Innovation

Disrupting last mile delivery

March 2019

The changing world of logistics

Logistics and supply chain focused organisations are facing an era of unprecedented change due to digitisation and the evolution of customer expectations. New technologies are enabling greater logistics efficiency (just think of the opportunities presented by driverless cars and autonomous drones). Collaborative operating models are ever easier to enact leading to new approaches to collaborative logistics and outsourcing. Industry models are getting disrupted placing greater importance on platforms and ecosystems of interconnected networks of partners, platforms, customers and suppliers.

Without the barriers of legacy technology and organisational structure, new market entrants have fewer entry barriers and are launching agile business based on analytics, data, internet-connected devices and machine learning.

The role of Amazon

Amazon presents the biggest near-term threat to traditional couriers and shippers like UPS and FedEx due to its size and focus on technology innovation. Shipping is Amazon's second highest cost as it steadily builds out its logistics infrastructure and delivery network. As a result it is aggressively focused on reducing that cost through initiatives such as its "Shipping with Amazon" third-party solution providing overhead cost incentives for independent contractors to launch logistics companies to make deliveries on Amazon's behalf. It has also acquired PillPack in 2018 to allow it to deliver prescriptions to customers and focused on developing autonomous drone delivery (albeit there is some way to go to make this a full reality).

Disrupting the last mile

The so-called last mile or final mile is difficult to service because of its complexity. Just think about a country like the UK where the reality of delivering to customers' homes can mean a lot of travel, unpredictable road conditions, variable traffic and all for the benefit of a customer unlikely to be at home. It's no wonder that the majority of shipping cost is also attributed to the final mile.

Whilst there has been a lot of hype around autonomous vehicles and the autonomous fleet the reality is that large business customers require value-adding services for last mile delivery, such as transporting complex goods or sorting items into small store rooms. These tend to be tasks that autonomous goods vehicles are unlikely to handle in the medium term.

Crowdshipping delivery

Crowdsourcing business models can be scaled up quickly and may well play a role in providing greater flexibility in local supply chains.

Crowdshippers enable asset-light, low fixed-cost models and aim to disrupt the last mile delivery model. They are often seen as partners for parcel delivery and logistics organisations who do not want to invest directly in last mile coverage. For example Piggybee is a crowdshipping community originally focused on European locations. It allows users to search for travellers a little bit like they'd search for flights by browsing departures and arrivals in different cities with the option of "posting their trip" to request a delivery to a specific location from someone who is already planning to go there.

Roadie claims it is the USA's "largest local same-day footprint...with a larger footprint than Amazon Prime Now." It allows enterprise, SMB and personal customers to leverage its network of verified drives to make one way deliveries. It aims to do this without the strict geographic and size limitations that many couriers would impose. There are many other examples in this emerging sector including Zipments, Bringrs, Postrope and Friendshippr.

Local delivery

Local delivery networks are also developing that provide cost effective delivery services. They are usually competitors and sometimes partners to traditional logistics, particularly within urban area last mile delivery. Again there are a number of organisations gaining market share including Postmates, Instacart, Doordash and Swapbox. For example Postmates operates in 18 US cities aiming to enable "anyone to have anything delivered on-demand." Its mobile platform connects customers with businesses and nearby couriers to place orders from local shops and restaurants. Users can choose to pay delivery fees ad hoc or pay a monthly service for free delivery.

Whilst the likes of Deliveroo, UBEReats and Foodhub are focused on restaurant delivery, Postmates aims to extend this to any item a customer might want to buy from a shop. DoorDash is currently active in more than 4,000 cities in the USA and Canada, with hundreds of partners, including restaurants and supermarkets such as Walmart. It also operates DoorDash Drive, which allows businesses to use the DoorDash network for their own deliveries. It's current (as of May 2019) $12.6 billion valuation makes it one of the 10 most valuable venture-backed companies in the USA.

Crowdstorage solutions

Crowdstorage solutions tend to be based on crowdsourcing spaces and delivery locations and providing temporary storage for future delivery or collection. This is promoted based on the flexibility it allows in delivery and reduced travel in collecting deliveries with locations that are closer to customer locations. MakeSpace and Boxbee provide core services to arrange collection of their belongings to put in storage but will also allow deliveries to their locations.

The vital role of customer experience

For all these disruptive models to work effectively and to grow as viable alternative last mile delivery models they will need to focus on a seamless customer experience and leverage a high level of trust through a frictionless, repeatable customer experience. If you are looking to take your first steps to shaking up your own last mile delivery and field service delivery to customers then take a look at On My Way.

We built On My Way to allow customers to see all the information they need to know about their planned service appointment. This includes appointment address, time and delivery window, technician name and their badge ID and photograph alongside the real-time location of the service engineer shown graphically on a live map.

On My Way also lets you get direct feedback from customers who have used the service. This feedback is taken during the service transaction itself, whilst the customer is viewing and interacting with On My Way and waiting for their service engineer to arrive.

Why not take a look and speak to us for more information.

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