Logistics are evolving at a head-spinning pace. Who will come out on top?
The war to win the last mile of delivery is being waged on countless fronts. While getting a product to a local distribution center is easy enough, how a company gets a product into their customers’ hands is everything. Now, more than ever, companies like Amazon, Kroger, Walmart and Albertsons are focusing the bulk of their efforts on building high-efficiency infrastructure to accommodate the rapidly increasing prevalence of online ordering.
In recent blogs, we’ve talked about the growing use of autonomous delivery vehicles and automated warehousing and the possible implications, but there has been massive movement in other areas, as well. Just in the last couple of weeks, a few big landmark pieces of news have surfaced on a different automated front that is expected to strongly impact the last mile in the near future, drone delivery.
In the last week of March, UPS began operating the first regularly scheduled commercial drone delivery program in the US. They teamed with drone delivery company Matternet for a program that will move medical samples around hospital system WakeMed’s Raleigh, North Carolina campus.
UPS being the first to plant their flag in the ground is a fairly significant piece of news for companies that use third-party logistics for last mile delivery, as Fed-Ex and Uber have been racing them to market. We’ll see if, and how quickly those competitors are able to catch up.
Meanwhile in Australia, Wing, a drone delivery provider owned by Google parent company Alphabet, has been piloting a drone delivery program for the past 18 months. Just this past week they announced their program has been approved by the Australian Civil Aviation Safety Authority and will be officially launching service in Australia’s capital city, Canberra.
What does this mean? It means even though Amazon has been talking about Amazon Prime Air drone delivery since 2013, Google just officially beat Bezos & Co. to market. Of course, being the first to market has never really been a significant must for Amazon. They excel in the ruthless efficiency of execution. And when it comes to last mile delivery, most people fittingly see Amazon as the benchmark.
While their drone program is still in the testing phases, Amazon continues its dominant status as the last mile experts. Recent years have brought tremendous growth in this regard with features that improve both the background logistics and the customer-facing user experience.
According to their most recent annual report, Amazon now has over 288 million square feet of physical warehouse space, a footprint that will be difficult for anyone to rival. In 2017 alone, the retailer added nearly 75 million square feet to its physical footprint. That’s more space than they had in total in 2012 (73.1 million sq. ft.), when they were already the largest retailer in the world, per a recent article in the Atlantic.
On the customer-facing side, Amazon launched their Map Tracker feature in 2018. This app feature allows customers to see where their package is on the map once it is within 10 delivery stops of the destination. While the somewhat soft launch flew in a bit under the radar, it’s become such an integral part of the experience, other retailers may be forced to develop the digital infrastructure to follow suit or be left behind.
So how does one compete with these monolithic giants? Innovation is key. One area that’s worth examining is the rapidly evolving food delivery industry. UberEats, for example, has been a tremendous success, tapping into their wide network of drivers to launch a massive 3rd party logistics program seemingly out of nowhere. Uber has announced plans to expand the program to include drone delivery in the near future.
Uber recently experimented with a parcel delivery pilot program in New York called UberRush, but ultimately scrapped the program. One has to wonder, however, if having a drone network may lead to a revival of this program, as unmanned drones have a higher cost/benefit ratio than human drivers and are able to avoid the unpredictable complications of traffic.
Another interesting concept we might learn from is CloudKitchens, a concept launched by former Uber CEO, Travis Kalanick. These CloudKitchens are setup exclusively to cater to customers that are ordering in, enabling fledgling restauranteurs to jump into business without shelling out a fortune for a physical restaurant space. Interestingly, it’s also a new line of business for food trucks to continue to make money in off hours through delivery.
The CloudKitchen concept of course begs the question, what other kinds of inventory could be mobilized in a profitable way? The increasing adoption of on-demand delivery service certainly opens new doors for companies to get innovative with the way they get their products into customers’ hands. There might be strong potential for success, pairing a mobile store with the right selection of products. It’s just one possible way new competitors may be able to hack their way into the precious last mile.
What interesting types of innovation have you seen in last mile delivery? What is the X factor that will allow smaller companies to compete with the giants in the last mile? We’d love to know what you think. Sound off on social media now and join the conversation.