EcommerceBytes-NewsFlash, Number 2691 - December 08, 2011     3 of 4

Kinek Is Part of New Package-Pickup Trend in Online Shopping

By Kenneth Corbin

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It's no secret that consumers have come increasingly to expect free shipping as a built-in perk when they shop online. But for sellers, swallowing that cost can eat into their bottom line, and door-to-door shipping can create troubling uncertainties, such as the concern over whether a package delivered to a high-rise apartment building actually makes it into the hands of its intended recipient.

Those issues are magnified when dealing with cross-border transactions, according to Kinek, a Canadian-based firm offering consumers and retailers an alternative approach to shipping.

For the past two years, Kinek has been recruiting brick-and-mortar facilities, such as UPS stores, hardware stores and pharmacies, into its network to serve as receiving depots where consumers can pick up merchandise that they have ordered online. These so-called KinekPoints are designed to provide consumers with a convenient pick-up location and avoid the uncertainty and expense of door-to-door delivery.

"What we're trying to do is to address the last mile of logistics," explained Kinek CEO Kerry McLellan. "About 60 percent of the cost for courier companies is in the last mile, but there are a lot of pain points for e-tailers and consumers."

In addition to addressing concerns over lost, stolen or damaged packages, Kinek also bills itself as a helpful shipping option for customers for whom residential delivery poses unique challenges, such as military personnel stationed overseas or people who split their time between multiple addresses.

Kinek makes its money through fees charged to its KinekPoints, who are eager for the foot traffic that comes from consumers coming into their stores to pick up their purchases, according to McLellan. Some KinekPoints, often those in dense urban areas, will charge consumers a storage or convenience fee, but McLellan said that the service is typically free for shoppers.

Nor do online sellers pay anything for the service, and, in fact, they don't need to take any special action to ship to a KinekPoint. That's because shoppers who have registered with the service can simply enter the name of their KinekPoint in the second line of the shipping address field, noting the site as "c/o," along with an ID number Kinek has assigned them.

Kinek does offer a free API that sellers can use to integrate the service into their checkout process, and the company encourages them to do so, touting the cost savings they can enjoy thanks to commercial shipping rates.

"For e-tailers this allows them to maintain control over the customer experience from when it leaves the loading dock to when they (consumers) receive the package that they don't have today," McLellan said, describing his company's approach as "carrier-agnostic," while also offering a greatly simplified method for shipping and tracking packages. "Instead of having 40 parcels going to 40 households, you're having 40 parcels going to a single (location)."

But so far, while the company has enlisted a handful of retail partners, it has been primarily working to expand its base of KinekPoints.

"Our focus has been building out the network," said McLellan, explaining that the company has not made much of an effort to recruit online sellers. "Signing them up has not been our priority," he said.

"Our second step is sort of after building the network is sort of building the consumer base," McLellan added.

Kinek is not alone in believing package pick-up is a viable service for consumers. The biggest online retailer, Amazon.com, is currently testing its own delivery lockers, describing them as self-service pick-up stations located in local neighborhoods. "When you ship Amazon orders to an Amazon Locker, you can pick up your packages at a time and place that's convenient for you."

Kinek currently has a network of more than 1,300 pick-up locations, of which more than 1,200 are in the United States. The remainder are in Canada, including several locations along the border. McLellan said that 24 of the crossing points into Canada are served by a KinekPoint, offering a cost-effective path for U.S. sellers to reach the heavily populated regions just north of the border.

Kinek debuted with a soft launch in 2009, funded almost entirely by McLellan, a veteran entrepreneur with a background in the mobile industry. The company has been expanding its KinekPoints network at a rate of about 5 percent each week, he said.

The next step for the company is a broader international expansion. In the first half of 2012, Kinek plans to set up shop in Eastern Europe, an area with high rates of Internet penetration but that many U.S. sellers have avoided owing to what McLellan described as "issues around trusted logistics."

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About the author:

Kenneth Corbin is a freelance writer based in Washington, D.C. He has written on politics, technology and other subjects since 2007, most recently as the Washington correspondent for InternetNews.com, covering Congress, the White House, the FCC and other regulatory affairs. He can be found on LinkedIn here.


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