Innovations in last mile delivery are providing unparalleled convenience, delighting customers and boosting bottom lines.
Joining our panel to share stories, experiences and opportunities were four experts in the field.
We first heard from ZX Ventures’ Trevor Stunden. Prior to joining the ZX team, Trevor was working directly with retailers at the original immediate delivery company Shutl. Today, he is helping AB InBev create the best possible experience for beer drinkers, with particular focus on the last mile.
Launched by the founders of Skype, Starship Technologies is the world’s leading startup for ground-based courier robots. Chief Marketing Officer Henry Harris-Burland described how drones are already delivering to doors around the world. The team recently raised $17.2m in investment, and is now working to offer on demand delivery for $1.
Joining Henry was Finery London’s COO Luca Marini, who explained the challenges of last mile delivery from an online fashion retailer’s perspective. Since launching in 2015, Finery’s offering of affordable but considered womenswear has resulted in sales of £5m in the first year alone.
Finally, Olivia Rzepczynski, Head of Communications at what3words, explained how the company’s innovative global addressing system is optimising logistics and even saving lives. Three word addresses are underpinning ecommerce deliveries across the Middle East with Aramex, Pizza Hut on demand in Mongolia, organ deliveries to hospitals with California courier Onibag, and even drone food deliveries in Costa Rica with Hylio & GoPato.
Here’s what we learnt.
The challenges of last mile
Customers expect delivery that is fast, cheap and trackable, meaning speed, cost and transparency are key.
Beer is big, heavy, bulky and fragile. “No one wants to carry it, so in many ways it’s well-suited to delivery,” said Trev. 40% of AB InBev’s products are bought and consumed within three hours, so an on demand service makes a lot of sense. But because delivery becomes more expensive as size and weight increases, margins can be very low. “This is the challenge for beer and other FMCG products,” he continued.
At ZX Ventures, the team is taking a number of different approaches to tackle these issues. For example, by partnering with Amazon’s Prime Now service to deliver party packs that pair beers with snacks, they’ve been able to improve margins on delivery whilst providing a service that caters to the way people socialise. “We are trying to find ways to give customers what they want, when they want it,” said Trev.
For Finery, however, Luca downplayed the importance of delivery in the scheme of its offering. “We are not a business that wins through delivery. We win through design, we win through branding. For Finery, delivery will always be a service.”
Finery works with third party partners, primarily using Royal Mail. “It’s not the best or most efficient, but it’s reliable, and the closest you can get to tracked delivery without having to pay for it,” said Luca, explaining the decision. “A lot of people know who the postman is and what time they come each day.”
He also questioned whether people even care about tracking their orders closely, arguing that people just want it to arrive, arrive on time and in good condition. To that end, Finery over-invests in packaging to ensure that even buying high street is a luxurious experience.
“But we’re definitely open to innovations,” Luca said, “especially if they cost £1!”
On demand for less
Luca referred to the low delivery costs promised by Starship and its fleet of land-based drones. Currently trialling in South London with Just Eat, Starship’s technology promises to solve the inefficiencies associated with the last mile.
Deliveries are fully trackable and users are kept updated with notifications. Once the robot arrives at their doorstep, the lid can be opened using a link sent to their phone.
Robots will help make the customer experience much more seamless, Henry said. The service will be convenient, and so cheap you won’t worry about it at checkout. “Our goal is that people won’t have to think about delivery.”
Moreover, Starship envisions that robots will be used in multi-use fleets, to increase efficiency given that demand of course fluctuates, and fluctuates differently for a restaurant, supermarket or fashion retailer.
Rise of the machines
The key to Starship’s success is ensuring the technology gains social acceptance, explained Henry. So far the company has primarily done this through the robot’s design, which is unthreatening and even cute, with kids approaching the robot to try and pat and feed it. Robots are also accompanied on runs by a handler, who is there to answer any questions onlookers might have.
“We’ll definitely see robots on the pavement more and more,” affirmed Henry, so to decrease disruption they’re designed to take up the same space as a pedestrian. The best use case for Starship robots is residential suburban environments where pavements are underutilised.
Incidents of theft or vandalism have been few and far between. But the robots are kitted out with cameras, two-way audio, and a lid that’s locked.
They are also unbranded, meaning no one can be sure of the value of the products inside. At the moment, the company is testing its tech with low to medium value items: parcels, groceries and food. “We won’t be sending diamonds any time soon,” joked Henry.
Issues to address
As well as being costly, delivery is a crowded and competitive space. And while some companies have been able to successfully build huge user bases, it’s no secret that many are still struggling to become profitable.
“Adoption of a differentiator like what3words can help increase efficiency as these companies try to develop viable commercial models,” Olivia said.
Addresses seem to work well, but in fact can be very efficient. Postcodes can cover a broad area, which in cities can mean tens and hundreds of potential delivery locations. Maps often unhelpfully pin the middle of buildings and large sites, rather than directing drivers to the appropriate entrance. It can often take drivers multiple phone calls and loads of wandering around to get a parcel to the right place, which can result in huge costs.
“If UPS were to save one mile per driver per day, they’d reduce operating costs by £50m a year,” said Olivia, going on to describe how the company famously removed doors from its vans in order to save a few seconds on each stop. “Businesses can afford to pay for a service that drives efficiencies, as they stand to make huge savings,” Olivia continued.
For countries that already have address infrastructure in place, what3words offers an added layer of precision on top of existing maps. But in place without, acts as a plug and play system that’s quick and relatively easy to implement.