Summary: With stretched capacity, questionable efficiency and pressures on sustainability, the postal industry is seeing a shift from home delivery to PUDO points.
This article was originally published in the January 2020 issue of Parcel and Postal Technology International.
PUDO has become the fastest growing fulfilment method globally. Why is this shift away from home delivery toward PUDO occurring?
There are three significant factors that together are creating a bit of a tipping point for PUDO.
The first is capacity. E-commerce has already stretched the limits of our infrastructure. There are 1.5 million packages delivered in New York alone, every day. There’s now a level of demand that everyone from carriers to governments recognizes cannot continue to be served by individual deliveries without total gridlock ensuing.
The second is efficiency – particularly relevant in e-commerce where margins are thinner than ever and online returns are creating an ever-growing challenge for retail. Delivering 100 parcels to one location where delivery is guaranteed is incomparably more efficient and profitable than driving 100 parcels to 100 different doors, where 10-20% of deliveries fail first time.
The final one is sustainability. As consumers we’re becoming increasingly practiced in considering the environmental impacts of our choices, and that’s affecting our delivery preferences. Half of us would choose to exclusively shop with retailers offering sustainable delivery options in the future, according to 2019 YouGov research from Doddle. That’s a tectonic shift and one that will win (and lose) the battle for loyalty in the years ahead.
What is most important to consumers – speed, cost, sustainability, convenience?
To be honest, it’s an impossible question to answer without the inevitable ‘it depends’. Delivery preference isn’t static, it’s something that varies depending on a whole host of factors – some of which are ‘controllable’ by retailers and carriers (costs, service, tracked etc.), while others are ‘personal’ and completely individual to the consumer (perceived importance of the item, living arrangements, likelihood of return etc.).
On a personal level, I use different delivery services for different things at different times. Often that’s PUDO, but sometimes it’s home delivery.
The one thing that is undeniably true about PUDO is that it can improve the performance metrics of all of those ‘controllable’ factors in a material way. Faster delivery, cheaper delivery, more secure delivery and so on.
Will PUDO ever overtake home delivery as the default option?
Absolutely. By 2025 we’re forecast to globally deliver 200 billion parcels annually. Building PUDO networks is the only way we’ll be able to meet consumers’ seemingly insatiable appetite for ecommerce.
The blueprint exists – over two thirds (70%) of PostNord’s deliveries are to PUDOs in Scandinavia, served by an impressive network of 7,000 locations.
And the best carriers are starting to really invest in PUDO, across all markets. Just look at the growth of Hive Box in China to 150,000 PUDO locations, or the rapid expansion of Amazon Hub which is now in seven countries. From a Doddle perspective, we’ve just announced a partnership with Australia Post to create the largest PUDO network in Australia.
What can carriers do to prepare for a switch to a PUDO first delivery model?
Our network experience has taught us that simplicity is everything for consumers and synergy is everything for partners. Consumers want painless, effective fulfilment that blends seamlessly into their everyday lives. That’s about giving them extensive collection options and communicating effectively throughout the delivery process.
PUDO locations are also after a painless experience – one that avoids complicated workflows and the diversion of precious staff resources and that synergizes easily with its own existing systems. Carriers need to have clear and simple protocols for every step of the journey.
Great technology underpins all of those needs, so finding a technology partner you trust to power your network with smart, simple, innovative solutions is crucial.
Do you see a future at all for home delivery?
Of course. It can be an amazingly convenient option and is sometimes just the best fit. Try picking up a fridge from a PUDO point! But a lot of factors suggest we’re at a tipping point, and I envisage a future where PUDO becomes the standard delivery option for online retail, and home delivery is priced as a premium option that takes account of the very real challenges and drawbacks associated with it.
Some will be sceptical that this change can happen, but societal shifts like this aren’t as uncommon as you think. A decade ago smoking in pubs and restaurants was commonplace and people questioned whether that behavior could ever change. Today, we are much more aware of the secondary impact of smoking and everyone accepts smoke-free pubs or restaurants as the norm. But we also accept that social smoking is a fact of life and make allowances for that with smoking areas. Similarly, PUDO will become our new norm. It won’t eradicate home delivery entirely. It’ll just have us re-writing the rule book and looking at it through a new lens.
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