Pickup and drop off (PUDO) is on the rise. And it will keep on growing, as more consumers and companies use it to bypass traditional delivery channels to send and receive packages.
And it was growing long before COVID.
In this guide, we’ll uncover why PUDO is becoming more popular. Why deliveries out of home are becoming so popular, and how we can help you build and improve your own PUDO offering.
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Why customers are switching to PUDO
Out of home delivery and pickup has been steadily increasing for several reasons. It is both a convenient and simple concept from a consumer perspective.
People can collect or send packages from a convenient location without the hassle of waiting for the delivery to arrive at the door or risking a missed delivery.
It is also about control. People get notifications of where the parcel is, when they can collect it, and a choice over what delivery option is best for them. PUDO can even come with a lower delivery charge.
Win:Win – PUDO benefit breakdown
Customer
Higher customer satisfaction: More delivery options means busy customers have the option of collecting their parcels on-the-go from a convenient location. This leads to higher levels of customer satisfaction and lower failed deliveries.
Customer and Carrier
Secure delivery: Parcel theft is rising with the growth in home delivery. In the UK alone, thieves stole over 5 million parcels in 2021. PUDO eliminates this. A round-the-clock service can even be provided if 24×7 parcel lockers are used.
Reduce C02s: PUDO reduces overall CO2 emissions with fewer drop-offs. In many situations, customers are traveling near the PUDO point or locker. For example, they could be picking up the parcel on their way home from work.
Another last mile channel: PUDO provides an additional solution for click-and-collect and online returns, as well as an estimated 35% of e-commerce parcels that cannot be delivered at the first attempt.
Carrier-only
Cost-effective alternative: A single drop off point for multiple parcels requires fewer drivers. PUDO is also a cost-effective way to balance volumes during peak times, while offering customers more choice and convenience.
How popular is PUDO?
Europe is leading the way on PUDO takeup. The region has seen a 40% growth in PUDO points since mid-2019, according to Last Mile Experts.
The increase is especially notable in Poland. Pickup drop-off points and lockers increased by over 32% (30,000) between 2019 and 2020.
Many analysts believe the overall growth is being driven by younger consumers. In the UK, Verdict found PUDO had penetration levels as high as 68% with consumers aged 16-24, when compared to the overall market.
Number of pickup drop off points in key PUDO markets
Last Mile Experts found Germany has the highest number of PUDO points.
However, Finland had the highest density of PUDOs in Europe with around an average of 20 points per 10,000 inhabitants.
Slovakia and Czech Republic were next – both closely matched – with around 14 points per 10,000 people.
Germany comes top out of the bigger markets, but only has 7 locations per 10,000 people. Indicating that network size is still a problem in the bigger markets.
And in the US
According to data released by the U.S. Postal Service, the number of parcels shipped through the mail increased by about 4% between 2019 and 2020.
US PUDO points tend to be provided by large FedEx, Amazon, UPS, DHL, and USPS. Together, they offer an estimated 70,000+ access points — ranging from lockers, to centers, to third-party retail stores.
The US is lagging behind Europe in terms of PUDOs per head of population.
But there are signs PUDO in the US will continue to grow, principally driven by the growth in e-commerce.
The rise of PUDO and what is behind it
PUDO has been surfing an e-commerce wave generated during the lockdown in 2020.
The high numbers of people who are working from home should have held back PUDO. But the rise in e-commerce was so high that it still rose significantly.
“Disruption of consumer behavior has driven significant growth in delivery networks across the Consumer Markets industry. Retailers and e-commerce businesses are rapidly evolving how they need to address ‘last mile’ delivery challenges.” – Peter Bambridge, Director, Consumer Markets Industry Strateg y Group, Oracle.
Long term, PUDO has been rising alongside a long-term increase in online shopping. For example, in 2015, Verdict forecast PUDO would grow by 193% between 2014 and 2019 in the UK.
If e-commerce continues to rise, PUDO could potentially increase at a higher rate as people return to the office.
PUDO challenges for carriers
More e-commerce sales mean carriers are coming under increasing pressure in the last mile.
All of the following challenges could have an impact on the growth of PUDO.
Network and network density
A PUDO network needs to comprise locations where all customers can pick up or drop off their packages without traveling too far.
Typically, locations include post offices, retail stores, restaurants, gas stations, hotels, and other businesses.
Customers need to have a PUDO point within a reasonable distance for the concept to work.
The Last Mile Experts cited a rule of 1 point per 10,000 people. It stated: “This is not an optimal network but represents the minimum density that has any chance of success.”
It also said parcel volumes in Europe would reach 20 billion pieces in 2025. However, there is a vast disparity in the network density across the region.
Capacity challenges
Parcel delivery volumes are increasing with the rise in e-commerce. So delivery services need to meet customer expectations.
With the customer making the journey to the PUDO point, speed, better customer service and overall reliability are more important than ever.
Driver shortages
With the number of parcels being delivered increasing year on year, the lack of drivers is becoming more and more of an issue for delivery companies.
Delivery increases are likely to be affected by driver shortages. So the process of offloading to PUDO points and lockers is, and will continue to be, a crucial way to solve capacity issues.
Last mile delivery costs
The e-commerce boom is great for retailers. But last mile delivery costs of around 50% are impacting profitability.
Delivery businesses need the ability to scale up at speed, operate with efficiency, while still controlling costs.
We believe technology will play a major role in alleviating these issues.
Here is how it can happen.
PUDO networks and how Scandit can help
Smartphones powered by Scandit’s Smart Data Capture can create major efficiencies in this process for both customers and PUDO employees.
Our technology gets the best out of a smartphone. As a result, staff can fulfill a variety of roles with one device without switching between them for different tasks.
The result?
Faster and efficient processes – enabling carriers to make the following use cases easier for both customers and staff.
Customer pick up
Workers can use smart devices to help with collections. They can use a ‘bring your own device’ (BYOD) or company-provided smartphones to quickly scan a customer’s pick up slips or QR codes.
They can also capture signatures or scan IDs to verify the recipient. It’s a simple, seamless and sustainable service.
Search and find
Lots of parcels on the shelves? Search and Find picks out the right one so staff don’t need to spend valuable time looking at package labels.
They simply scan the shelf with the smart device camera. The customer’s package is then highlighted on the screen using Scandit’s augmented reality feature.
Drop offs and returns
Workers can use the same smart device to handle drop off processes. All they have to do is scan return parcels dropped off by customers or drivers at the PUDO point.
Scandit’s high performance scanning means speed and accuracy is a given – regardless of tough scanning conditions. A typical example of this is a poorly printed label
Parcel inventory check
Taking inventory can be a time-consuming task that can be easily streamlined for employees using Scandit-enabled smartphones.
Simply hover the device over multiple parcels in the storage area. On-screen augmented reality overlays visually highlight what parcels are overdue for return.
Summary - PUDO is only going to grow
PUDO is only likely to grow as people return to the office.
Theft prevention, lower costs and more choice, are just a few of the reasons it will play an increasingly important role in the last mile.
But there are still challenges to overcome.
The most obvious one is the need for a higher density per population of PUDO points.
The more out-of-home points there are, the more accessible it will be for customers. But more packages and PUDO points mean processes need to change.
Post office employees, gas station workers, retail shop associates or employees at any other PUDO point will require streamlined and efficient processes.
Technology is the simplest solution.
A smart device, powered by Scandit Smart Data Capture platform, in the hands of each employee, will allow them to perform a range of tasks.
The result? A better PUDO operation, faster staff, timely deliveries, and satisfied customers.
Want to find out more about how Scandit’s Smart Data Capture can help your PUDO operation? Then get in touch with us to find out more.