The untimely death of Pass My Parcel

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UK PUDO network Pass My Parcel is set to close. What are the reasons behind this? Marek Różycki and Ian Kerr share the lessons other PUDO operators and partners can learn from Pass My Parcel’s closure

Pass My Parcel, the UK newsagent-aligned pick-up and drop-off (PUDO) network, is to close its 3,500-strong network of PUDO points.

Amazon, ASOS, French Connection and Gym Shark were among Pass My Parcel’s e-commerce customers. The network also handled returns.

What was different about Pass My Parcel?
Unlike PUDO networks that partner with last-mile operators, Pass My Parcel was set up to handle distribution from the warehouse to the PUDO point.

Pass My Parcel owners Connect Group also owned magazine distributor Smiths News. With its core business in decline, it sought a way to capitalize on its existing distribution network.

Newsagents, much like post offices, are seeking to diversify. Parcel collection offers a modest payment per parcel and additional foot traffic, as well as complementing the Smiths News newspaper distribution network as parcels can be shipped via newspaper line hauls to or from the retail/PUDO points.

It sounds like a great idea but as any postal operator will tell you, the reality of parcel collection is less straightforward. Parcels must be stored securely, some parcels aren’t collected straight away, and peak parcel collection periods can affect staff costs.

Why did it close?
One hypothesis is that there is an oversupply of PUDO points in the UK. Then there’s the issue of payment: are PUDO networks charging e-commerce retailers fees that are below the cost to serve?

Most likely Pass My Parcel was unable to achieve two important factors, the first being a great customer experience. Based upon Trust Pilot reviews, they have not been successful.

The second important factor is carrier neutrality and getting big name carriers on board. Each e-commerce player requires expensive integration and while this will pay off with big players such as Amazon, it is easier to integrate with a handful of large carriers such as DPD rather than seeking to partner with a myriad of smaller e-tailers.

Of course, the challenge here is that the major UK carriers have their own PUDO networks. Royal Mail has Local Collect, Yodel has CollectPlus, Hermes has Hermes ParcelShops, and DPD has DPD Pick Up.

Another important factor is the technology investment needed to set up a PUDO network. First there are the systems to handle scanning and event management. Then there’s the in-store technology: Pass My Parcel provided hand-held scanners to each of the 3,500 newsagents. Perhaps an app-based solution running on mobile phones would have been more suitable – especially at low-volume sites. Most PUDO points handle less than 30 parcels a day, so IT systems must run smoothly and tech costs need to be tightly-controlled.

So there needs to be a healthy volume of parcels at a decent unit rate in order to make the technology investment viable.

What does this mean for the remaining PUDO networks?
The incumbent (Royal Mail/The Post Office) has the biggest retail network and offers a direct to post office delivery option, but otherwise Royal Mail seems to have been more focused on residential delivery initiatives such as Deliver To Neighbour.

CollectPlus and its network of almost 7,000 PUDO points could win big. It has been trying to become carrier agnostic (despite its ties to Yodel).

Speed and customer experience will play a big role in PUDO networks winning parcel volumes from retailers and price is also an important factor, but is it a race to the bottom?

PUDOs and parcel lockers can drive delivery efficiencies, so it’s not all doom-and-gloom in the PUDO world. It will ultimately come down to the strategies the PUDO networks follow and, equally important, the quality of execution.

Bios:

Ian Kerr is the founder and host of the Postal Hub Podcast, the weekly podcast for the postal and delivery sectors.

 

 

Marek Różycki is managing partner at Last Mile Experts, specializing in CEP and e-commerce last-mile advisory.

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About Author

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Marek Różycki is managing partner at Last Mile Experts, specializing in CEP and e-commerce last-mile advisory. Różycki was vice president of Amazon Logistics EU until 2015. With over 25 years in finance and general management roles, Różycki is a seasoned manager and entrepreneur. His career has included senior executive roles with Coopers & Lybrand Consulting, Kraft Jacobs Suchard, Allied Domecq, Grand Metropolitan and Monsanto. Following a senior finance role with DHL, Różycki set up Masterlink (now DPD) in Poland and developed it from scratch to reach market leadership in six years, before selling the company. At GeoPost/DPD, Różycki headed Central and Southeast Europe (16 countries, €300m+ (US$369m+)). He has been on numerous supervisory boards and has recently acted as industry advisor in several major due diligence exercises in Poland and internationally.

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