What is PUDO (pick up, drop off) A Complete Overview

Pick-Up and Drop-Off Services: The biggest last-mile challenges facing the logistics industry are: failed deliveries and missed deliveries.

Retail outlets have had a consistent collapse in in-store traffic since the outbreak of the COVID-19 pandemic.  E-commerce has now become the preferred choice for any kind of purchase.

The rise in home deliveries has put  increased pressure on stock and delivery capacity. Delivering 100 parcels to 100 homes is less efficient than delivering 100 parcels to three or four destinations.

If businesses have to deal with demand effectively, they have to reduce miles travelled, while ensuring that customer experience remains intact. Pick Up and Drop Off collection points cater to this very need. PUDOs frees up home delivery slots for those who genuinely need it.

PUDOs can enable under-pressure retailers to help customers access online shopping without long waiting periods. Today, many retail outlets are working on creating PUDOs locations like BOPIS collection points.

Customers hate to wait for their parcels, and on the other hand, it is equally painful when customers aren’t available even after all the relevant notifications. These failed and missed deliveries can impact your efficiency, and increase your reverse logistics costs.

PUDO (Pick-Up and Drop-Off Service) point facility is a smart step towards solving these last-mile challenges.

What is the Pick-Up and Drop-off (PUDO) Location?

PUDO or Pick-up and Drop off point is a designated area where consumers receive or drop-off E-commerce packages at their convenience. Many countries like Indonesia, UK, Sweden, China, etc. have an advanced PUDO infrastructure.

In many other countries, the PUDO model has started to gain prominence now. 

Types of PUDO Locations

• Locker bank: Infrastructure that helps you independently send or receive parcels.
• Convenience store PUDO: Convenience stores are local retail outlets that provide consumers with parcel dispatching services on behalf of their contract partners (parcel carriers).
• Parcel shop: Business whose primary purpose is to provide consumers with parcel services.

How do Pick-Up and Drop-off services (PUDOs) Work?

Pick-up and drop-off services (PUDOs) work through a clear sequence. Customers first select a collection point at checkout, after which parcels are consolidated and delivered there. Once notifications are sent, customers can collect or return their packages at a convenient time.

Here is a step-by-step breakdown of how it works:

1. Order placement: Customers choose a nearby PUDO location, such as a locker, convenience store, or parcel shop, when placing an order.
2. Parcel consolidation: Parcels going to the same PUDO site are grouped together. This saves delivery time and reduces costs.
3. Dispatch from fulfillment center: The grouped parcels leave the warehouse and are assigned to routes that lead to the chosen PUDO sites.
4. Delivery to PUDO site: Drivers scan and place the parcels at the location. Lockers or staff at the store record them for safe storage.
5. Customer notification: Customers receive alerts by SMS, email, or app with details like a pickup code or QR code.
6. Parcel collection: Customers visit the PUDO site at a convenient time and collect their package using the provided code or ID.
7. Returns handling: Many PUDO locations also allow customers to drop off return parcels. This makes the return process faster and lowers reverse logistics costs.

By shifting the last mile from hundreds of doorsteps to a network of centralized points, PUDOs streamline routes, cut costs, and give consumers flexibility without compromising security.

Advantages of using Pick-Up and Drop-off services (PUDOs) services

Failed Delivery attempts cost businesses and consumers alike. Consumers want a convenient option that lets them collect deliveries during flexible time periods. PUDOs (Pick-Up And Drop-Off service) help you manage delivery volumes efficiently by increasing the density of collection points. It ensures successful first-time deliveries, thereby eliminating service failures and reducing excessive costs. 

Logistics companies value efficiency and consumers value convenience. Redirecting deliveries to PUDOs benefits both in different ways.

Zero wait time

48% of customer service professionals say wait times are longer, and 39% report a lack of resources to do their jobs.- Kustomer Inc, April Survey, 2020.

Consumers hate to wait for their deliveries,and every missed delivery causes consumers to lose trust. It forces the parcel carriers to incur costs for holding the parcel longer and rescheduling deliveries.

The wait times have only become longer since the start of the COVID-19 pandemic. 

With the pick up and drop off service setup, consumers need not hang around at their office or home waiting for the delivery. They can rather focus on things that demand their attention. Locus can incorporate customer preferred time-slots into the PUDOs setup using time-slot management. This drives efficiency in the last-mile experience.

Increased flexibility and convenience of delivery options

40% of respondents are seeing disruptions to their supply chains from the virus and another 26% expect to see disruptions as the situation continues. – National Retail Federation Survey, 2020, April.

