RETAILERS PILOTING NEW DELIVERY METHODS TO WIN THE LAST MILE
WHAT’S GOING ON
In 2015, a Deloitte survey showed that 63% of people felt that “fast shipping” meant being delivered in 2 days or more.
In 2016, the same survey was run – this time 96% of customers said fast shipping meant “receiving parcels on the same day”.
Defined as “the last step before a product reaches the hands of the customer”, the last mile is a significant factor in gaining customer loyalty.
As such we are now witnessing the disruption of online retail shopping with countless retailers trialling new ways to get deliveries to customers faster.
Like a trial by Walmart in the US Coles recently ran a small-scale trial of grocery home delivery with Uber out of its “dark” store in Richmond which ran from August into September. Uber drivers worked alongside Coles’ existing network of delivery drivers to provide customers the service, with shoppers receiving emails showing their delivery is on the way via UberRUSH which is Uber’s on-demand delivery service.
Similarly, IKEA has teamed up with AirTasker, to speed up deliveries and add quick and easy installation to the offer.
In December 2016, Amazon launched ‘Prime Air’ delivery – a delivery system designed to get packages to customers using drones in 30 minutes or less.
Walmart recently applied for a U.S patent for a floating warehouse that could make deliveries via drones direct to customer homes. The blimp style machine would fly at heights between 500-1000 feet, has many launching bays and can be operated autonomously or by a remote human pilot – Amazon was granted a patent for a similar concept last year.
Walmart has only just announced a pilot where perishable groceries are being delivered straight to a customer’s fridge, one of its latest idea at making online grocery shopping more convenient.
Alibaba’s physical store play is not just about the experience, they are used to drive logistics innovations in their ‘last mile’ strategy. CEO of Alibaba Daniel Zhang recently stated that ‘buying stores and converting them into fulfillment centres will enable 1 billion packages to be delivered every day in the future’.
JD.com is also offering 100 million yuan ($15 million) to the winner of a drone delivery competition who have been tasked to design a solution that could enable widespread drone delivery in the country.
GROWTH MANTRA’S PREDICTION
- These examples highlight the urgent step that both traditional and modern retailers are taking to increase convenience for their customers.
- We believe last-mile innovations will see online shopping achieve exponential growth over the next 10-20 years.
- While few retailers have grasped the extent to which their business models and mindsets need to change to keep up with both consumer and market changes, we expect the Amazon’s and Alibaba’s of this world to blaze the trail and exceed our wildest predictions.
- Consumers increased desire for fast deliveries at a low cost will see the rise of autonomous vehicles dominate the last mile, both in the air via drones and on the ground.
- Legislation and regulation will need to change dramatically (e.g. to cater for liability damages for autonomous vehicles).