Decision models for on-premises parcel lockers service revenue management

On-premises parcel lockers (OPLs) have recently garnered attention as a convenient, safe, and secure parcel delivery solution in urban areas. Companies like Amazon Hub, GroundFloor, and My Parcel Locker have adopted basic Service Revenue Models (SRMs), providing OPLs in buildings under different contract arrangements, such as subscription models and annual partnership fees. However, high capital and ongoing costs impede the adoption of OPLs in small buildings. This study aims to develop advanced decision models for the revenue management of on-premises parcel lockers by developing extensions to the basic SRM. The extensions function by incorporating the concept of carriers paying a service fee and buildings receiving services through partnership agreements. Two distinct partnership scenarios are evaluated: (i) a building hosts the OPL while serving neighbouring buildings, and (ii) collaboration with the local government, where authorities establish shared OPLs in public space near designated buildings, promoting sustainable urban delivery. Alternative SRMs are formulated using novel optimisation techniques, and equilibrium points are identified and analytically evaluated to determine optimal service fees and contract durations. Using real-life data from Melbourne, this study compares the performance of these models under different scenarios. Using real-life data from Melbourne, this study compares the performance of the proposed models under various scenarios. While partnerships involving shared public OPLs supported by local governments remain the most cost-effective overall, incorporating modest land costs slightly reduces their advantage, though they continue to offer the most feasible and widely accepted solution.