What Moves the Customers? Adoption of Self-Service Technology in the Last Mile

Problem definition: Self-service parcel locker technology has emerged recently as a solution to address the last mile delivery challenges in several countries. However, voluntary usage (i.e., adoption) of parcel lockers remains limited in numerous areas, with customers generally favoring the conventional home delivery option. This presents a significant challenge for the industry, particularly for courier-agnostic parcel locker operators lacking a guaranteed base for parcel deliveries. To investigate how customers can be encouraged to adopt self-service parcel lockers, this paper empirically examines two effects related to this issue: the exposure effect (changes in locker usage following an initial trial) and the popularity effect (how usage is affected by the popularity of parcel lockers installed in the vicinity).Methodology/Results: Current literature primarily relies on surveys and focus group studies to uncover essential features influencing adoption. In contrast, we utilize a unique dataset obtained from a pilot program (Locker Alliance Network, LAN) in Singapore to examine these effects on adoption. We enlisted and surveyed 2,210 participants just before LAN's launch in Singapore, tracking their actual locker usage over nine months, in comparison to home delivery data provided by a leading logistics company, to analyze adoption behavior. We employ a Heckman selection model and a randomized intervention to quantify the exposure effect, and then propose an instrumental variable to identify the popularity effect. Managerial implications: We have found that the exposure effect considerably enhances LAN adoption rates for new consumers, emphasizing the necessity for ongoing efforts by locker operators to encourage parcel locker usage. Further, our results also indicate that the popularity of lockers situated nearby can elevate LAN adoption rates among prior users, highlighting the importance of selecting an optimal location for locker diffusion among residents. By conducting simulations, we solidify these implications and reveal that even a single promotional event for new users can notably boost parcel locker usage, leading to the long-term, sustainable expansion of the locker system