What is PUDO (Pick Up, Drop Off): A Complete Guide for Enterprise Logistics

TL;DR: PUDO (Pick-Up and Drop-Off) services consolidate deliveries to centralized collection points, reducing last-mile costs by up to 28% while improving customer convenience and reducing failed deliveries for enterprise retailers and logistics providers.

For enterprise logistics managers in retail and e-commerce, failed and missed deliveries are among the most pressing last-mile challenges impacting both costs and customer satisfaction.

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 significantly less efficient than delivering 100 parcels to three or four PUDO destinations—a reality that forward-thinking enterprises are leveraging to gain competitive advantage.

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.

At Locus, we believe PUDO points are a game-changing solution for last-mile delivery—giving our clients the strategic edge to delight customers and reduce costs.

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

PUDO Location Types Comparison

Location Type	Accessibility	Security	Operating Hours	Best Use Case
Locker Bank	24/7 access	High (automated)	Always open	Urban areas, apartment complexes
Convenience Store	High foot traffic	Medium (staff-managed)	Store hours	Suburban neighborhoods
Parcel Shop	Dedicated service	High (specialized)	Business hours	Commercial districts

• 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.

How Smart Lockers Work in PUDO Networks

Smart lockers represent the most advanced form of PUDO technology, offering 24/7 accessibility and enhanced security for enterprise logistics operations.

Smart Locker Process:

1. Package Delivery: Courier scans package and inputs it into an available locker compartment
2. Automated Notification: Customer receives SMS/email with unique pickup code and locker location
3. Secure Access: Customer enters code on touchscreen interface to unlock specific compartment
4. Package Retrieval: Compartment opens automatically, customer retrieves package
5. System Update: Locker confirms successful pickup and updates inventory management system

Security Features: CCTV monitoring, tamper-proof compartments, time-limited access codes, and real-time system monitoring ensure maximum package security.

Benefits of Pick-Up and Drop-Off (PUDO) Services

Failed Delivery attempts cost businesses and consumers alike. Consumers want a convenient option that lets them collect deliveries during flexible time periods. PUDOs help enterprise logistics managers efficiently manage delivery volumes by increasing the density of collection points, ensuring successful first-time deliveries and eliminating service failures.

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

Enterprise Impact: A leading European retailer reduced last-mile delivery costs by 35% and improved customer satisfaction scores by 28% after implementing a comprehensive PUDO network with Locus optimization.

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 incorporates customer preferred time-slots into the PUDOs setup using advanced 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.

See how Locus optimizes PUDO for enterprise retailers— Schedule A Demo

Environmental Impact of PUDO Services

PUDO services significantly contribute to sustainable logistics by reducing carbon emissions and environmental impact through optimized delivery routes and consolidated shipments.

Environmental Benefits:

• Reduced Carbon Footprint: Consolidating deliveries to PUDO points can reduce delivery vehicle miles by up to 40%, significantly lowering CO2 emissions
• Fewer Delivery Vehicles: One delivery to a PUDO location can serve 50-100 customers, reducing traffic congestion and air pollution
• Optimized Routes: AI-powered route optimization through platforms like Locus further reduces fuel consumption and emissions
• Packaging Efficiency: Bulk deliveries to PUDO points reduce packaging waste and improve resource utilization

Industry Impact: Studies show that widespread PUDO adoption could reduce urban delivery emissions by 25-30%, supporting corporate sustainability goals and regulatory compliance for enterprise logistics operations.

Cost Structure and Pricing for PUDO Services

Understanding PUDO pricing models is crucial for enterprise logistics managers evaluating implementation costs and ROI potential.

Typical Pricing Models:

Pricing Model	Cost Range	Best For
Per Package Fee	$0.50 – $2.00 per package	Variable volume businesses
Monthly Subscription	$500 – $5,000 per location	High-volume enterprises
Revenue Share	3-8% of delivery value	Partnership models

Cost Factors:

• Location Type: Smart lockers cost more than convenience store partnerships
• Volume: Higher package volumes typically reduce per-unit costs
• Technology Integration: API integration and tracking systems add setup costs
• Geographic Coverage: Dense urban networks are more cost-effective than sparse rural coverage

ROI Calculation: Most enterprises see 15-25% cost savings within 6-12 months of PUDO implementation, with additional benefits from improved customer satisfaction and reduced failed delivery costs.

Common Challenges with PUDO Services and Solutions

Challenge	Solution
Limited Network Coverage	Sparse coverage makes access difficult in rural or low-density areas. Locus helps enterprises expand networks through strategic partnerships with supermarkets, gas stations, and local stores to improve accessibility.
Customer Adoption	Many shoppers still prefer doorstep delivery. Our platform enables offering lower delivery fees, faster pickup notifications, and clear communication about convenience to encourage adoption.
Capacity Constraints	Lockers and parcel shops often fill up during peak shopping seasons. Locus provides dynamic allocation, live monitoring, and predictive analytics to prevent overload.
Operational Complexity	Coordinating between carriers, retailers, and third-party operators can cause errors. Our integrated platform streamlines operations with real-time tracking and automated workflows.
Return Handling Bottlenecks	High return volumes can overwhelm PUDO sites. Locus automates return scanning and optimizes drop-off slots during peak periods.
Security and Reliability	Lockers may face theft, technical failures, or damage. Our monitoring systems use CCTV integration, secure access codes, and preventive maintenance alerts.
Cost of Infrastructure	Setting up lockers and digital systems is expensive. Locus enables starting with shared locker networks or partnerships to reduce upfront costs before scaling.

Orchestrating Smarter Deliveries with Locus: The AI Advantage for Enterprise Retailers

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’ AI-powered TrackIQ sets us apart from traditional providers—delivering real-time tracking, proactive notifications, and seamless integration with PUDO networks. Our enterprise clients see 22% reduction in failed deliveries.

Locus’ IntelliSort leverages machine learning to optimize parcel sorting based on delivery zones of PUDO locations, while intelligently allocating riders based on their skill sets, delivery volume, and vehicle capacity—capabilities that generic solutions simply cannot match.

Why Enterprise Leaders Choose Locus for PUDO Optimization:

• AI-Powered Route Optimization: Reduce delivery costs by up to 28% through intelligent routing
• Real-Time Visibility: Complete supply chain transparency across all PUDO locations
• Scalable Infrastructure: Seamlessly manage thousands of PUDO points across multiple markets
• Enterprise Integration: Native APIs and integrations with leading e-commerce and ERP platforms

Courier Dispatch Challenges: Common Problems and How to Solve Them

Ready to Transform Your Last-Mile Delivery?

Join leading enterprises who have revolutionized their logistics operations with Locus’ AI-powered PUDO optimization platform. See how we can help you reduce costs, improve customer satisfaction, and scale your delivery network.

See how Locus optimizes PUDO for enterprise retailers— Schedule A Demo

Next Steps:

• Assess your current last-mile delivery challenges and costs
• Identify optimal PUDO locations in your key markets
• Calculate potential ROI from PUDO implementation
• Schedule a personalized demo to see Locus in action