The COVID-19 pandemic has created a new normal. Companies have to adapt, meet, alter or exceed varying customer expectations. 

It is necessary to update rigid supply chain strategies, enhance flexibility and meet consumer demands. If two words can define customer experience, they are— flexibility and convenience. Consumers today demand multiple fulfillment options, delivery efficiency and a safe shopping experience.

PUDOs help consumers collect packages at their convenience. Whether consumers need to send or pick up parcels, PUDOs reduce delivery failures.

Safe and secure location for products 

Most Americans reported having packages pilfered once to twice at most in the last 12 months. While about 39% said they only had one package stolen, roughly 36% said that they had at least two packages taken. While it’s unclear, hopefully this means that victims increased security measures to prevent further package theft. We do see that 11% at most said they’ve been victimized three or more times. – Finder Survey, Porch Pirate Statistics, 2020. 

Safe and secure storage of parcels determines the customer experience in the last-mile delivery. Leaving parcels outside the door when customers are unavailable can lead to damage or loss. It leads to repeated deliveries incurring additional costs or forces the customer to travel to an inconvenient location like a depot.

PUDOs ensure a safe and secure location to store parcels.

Reverse logistics made easy

At least 30% of all products ordered online are returned as compared to 8.89% in brick-and-mortar stores. 92% of consumers surveyed said that they will buy again if the product return process is easy, whereas 79% of consumers want free return shipping. Invescpro, E-commerce Product Return Statistics, 2020.

One of the biggest challenges in last-mile delivery is supporting the free shipping option. This free shipping option applies to reverse logistics also. Missed deliveries increase your reverse logistics costs. Managing reverse logistics for massive delivery volumes makes your last-mile logistics inefficient. 

PUDOs provide an extra option to return items to sellers. It reduces the reverse logistics costs in the last-mile delivery, thereby supporting free return services to consumers. It also helps in executing comprehensive and cost-effective return logistics, thereby simplifying your reverse logistics operations. 

Reverse Logistics : Forward Thinking Pays Big Dividends

Reduces last-mile delivery costs

The Bureau of Economic Analysis (BEA) reports that the last leg of overall transportation costs make up as much as 28% of logistics expenses.- Freightwaves, 2018.

Home deliveries during the pandemic have made last-mile deliveries quite costly. It requires each package to be delivered to a different location and demands a longer journey time. Also, it adds to fuel costs, driver costs, traffic congestion costs, thereby impacting  cost-efficiency. Last-mile operators are also having a tough time in sustaining their First Attempt Delivery Rates (FADR). 

Instead of delivering hundreds of parcels to individual doors, operators can instead deliver the parcels to a handful of PUDO locations. This reduces the time spent by drivers on the road. Pick-up and drop-off services with preferred time slots lead to fewer miles driven and higher capacity, thereby resulting in a higher delivery success rate.

Challenges of Pick-Up and Drop-off services (PUDOs)

Challenge	Solution
Limited Network Coverage	Sparse coverage makes access difficult in rural or low-density areas. Expanding networks through partnerships with supermarkets, gas stations, and local stores improves accessibility.
Customer Adoption	Many shoppers still prefer doorstep delivery. Offering lower delivery fees, faster pickup, and clear communication about convenience encourages adoption.
Capacity Constraints	Lockers and parcel shops often fill up during peak shopping seasons. Dynamic allocation, live monitoring, and adding temporary storage capacity prevent overload.
Operational Complexity	Coordinating between carriers, retailers, and third-party operators can cause errors. Integrating systems with real-time tracking platforms streamlines operations.
Return Handling Bottlenecks	High return volumes can overwhelm PUDO sites. Automating return scanning and dedicating drop-off slots during peak periods keeps returns efficient.
Security and Reliability	Lockers may face theft, technical failures, or damage. Using CCTV, secure access codes, and preventive maintenance improves reliability and builds trust.
Cost of Infrastructure	Setting up lockers and digital systems is expensive. Starting with shared locker networks or partnerships reduces upfront costs before scaling independently.

Orchestrating Smarter Deliveries with Locus 

Click-and-collect and returns have become commonplace. This  has resulted in creation of new PUDO locations in supermarkets and small format convenience stores.

PUDOs infrastructure demands essential digital support like real-time tracking, user preferred time slots and shipment sorting solutions. 

Locus’ TrackIQ compliments Pick-Up and Drop-off Services with real-time tracking. It helps you send real-time notifications and alerts to consumers. 

Locus’ IntelliSort helps sort parcels based on delivery zones of PUDO locations. Also, it helps  allocate riders based on their skill sets, delivery volume, and vehicle capacity.

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