Pickup and drop off (PUDO) is rising. And it will keep growing as more consumers and companies bypass traditional delivery channels to send, return, and receive packages.
In this guide, we’ll uncover why PUDO is becoming a vital last mile component. We’ll also help you build and improve your PUDO offering, whether you use lockers or PUDO points.
Why customers are switching to PUDO
Out-of-home delivery and pick-up has been steadily increasing for two reasons. It is both a convenient and straightforward 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 missing it while at work.
It also provides control. People get notifications of where the parcel is, and when they can collect it, with 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 mean busy customers can collect their parcels on the go from a convenient location, whether it’s a point or locker. 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. Around-the-clock service can even be provided if 24×7 lockers are used.
Reduce C02s: PUDO reduces overall CO2 emissions with fewer drop-offs. In many situations, customers are regularly traveling near the PUDO point or locker. For example, they could pick-up a parcel on their way home from work.
PUDO provides an additional solution for click-and-collect and online returns. It also alleviates the 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.
Where does PUDO fit in key markets
Europe is leading the way on PUDO takeup. The region has seen a 40% growth in PUDO points since 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.
The trend has continued. In 2022, the number of PUDO points grew by 7% year-on-year. However, the most notable expansion was with lockers, which grew by 51% over the 12 months until 2022.
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.
PUDO points and lockers: delivery hubs for the community
PUDO points are cost-effective, thanks to the economies of scale achieved by handling many parcels at a single location. Something that is particularly useful during peak delivery times. Plus, they offer a secure delivery option, with the ability to verify recipients via a face-to-face ID check.
PUDO has been growing across Europe. One of the key metrics in this growth is the number of delivery points per 10,000 inhabitants. Here, Poland comes out on top with just over 30 per 10,000 people (30,000 points). However, when it comes to PUDO points, it’s a different picture.
Top 3 European countries by number of PUDO points
- Germany – 51,000
- France – 49,280
- UK – 45,000
PUDO point challenges
However, PUDO points aren’t without their challenges. There’s often a lack of control over tracking data quality and process compliance when dealing with contracted PUDO points. And while they’re becoming more convenient as PUDO point density increases, they still can’t match the convenience of door delivery for customers.
Despite these challenges, PUDO points are becoming more popular. In Europe, according to the Last Mile Experts, they have grown by 7% in one year up to the end-2022. They’re increasingly used as a cheaper delivery option for pickup or returning e-commerce goods, reducing failed first-door delivery attempts and handling peak volumes.
PUDO lockers: the 24x7 accessible delivery solution
PUDO lockers offer round-the-clock accessibility for customers, a feature that’s a significant advantage in our always-on world. They also provide high efficiency for delivery companies, as they don’t require on-site employees and allow for bulk processing of parcels.
There has been considerable growth in PUDO lockers over the last 12 months. According to Last Mile Prophets, there were 120,390 lockers across Europe – a 51% rise on 2021. Here again, Poland comes out on top with nearly as many lockers as it has PUDO points (28,000).
Next comes the UK with around 15,000 lockers. However, it clearly prefers to do points with around 12 1/2 per 10,000 inhabitants, as opposed to 2.3 lockers for every 10,000 inhabitants.
So why have lockers risen? Part of this is down to the rising automation and the ability of the lockers to handle more capacity without taking up staff time. However, for them to be successful the scanning software needs to work flawlessly. This is both for the consumer and the employee who is managing the contents of these devices.
Locker challenges
But PUDO lockers also come with their own set of challenges. They require a high upfront investment and offer static capacity, with no means to scale up or down based on demand. The convenience for customers largely depends on the availability and proximity of the lockers.
Despite these hurdles, the trend is towards scaling locker density to make them as convenient as possible for consumers.
The driver behind PUDO’s rise
PUDO has been surfing an e-commerce wave generated during the lockdown in 2020.
The high number 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 Strategy 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.
PUDO 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.
PUDO challenges for carriers
All of the following challenges could impact the growth of PUDO.
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 a PUDO point or locker within a reasonable distance for the concept to work.
The Last Mile Prophets cited a density rule of one PUDO 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? MatrixScan 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.
With Scandit’s SparkScan high-performance scanning means speed and accuracy are a given – regardless of tough scanning conditions. A typical example of this is a poorly printed label, which can be handled either by scanning or text recognition.
Parcel inventory check
Taking inventory can be a time-consuming task that can be easily streamlined for employees using Scandit-enabled smartphones.
MatrixScan Count enables employees to 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 PUDO 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 Capture allows employees to perform a wide range of tasks.
The result is 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?