March 31, 2020
Does PUDO work during a pandemic?
The core competency of delivery and logistics, getting things to people, is perhaps never more crucial than in crises like this. People self-isolating or in quarantine still need and want consumer goods, and now ecommerce is the safest and most accessible route to obtaining them. Where brick and mortar retail will see a collapse in demand, ecommerce is seeing a significant upswing in specific areas like groceries and everyday home goods.
Right now, that is causing widespread out-of-stocks on everything from toilet paper to webcams (as white-collar workers like myself shift to working from home and realise they’ll need one for video conferencing). The reason this happens so quickly is that retailers try desperately to avoid overstocking. Stacking up stuff in warehouses without being able to shift it is a massive drag on the bottom line – so they focus on having just enough product arriving to distribution centres and stores Just-in-Time.
‘Just enough’ and ‘just in time’ is fine in normal times, and improves profitability for these businesses. When demand suddenly skyrockets in a matter of days, ‘just enough’ is no longer enough, and ‘just in time’ is running late.
Two factors: stock and delivery capacity
All of this is to say that there are two key factors right now in making goods available to consumers – stock (do you have stuff?) and delivery capacity (can you bring it to me?). Stock forecasting is well outside of the scope of our expertise here, and there are limiting factors there: only so much toilet roll can get made in a day. What we are far more familiar with is delivery capacity, and we know there are immediate ways to increase it.
Amazon is built on the back of convenience. Bezos’ three guiding principles are as follows: more stuff to choose from, cheaper prices, and faster delivery. It’s not surprising then that they have experienced a huge pressure on their Prime promises in the last few weeks – they’re the first port of call for many. They recently announced a plan to hire 100,000 fulfilment workers to further expand their delivery capacity. Amazon employs around 800,000 people right now. They’re scaling up their workforce by 12.5% as soon as possible to make the stuff get out quicker and keep their promises.
That’s one way of dealing with the issue, but there aren’t many retailers with the option of calling up an extra 100,000 workers. A more direct and cost-efficient way to improve delivery capacity is to encourage the use of third-party PUDO locations.
The role of PUDO and Click & Collect
Right now, home delivery is being stretched past its limits. It’s a point we’ve made before, but it bears repeating. Delivering 100 parcels to 100 homes is so much less efficient than delivering 100 parcels to one or two shops. If our objective here is to deal with demand as effectively as possible, then we need to drop the emphasis on home delivery.
Doing this also frees up home delivery for those who truly need it, those vulnerable to Covid-19 and those who are already quarantined with the disease. To the extent that people will still be visiting grocers and corner shops, PUDO collections allow ecommerce deliveries to be built into existing journeys and schedules.
It’s an option that China has taken and run with. Provider HiveBox has 180,000 locker installations, with 20 million individual openings. In central Shanghai there’s a locker per 1200 people. That density and capacity has enabled delivery to continue to the country’s massive populace without as much disruption.
In the UK, we also have pretty good PUDO coverage. 94% of the country lives within 3 miles of 5 different PUDO points, and 3/4s live within 1 mile of 5 options. The capacity is huge – and yet it’s massively underutilised. It’s hardly advertised by retailers and consumers are often unaware of the option.
Now is a crucial time where PUDO can bring a clear benefit to under-pressure retailers by delivering more parcels, more quickly, and allow consumers to access online shopping without waiting long periods for deliveries.
Out of home delivery when the advice is “stay at home”?
Of course, government advice in the UK and elsewhere is to stay at home. Right now, we shouldn’t be leaving the house unless it’s essential. One of the things considered essential is food shopping, and food stores are some of the most-used PUDO locations.
To be very clear, we are not encouraging shoppers (or suggesting retailers should encourage shoppers) to head out and collect parcels like they usually would – some common sense is needed. Remember though, consumers are already used to folding click & collect and returns into their daily routines. That’s why PUDO locations exist in supermarkets and small-format convenience stores so widely already.
The message from retailers needs to be about using PUDO to collect and return items as part of the weekly shop, especially highlighting the no-contact benefits of lockers to reduce viral spread.
These are unprecedented times. We need to show customers that we’ll still be there for them, and help them to make the right decisions about their delivery.