Comparing Five Distribution Channels: Brick & Mortar, Home Delivery, PUDO, Parcel Lockers, and Capsule‑Tube Systems
Brick‑and‑mortar retail continues to lose market share to e‑commerce, an ongoing and accelerating trend. This shift has profound implications for cities: instead of consolidated deliveries to stores, urban logistics now must support highly fragmented flows, often consisting of one or a few items delivered to thousands of individual homes and workplaces. Cities were never designed for this level of capillary movement. The consequences are familiar and growing: inefficient logistics, rising costs, congestion, noise, and pollution.
How Capsule‑Tube Systems Work in Practice
Capsule‑tube systems such as Omniloop are emerging technologies and therefore unfamiliar to many, unlike the four established channels.
Goods are loaded into capsules at a distribution centre, consolidation hub, or retailer. Capsules travel through an underground tube network to a local storage loop, which typically serves an area with terminals placed within ~50 meters of doorsteps.
When the user wants the shipment, they call it to any terminal connected to the loop. Delivery typically takes about 1 minute. The loop functions similarly to:
- a luggage carousel (continuous circulation), or
- a particle accelerator (items circulating until needed).
Sending items works the same way in reverse. If sender and receiver sit on different loops, the capsule is routed via a connecting tube, producing a delivery time of roughly 5 minutes.
One Tube Network Designed for Many Urban Flows
Capsule‑tube systems are not simply delivery channels, they are multipurpose urban infrastructure capable of handling a wide range of goods and materials:
- E‑commerce parcels and returns
- Groceries (ambient, chilled, and frozen)
- Warm meals
- Circular‑economy flows: reusable packaging, laundry, repair, refurbishment
- Borrowed or shared items: tools, toys, books, clothing
- Sensitive or confidential documents
- Waste—sorted into multiple fractions
Capsules remain in the system like elevator cabins. Terminals for parcels and waste are separated, and waste capsules are vacuum‑sealed to prevent leakage. Because many flows share the same underground infrastructure, the resulting cost per shipment can be very low, potentially around 1 USD per shipment at scale.
Comparison Across the Five Channels
A fundamental difference among the five delivery channels is how they solve the time‑and‑place coordination problem:
- Brick & Mortar: The customer performs all last‑mile activities, travel to the store, product picking, checkout, and transport home.
- Home Delivery: A courier brings the item directly to the customer, who must be home to receive it or accept the risk of theft.
- PUDO (Pick‑Up/Drop‑Off points): Delivery is decoupled from pickup through temporary storage at staffed locations.
- Parcel Lockers: Same time‑decoupling as PUDO but fully automated, with no staff.
- Capsule Tube Systems: Decouple both time and place. Items are stored underground and can be delivered on‑demand to any nearby user terminal.
We used the best available cost data to compare the cost of delivering the same item—for example, a pair of shoes—from the distribution centre to the doorstep.
Our analysis breaks down the distribution into five components:
- Staff: operations at store or hub
- Overhead: store rent, utilities, fixed infrastructure & operating cost
- Logistics: transport from the distribution centre to the shop or hub
- Last‑mile: courier‑based delivery or automated movement hub to the customer
- Customer: time, travel, and effort required by the customer
Although absolute costs vary across countries, product types, and retail formats, the relative positions of the five channels are stable:
- Brick & Mortar has the highest total cost, about six times higher than the best e‑commerce channel.
- Parcel Lockers and PUDO are substantially more cost‑efficient than Home Delivery due to consolidated last‑mile operations.
Capsule‑Tube Systems emerge as the lowest‑cost channel in our model, benefiting from a high degree of automation and consolidation, minimal customer involvement, and sharing infrastructure with other city flows. As with the internet, once the infrastructure is in place, the cost of another parcel is almost zero.
Why Parcel Lockers Are Not the Final Stage of Delivery Innovation
Parcel lockers already represent a more efficient, infrastructure‑based alternative to Home Delivery. They reduce missed deliveries, consolidate routes, and serve multiple user cases. However, Capsule‑Tube Systems go significantly further; they are a general-purpose infrastructure like other utilities, such as water, sewage, and internet fibre.
Capsule Tubes can support all parcel locker use cases, plus point-to-point movement between peripheral consolidation hubs, local retailers, service providers, and doorstep terminals.
Key advantages of Capsule Tubes over Parcel Lockers
- ≤ 50 meters from the door (versus lockers that may be kilometres away) → lower customer cost and less car use
- Pickup at any terminal → far greater flexibility
- Delivery in minutes not next‑day batching→ supports on‑demand consumption,
- Lower total cost → in our model, ~1/3 of parcel‑locker cost
- Minimal footprint → terminals require ~0.5 m²
- High storage capacity → ~1,000 shipments in a 2 km loop
- Fewer vans → eliminating feeder trips
- Much lower energy use and emissions → no vans, no customer car trips
- Fully automated → less vulnerability to strikes
- High security → underground routes with limited access for antagonists
- High resilience → not affected by weather, traffic, or conflict disruptions
Limitations and How the Channels Complement Each Other
Capsule tubes can only move what fits inside a capsule (approx. 30 cm × 50 cm). For that reason, Capsule Tubes and Parcel Lockers naturally complement each other:
- Small goods + household waste → Capsule Tube
- Bulky goods → Parcel Locker or Home Delivery
- PUDO and Parcel Lockers are practical transitional steps while capsule networks are being built.
- Brick & Mortar remains desirable when customers want to touch, try on, or evaluate products physically.
- Home Delivery will remain important for heavy items, installations, and specialised services.
Collaboration opportunity and more information
We will be glad to provide you with more information on this, and we are actively seeking partnerships with a wide range of organisations in order to make this a reality. Please reach out, and connect with us on LinkedIn.
And we are not alone! Together with these pioneers we are moving the world forward, towards a better and more future-proof infrastructure in cities:
Moving parcels: Pipedream Labs, Tubular Network, CargoFish