TZ Limited (ASX:TZL) has received an initial purchase order from Hills Limited for parcel lockers to be deployed at the Hills Lidcombe store in New South Wales and Hendra store in Queensland as an after-hours pick up facility.
Shares in the company should trade higher on the news.
If this pilot program is successful, Hills will roll out this after-hour pick up initiative nationally, which could result in more orders for TZ parcel lockers.
This follows the company successfully supplying, installing and commissioning parcel lockers for a major U.S. logistics company at nine locations in the Greater Chicago area, commercialising new initiatives with Singapore Post and securing Locker Bank deployments in the corporate sector in the U.S. and in Australia.
“For Hills, this initiative offers our customers the ability to transact on their own terms and collect their goods at times that are convenient for them,” Hills chief executive officer Ted Pretty said.
“Improving customer service is a major priority for us and the introduction of these parcel lockers will help us respond to customer demands for greater flexibility and convenience.
“We believe the benefits of after-hours parcel lockers will significantly improve customer service and ensure there is a real point of difference between us and our competitors.”
TZ executive chairman Mark Bouris added:
“The potential for Parcel Lockers as a new delivery channel for retailers is clearly a major area of opportunity for our business.
“Reserve-and-collect services are becoming increasingly important for both bricks and mortar and e-commerce retailers as consumers expect to be able to pick up their purchases when and where they choose.
“While our ADAM Network provides a broad open platform for parcel transactions, we are being approached by several retailers who are looking to offer their own closed system solutions.
“Hills is a perfect example of how innovative companies are looking to enhance their service offerings and improve their overall customer purchase and fulfilment experience.”
TZ and Hills are also in discussions about distribution arrangements for the company’s OurPAD individual parcel locker solution for the home.
The parties are currently exploring expanding their strategic partnership into the home environment, where Hills is a trusted and well established entity.
The OurPAD locker is about to enter into pilot production, and TZ and Hills are in discussions around how it could be potentially leveraged through Hills’ customer base, both in the home and for Hills’ electrical trades base.
Smart Parcel Lockers
TZ’s parcel lockers have been a winner with its Packaged Asset Delivery (PAD) reporting revenues in the September 2014 quarter that were more than double revenues in the equivalent period last year.
This was underpinned by a significant number of new Locker Bank deployments in the corporate sector in the US and in Australia, and the roll-out of Postal Locker Banks in Singapore and the U.S.
U.S. sales to the corporate sector continue to grow as established customers expand their deployment focus.
This includes the recent installation of lockers for the U.S. logistics company under an initial purchase order announced on 28 May 2014.
These lockers be serviced and maintained as part of this first Work Order under a structured multi-year umbrella supply and service agreement.
TZ’s Intelligent Locker Systems are fast becoming the solution of choice in the U.S. Corporate Sector with adoption by major corporations that are well known global brands in the technology, IT and financial services sector.
Sales interest in Concierge Lockers for the high density residential sector is also at an all-time high with a number of sales to two large and prominent U.S. real estate group and property management firms.
Analysis
TZ Limited continues to scale the reach and applications of its smart parcel lockers with the initial order from Hills Limited highlighting the potential for their use as a new delivery channel for retailers.
Besides the potential for further parcel locker orders if this initial pilot program, it also increases the recognition that the company’s offering has in the retail sector for the provision of reserve-and-collect services.
To top it off, the two companies are in discussions that could allow TZ to leverage Hills’ customer base to distribute its OurPAD individual parcel locker solution for the home.
Momentum continues to build as the company moves a number of new supply contracts into the negotiation stage.
This should drive strong business growth through 2015 and uplift in its fiscal year expectations. TZ had previously stated revenue guidance of $15 million for FY2015.
Proactive Investors expect further contract and tender wins for TZ. As well, we would believe that its technology and platforms would be a "prize" coveted by North American and European companies desiring a beach-head into the Asia Pacific region.
We consider the current share price of $0.13 to be light once again, despite the higher issued capital. On our forward revenue projections, based on projected growth, Proactive Investors has forecast a share price of $0.19 - $0.22 in 12 months’ time.
Proactive Investors Australia is the market leader in producing news, articles and research reports on ASX “Small and Mid-cap” stocks with distribution in Australia, UK, North America and Hong Kong / China.