Buried deep within PayPoint's recent earnings calls lies a seemingly innocuous detail - a casual mention of their parcel volume target. But for those paying close attention, this tiny tidbit could be a harbinger of a massive explosion in PayPoint's e-commerce business, one that could catapult the company into the big leagues of parcel delivery.

On the surface, PayPoint, a UK-based payments and retail services company, might not seem like a natural contender for parcel dominance. They're best known for their network of over 28,000 convenience stores, offering bill payment services, prepaid mobile top-ups, and a host of other retail solutions. However, through their Collect+ network, a strategic partnership with major carriers like Yodel, DHL, and Amazon, PayPoint has quietly carved out a niche in the booming out-of-home parcel delivery market.

In their July earnings call, PayPoint proudly announced a staggering 69.8% year-on-year increase in parcel transaction volume, reaching 56.4 million parcels. This stellar performance was attributed to strategic investments in in-store label printing technology and shrewd partnerships with carriers catering to high-growth segments like fashion resale. The CEO, Nicholas Wiles, highlighted their ambition to become the UK's number one out-of-home network, a goal that seemed achievable given their momentum.

Then came the November call. This time, a sense of understatement pervaded the discussion of parcels. While acknowledging "really significant" volume growth, Wiles shied away from specifics, opting for cautious language like "substantial growth" and "channel shift." He downplayed their previously stated target of 100 million parcels, calling it "very modest" in light of the looming opportunities.

This shift in tone, coupled with Wiles' emphasis on the Vinted-Yodel partnership and the ongoing shift from home delivery to out-of-home solutions, points to a potentially explosive scenario for PayPoint's parcel business. Let's break down why:

Firstly, the Vinted-Yodel partnership, described as a "multi-year agreement," leverages PayPoint's Collect+ network to manage the surge in parcel volume generated by Vinted, a popular fashion resale platform. Vinted, with its focus on sustainability and affordability, is experiencing explosive growth, particularly among younger demographics. This partnership alone could dramatically exceed the 100 million parcel target.

Secondly, the broader trend of consumers opting for out-of-home delivery, driven by convenience, environmental concerns, and a desire to avoid missed deliveries, plays directly into PayPoint's strengths. Their extensive network of local convenience stores offers an unparalleled level of accessibility for consumers seeking convenient pickup points.

Now, here's the hypothesis: PayPoint, by downplaying their initial target, may be signaling a far more ambitious vision for their parcel business. If we consider the potential scale of the Vinted-Yodel partnership, combined with the ongoing shift to out-of-home delivery, PayPoint could be on track for a 10x growth in parcel volume over the next few years.

Parcel Volume Growth Projections

This potential trajectory, while ambitious, isn't entirely outlandish. PayPoint's unique combination of an extensive retail network, strong carrier relationships, and strategic investments in technology positions them perfectly to capitalize on the booming e-commerce landscape. While the 10x growth scenario remains a hypothesis, the subtle clues embedded within PayPoint's recent earnings calls suggest that they may be on the cusp of a transformative expansion, one that could redefine their role in the parcel delivery ecosystem.

"Fun Fact: Did you know that PayPoint processed over GBP 318 million in deposits for neobanks like Monzo in FY23? This underscores their vital role in providing banking services to communities across the UK, especially in areas where traditional bank branches are scarce. This, coupled with their recent foray into open banking, further demonstrates PayPoint's commitment to evolving with the changing financial landscape."

Keep your eyes on PayPoint. This seemingly unassuming payments company might just be the next big thing in parcel delivery.