How PUDO can add much-needed delivery capacity for retailers

In normal times, delivery is an important element of the eCommerce customer experience. Right now, however, delivery is fast becoming the most important factor. As demand has spiked massively following the Covid-19 outbreak and social distancing measures are being taken by governments around the world, the ability for retailers to make products accessible to consumers is affected by two major factors: stock (do you have what I want?) and delivery capacity (can you get it to me?).

Here’s how retailers can harness pickup and drop-off (PUDO) locations to significantly increase their delivery capacity.

Avoid flashy innovation that doesn’t deliver improvements

There’s a lot of noise in the fulfilment sector right now, from e-bikes to electric trucks, and drones to droids. Unfortunately, none of these are ready for market, as they are not yet cost-effective and capacity-expanding. The problem (at least in the short term) is not with the way we move parcels, it’s about where we move them to.

By delivering hundreds of parcels to hundreds of individual doors, last-mile fulfilment drivers spend far more time on the road and have a much lower successful delivery rate compared to delivering those hundreds of parcels to a small handful of PUDO locations, which are guaranteed to be open for business and able to accept deliveries.

If you want autonomous options (helpful for no-contact exchanges in our current situation), look at locker solutions. But lockers aren’t for the faint-hearted – typically costing £10,000 for a 40-door locker, with instalment, data, power and servicing charges on top. Done properly though, they really can change the dynamics of online delivery. In China, the Hive Box locker network processes 15m parcels per day – no, that’s not a typo – through their network of over 180,000 smart parcel lockers.

Be it the parcelshop PUDO format, or parcel lockers, there are plenty of existing solutions to the capacity issue.

Home delivery mostly works for shoppers, but we could be doing better.

Home delivery is often great for consumers, but it’s not always reliable. Seven in 10 shoppers have experienced a problem with deliveries in the last year.

(Source: Citizen’s Advice)

You can see just how many of these issues are related to home delivery specifically: I was at home but still didn’t get it. The parcel was left in an insecure location. I had to stay at home when I didn’t want to. The parcel went to my neighbours. I had a bad experience with the delivery person.

All of these are exclusive to home delivery.

PUDO performs better for customers

By contrast, consumers who have used PUDO points rate them highly. Survey respondents rated PUDO points based on secure storage, safe access, successful first-time delivery and timely delivery.

  • 47% of those who have used them previously now use PUDO points as their first-choice delivery option
  • Lockers scored over nine out of 10 on average
  • Parcel shops over eight out of 10 on average

(Source: Citizen’s Advice)

And it is better for retailers too

We touched earlier on the benefits of consolidation, delivering many parcels to one PUDO location rather than to each individual home: higher capacity and fewer miles driven, resulting in lower emissions, reduced congestion and higher delivery success rate.

There are direct financial benefits to the retailer too. Increased consolidation should reduce cost per delivery and, in our conversations with retailers at Doddle, we’ve seen concrete evidence that PUDO adoption is directly correlated to increased customer lifetime value. One of the leading global pureplay retailers we’ve worked with ran some extensive analysis and found that customers who use PUDO were 138% more valuable on average than those using home delivery, shopping twice as often as their average customer and with slightly larger average order values.

Retailers need to push the change

I sometimes get the feeling that UK retailers are quite insular and rarely look internationally for inspiration. That might be right, given how well developed our eCommerce market is here. But if you do look at other markets to see how they ‘do’ delivery, there are some interesting insights to be found.

Some existing retail markets categorically prove that PUDO can be the default option for delivery. In Scandinavia, 70% of PostNord’s deliveries are to PUDO locations. In Sweden, Zalando’s checkout experience asks customers which area they live in and then offers them locations for pickup accordingly – it does not ask for a delivery address. If you do want a ‘home delivery’ you pay a premium – typically €5.

I mentioned earlier that HiveBox process 15m parcels per day through lockers in China. HiveBox and the phenomenally successful parcelshop offering, Ling Shou Tong (owned by Alibaba), have driven PUDO to account for >40% of all eCommerce deliveries in China.

Compare that to the UK. Right now, 29 of the top 50 UK retailers do not offer PUDO delivery options for consumers (Citizen’s Advice). On top of that, 13 of those that do offer PUDO delivery do not clearly advertise this on the product page. Thanks to the coronavirus massively increasing eCommerce demand, it’s now more important than ever for retailers to adopt the most efficient method to get their parcels to customers. By directing more orders to pickup options, retailers allow those who actually rely upon home delivery (those in quarantine or with disabilities) to use the service properly, rather than suffer long wait times because everyone else is now using the same service.

The UK already has a well-developed PUDO infrastructure. 75% of us live within a mile of five PUDO locations. This is a huge opportunity for retailers to extend their delivery capacity, and they don’t have to make massive investments to do so – they only need to tweak their customer journey and promote PUDO at the checkout.