Can a past peak problem help deliver a data-driven future?

Written by Sean Fleming

October 19, 2020

A peak in e-commerce can be difficult to handle. What about one lasting since early 2020?

It feels like a lifetime ago that I was part of the launch of eDelivery, a UK-based publication with its focus on retail logistics. It was only 2014, but so much has changed in the world of deliveries and ecommerce since then.

I don’t look at the eDelivery site very often. Hardly at all, in fact. It feels a little bit like stalking a former partner – who are they hanging out with these days, what are they interested in, I wonder if they remember me.

But if you look at it now (which I just did) one thing is clear… there’s a huge boom going on in the delivery sector. New warehouses, job creation at all levels, partnerships, acquisitions and so on.

It’s a good sign. One of my memories of my time at that publication was when I told a friend about the launch. “But no one cares about delivery,” she said. “You know there are apps that take care of all that, don’t you?”

Funny, right? But also, not so funny. It was a simple remark that demonstrated just how under-appreciated the importance of the last mile was. I think that’s one of the changes that’s taken place over the past six years. Retail logistics is now more visible than ever, thanks to the Covid-19 pandemic, which has seen an unimaginable increase in ecommerce spending take place. It’s brought a familiar challenge back to the surface – how can a retailer continually delight customers with excellence in delivery and still make a healthy profit?

Get the balance right

According to a report into Ecommerce 2020 Holiday Shipping by Commerce Next, almost two-thirds of US retailers said their biggest worry right now is getting that balance right. One particular concern is the role shipping business might play in making the situation even more challenging.

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US retailers’ main concerns for this year’s peak (Image courtesy of Commerce Next)

Retailers expect their delivery partners to charge them more during the end-of-year peak period, but they are worried there will also be strict caps placed on volumes. They’re right to be worried. The first wave of the pandemic led to supermarket shelves being stripped bare and online grocery delivery slots selling out. Whichever wave we may be facing now will be coming at the same time as flu season, more colds and chest infections, an increase in the number of accidents caused by bad weather and not enough daylight.

The pressure on healthcare services could be terrible. The pressure on logistics services almost certainly will.

Get ready for the future

The last mile is the most expensive mile, according to Boston-based Inkwood Research, which says more than 50% of all costs associated with delivery are within the last mile. Finding ways to squeeze costs is now desperately important and is leading retail and delivery businesses toward tech-based solutions. The market for ground delivery robots, self-driving vehicles, and even aerial delivery drones could hit $40 billion by 2028, Inkwood believes. It estimates its present value to be around $12 billion.

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A $40 billion market in the making (Image courtesy of Inkwood Research)

If you have been a regular reader of my Milkman column, you may be aware that I am a delivery drone sceptic. Even though Inkwood Research expects $40 billion of sales in automated last mile gadgetry, I really don’t expect I will ever be living in a world that’s filled with delivery bots. Not in the most visible stretch of the last mile, anyway.

Don’t get me wrong, I am sure there will be a very significant role for fetch-bots and carry-bots and all kinds of other automated helpers. There will also be plenty of examples of where they can make a huge difference to people’s daily lives. I’m not sure there will be a big enough mass market for the developers and manufacturers to scale their consumer-facing robo-offerings, though.

Time and again, I find myself reflecting on one particular story from six years ago. It was about Yodel and the eye-popping numbers that it had dealt with over the peak period. It had dealt with 600,000 more parcels than expected over the Black Friday/Cyber Monday weekend. It had employed an extra 5,000 people and put an extra 700 vehicles on the UK’s roads.

I don’t know to what extent robot delivery drones would have helped in that situation. Probably not much.

Back in 2014, the UK experienced its first really big Black Friday. Retailers went all out to hype it and get shoppers hungry for bargains. That’s where Yodel’s 600,000 unexpected parcels came from. It also led to a series of collapses and failures in the wider delivery sector.

Will history repeat itself this year? I doubt that anyone knows. What might help though, is better visibility and better planning based on an improved end-to-end flow of data right the way along the whole retail value chain. Those businesses who find themselves caught out this year may do well to think about investment in that kind of technology in the future.

Milkman’s Last-mile delivery orchestration platform

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Commerce and logistics integration at the point-of-sale is enabling dynamic choice of convenience and cost.

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Deep business insights are driving better planning of last-mile logistics and transportation.

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Effective communication based on the customer’s unique needs and preferences drives a better experience from purchase to delivery.

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