppers’ behaviour, and so on. Plus ça change, as the French might say.
“When I started considering what was going on with online shopping at the time, one thing jumped out at me – the people using the railway stations are more likely to be among the most cash-rich and time-starved members of British society. They’ve got a long commute, often commuting into big cities like London, Manchester, Birmingham, Glasgow, Leeds. They’re often those that suffer from the sorry you were out card more than most for that very reason.
“What I’d also known from having spent a number of years in logistics, because my background was more concerned with rail freight than passenger trains, was that the costs of the final mile were starting to become a real challenge for retailers and carriers but, more importantly, the consumer experience was pretty poor.”
Back in 2007, of course, there were significantly fewer delivery and collection options; no CollectPlus, no Shutl, no click-and-collect.
But by 2009, or thereabouts, Robinson was working with Network Rail on trials of smart-lockers on railway station concourses. Despite getting DHL involved, and working closely with train operators and the rail trade unions, by 2010 the project was mothballed due to a lack of appetite among the retailers and the carriers. And while that might not have been the first time someone experimented with publicly available parcel lockers, nor the last, to this day lockers feel like a very niche offering in the UK.
Had it not been for a quirk of fate it’s possible Robinson’s vision of transforming railway stations into retail service points would have been quietly forgotten. But two years after the locker idea failed to take off, he found himself back in the railway business, which turned out to be the best thing that could have happened for his retail ideas.
Changing trains
“Network Rail was in the process of restructuring and reorganising, and was looking for somebody to come in and be the managing director of the freight and logistics business. They offered me the job and it felt like a good opportunity to dust off that project file.”
It was now five years since Robinson had first looked at the changing use of railway stations and by that time a lot had changed. “In 2007 UK consumers were spending about £7bn a year online,” he says. “By the time we got to 2012 it was £67bn, so there’d been a huge growth in that period of time, nothing like we’d seen in any other sectors before.
“Networks like CollectPlus had started to build and would eventually become very popular with consumers. Networks like that have their challenges, but actually CollectPlus have done a good job of building a network that’s relevant to most, and covers most postcodes.”
Doddle Runners
While the likes of CollectPlus and myHermes will always outgun Doddle when it comes to the number of outlets within their networks, Robinson has focused on building depth and capacity into his. That hasn’t stopped some in the local-shops-as-collection-points end of the pool seeing Doddle as a threat; some have been keen to drop scathing remarks into conversations I’ve had with them over the seeming lack of people in some of Doddle’s stores – a curious metric to use, especially if done so outside of the rush hour, peak-footfall part of the day. Robinson, by comparison, never once casts anything other than a positive light on everyone else in the industry that is mentioned in the duration of our interview.
The average Doddle store can hold about 2,000 parcels at any one time, which – if multiplied across 40 stores over a year – comes to around 25m parcels, he tells me. It’s unlikely that a typical CollectPlus or myHermes shop would even want to deal with parcel volumes like that.
Going dark
The location was right, in so far as huge numbers of people pass though major railway stations each day. The initial idea, lockers, had fallen short and in its place an alternative idea had emerged – people wanted a shop-like environment, with all that entailed. Something that felt familiar, that they felt they could trust, something that was on their journey home, where there was someone they could talk to if they had a problem, who knew how to solve their problem, be it with a retailer or with a parcel carrier.
The first Doddle store came to fruition in Milton Keynes in 2013, operating as a dark store, running trials with Amazon and ASOS.
“On either side of our store at Milton Keynes we had Network Rail’s head office, which has about 3,500 people in it, and Santander’s UK head office just up the road, with about another 5,500. We started offering our services to both of those employee groups, free, for about nine to 12 months to refine the experience, to understand what type of technology we would need to make the interface beautiful and effective as far as the consumer is concerned, but ultimately to convince ourselves that this model could stomach the cost of a real shop with real people.”
By May 2014, Robinson had raised £24m in funding – from Network Rail and Lloyd Dorfman, the entrepreneur and philanthropist who founded the high street foreign exchange business Travelex. That was the springboard that enabled Doddle to take shape and launch in September 2014. It now has around 40 stores, including some of London’s busiest commuter locations.. The Doddle store at London Waterloo handles around 300-400 parcels a day, and its store at Kings Cross is in the path of around 47m people a year.
Even darker
In its first year, Doddle reckons to have done somewhere in the region of 150,000 transactions, but could see that total rise to something close to one million if there is a rise in 2015 peak traffic along the same lines as last year. It also has around 70,000 people signed up to its subscription service, which charges customers £5 per month and lets them make an unlimited number of collections, free returns and gives discounted prices on sending. Regular users pay £1.95 per collection and £2.99 to send.
Doddle King’s Cross
No conversation with anyone in the retail supply chain would be complete without asking for their thoughts on Black Friday, which is now so close as to make such conversations all the more topical. So how does Robinson view mother-of-all-peaks, and does he think plans to cap volumes and maybe introduce dynamic pricing will keep retailers and carriers alike out of trouble.
He’s not especially optimistic, it must be said.
“It must be really scary being a parcel carrier these days. In businesses like that you spend 10 months of the year paying down your fixed costs, covering your costs and making sure the business is solvent, and you make all the money in the last two months of the year; that’s how it’s been, historically.
Dick Stead (Yodel’s exec chairman) has been talking about capping volume on Black Friday and all that stuff. Now, he’s a great guy and I have a lot of time for him, but it’s impossible, you just can’t do it.
I mean, how do you cap it on the night? It just comes, and comes. So it’s a real challenge.
We’re talking to a couple of our retail partners now about the potential for them to incentivise consumers to shift to Doddle stores over the peak period and maybe price proactively in order to make it happen so that it takes that burden that long tail of the supply chain.
Using price as a mechanism to shift behaviour is supply and demand come to life, so does Robinson see a role in delivery for the kind of surge pricing model Uber uses on its taxi service?
“The theory of it is absolutely bang on. We’ve had this in railways over the years, I’m sure you can imagine, about how you price the peaks; should you tier ticketing rates so that somebody that wants to travel just outside of the peak gets a much cheaper season ticket?
But the difficulty is in how you execute it.
This is the same who’ll blink first scenario we’ve written about previously on eDelivery; if the only thing that will save you from a calamitous Black Friday is withdrawing next-day delivery, or increasing your delivery charge – two moves that would draw unfavourable comparisons with your competition – you would have to have nerves of steel to implement such a change. Not only do you risk appearing less attractive to shoppers, but you guarantee having to swallow costs associated with making changes to your checkout system, which could be an expensive undertaking.
“I’m not saying it can’t be done, but all retailers would have to do work to do that and they’re all paranoid that the others won’t do it. That’s the tricky bit; there are no cartels here. They’re all fighting for that same £25 from that same 25 year old shopper.”
For all that Robinson sounds like a man with his finger on the pulse of his own business and the sector it operates in, it’s not sunshine and roses all the way for Doddle just yet. Coupled with risk-averse retailers who show reluctance to integrate Doddle into their checkouts – although Robinson explains at length this was a barrier he saw more in the early days of Doddle, and one which is less apparent now – is the challenge of customer inertia.
“I have a great many friends who are very supportive of me and the fact I’ve launched this business, and when I say to them, “so have you tried the service, have you tried one of our shops?” reply “oh no, I still just get stuff delivered to home.”
“And even though they’re never in, their attitude is “it gets here in the end.”
That said, with 50% month-on-month growth, that inertia may be becoming less of a problem. And with scenario planning which has seen Doddle prepare for a peak surge of anything up to 600%, the next 12 months could be an interesting time for Doddle.
