DHL, Walgreens team up for shipping service deal

Jeff Berman, Senior Editor -- Logistics Management, 1/9/2008

PLANTATION, Fla.—Express delivery and logistics services company DHL and Walgreens, the largest drugstore chain in the United States, announced today they have entered into a strategic agreement that will more than double the number of Walgreens retail locations offering DHL Express shipping services to more than 6,500 locations by the end of this year, with more than 1,600 of these locations open 24 hours a day.

DHL said in a statement that this initiative will provide consumers and small shippers with access to its overnight, ground, and international delivery services at Walgreens locations. Each Walgreens location will have a “DHL Shipping Spot” kiosks that will be staffed by a Walgreens associate at their photo counters to weigh, label, and ship packages to U.S. or international locations, added DHL.

Walgreens spokesperson Tiffani Bruce told Logistics Management that DHL and Walgreens initially tested this concept at three Walgreens locations in Austin, Texas, Kansas City, Missouri, and Denver Colorado last September.

These tests received a strong response from customers, especially for small businesses and shippers in urban settings, she said. “The main benefit we heard was having close proximity and convenient and timely access to DHL services around the clock in many cases,” said Bruce.

DHL Express CEO Hans Hickler told LM in an interview today that this partnership is part of the company’s retail strategy. He cited how when DHL acquired Airborne Express in 2003 it had become a company that was heavily weighted on large, multinational customers and its mix of small and midsize businesses (SMB) compared to large customers and mix of documents compared to large packages (he estimated it was a 60 percent to 40 percent split) “was not what it needed to be relevant to what our competitors had.”

To counter this, Hickler said DHL realized it needed to penetrate the consumer and SMB market, and he added it needed a retail footprint—like a Walgreens—to do so.

“We had [small businesses] telling us ‘we want to ship with you, but we don’t know where to drop the package off,’” said Hickler. “There were OfficeMax’s and AMPC’s (Associated Mail and Parcel Centers), but they were not the equivalent of a FedEx Kinko’s or a UPS Store.”

This situation, said Hickler, told DHL it needed a location footprint in order to differentiate itself on ease of shipping and convenience. But given its competitive environment in the U.S., Hickler explained that a “bricks and mortar” acquisition was not in the cards, nor did DHL think it was the most viable option. Partnering with a large retailer like Walgreens, which has what Hickler said was strong brand presence and is well-known throughout the U.S. came off as a more manageable option.

Shipper benefits: Hickler said this initiative providers shippers with the footprint they need to take care of package delivery and mailings quickly and conveniently. And the DHL Shipping Spot kiosks located at each Walgreens store will be equipped with scales and DHL’s proprietary software that store associates will utilize to process shipments.

In order for things to go smoothly with this initiative, Hickler said that implementation and training for Walgreens’ employees that will be overseeing these kiosks is the key.

“All the IT work has been done for these [kiosks],” said Hickler. “It is all about good implementation, a good presence, and customer and shipping experience, when people first start coming in to use our services. We are well-positioned to do this right.”

Walgreens’ Bruce said the implementation of DHL services into Walgreens retail locations will be a gradual rollout, with the test market stores in Austin, Kansas City, Denver, up and running, as well as a few other markets. She said a full rollout will begin around April in the metropolitan Chicago area in Illinois and the metropolitan Miami and Fort Lauderdale areas in Florida.  And from that point, the rollout will continue aggressively throughout the rest of the year throughout the contiguous 48 states and Puerto Rico and Hawaii, too.