Zalando plans to use these stores as fulfilment centres for its online orders drawing inspiration from Alibaba’s new ‘Connected Retail’ platform. This platform connects in-store inventory to the e-commerce website, enabling Zalando to fulfil online orders from the stores in urban city centres.
“Platforms such as Alibaba and JD.com have largely dissolved the boundaries between online and offline. I see the technological dynamism in the offline market as a preliminary step towards greater integration of online trading with stationary trading” – Carsten Keller, VP of direct-to-consumer at Zalando.
It’s becoming increasingly clear that it’s not a question of digital vs. physical retail but rather creating a framework that connects both. Allowing customers to browse in-store, order online and have purchases delivered from the store rather than a rural warehouse makes for a more efficient delivery process and a more convenient shopping experience. This brand of ‘Connected Retail’ promises to bring growth back to the high street – a promise we’d love to see kept.
Facebook helps brands get facetime with customers
This month, Facebook joined a string of tech giants vying to plant roots in the land of physical retail. Across 9 new pop-up shops hosted by Macy’s department stores in cities along the east and west coasts, Facebook features 100 small digital-native brands that are power users of both Facebook and Instagram to help grow their business.
“When an e-commerce brand can physically reach out to a customer and engage them, it really throws gasoline on that interest” – Matt Sargent, Senior Vice President at Magid
Although this is a tepid step into physical retail, it could be the first of many more, bolder moves. As the lines between digital search and physical fulfilment continue to blur, the last-mile increasingly becomes the link between the digital social experience and the retail experience. We won’t be surprised to see Facebook branded delivery vehicles join Google Express and Amazon vans navigating city streets in the near future.
Home delivery for the holidays
Amazon is toying with the idea of sending an annual holiday catalogue to millions of its customers across the US. This year, it’s sending out its 70-page pilot filled with favourite picks for every baby, kid, tween, and teen. In the aftermath of Toys-R-Us’ demise this year, Amazon is hoping that this catalogue will help capture the interest of loyal Toys-R-Us customers and migrate them onto the Amazon platform.
Over the last several months, Amazon has adopted traditional sales strategies, embracing the advantages of physical retail by opening more brick-and-mortar stores and cashier-free supermarkets, so it comes as no surprise that it’s now implementing traditional marketing strategies, too.
Traditional or digital strategies aside, one thing remains certain – delivery remains at the heart of the customer experience. The success of holiday sales and catalogues hinges on just how well holiday orders are delivered. As we’ve said before, customer experience is the delivery experience and retailers know that winning this holiday season comes right down to the last-mile.
Green is the new red
Source: Royal Mail
With a fleet of 49,000 vehicles on the road across the UK, Royal Mail isn’t the greenest of companies out there – but it wants to change that.
Last year, the logistics provider purchased 100 electric Peugeot vans and installed a charging infrastructure across its network to support the green initiative. And in their second step towards a greener, more eco-friendly fleet, they more recently began trialling 9 new fully electric vans from Oxfordshire-based automaker Arrival.
The Royal Mail isn’t alone in their carbon-cutting efforts. After striking a deal with Arrival earlier this year, UPS committed to trialling 35 zero-emissions electric vans designed to make deliveries in busy cities like London clean and quiet.
The adoption of these hundred odd vans is still just a tiny step in a larger race towards making our cities greener and more liveable – but every step counts and we’re excited to see more logistics providers follow suit.
The London tube map was once a complicated geographic rendering that was hard to read and hard to follow. Then Harry Beck came along and transformed it into what it is today. He suggested that people riding the underground in trains don’t care about what happens above ground. They just want to know – ‘where do I get on and where do I get off?’ It’s the system that’s important, not the geography.
For more designs that changed the world, head here.
Amazon Fashion crosses the pond
Amazon hit the news for a couple of reasons last week. Their quarterly results sent their share price tumbling a bit, but for those who looked behind the headlines there were interesting takeaways on their omnichannel strategy.
Last quarter Amazon expanded grocery delivery at Whole Foods to 60 cities, added five more checkout-free Amazon Go stores (bringing the total to 6), opened an Amazon 4-star store in New York’s Soho (as reported in Issue 12 of this newsletter), and expanded its chain of physical bookstores to 18. An interesting approach for what many see as the quintessential e-commerce retailer.
“Friends congratulate me after a quarterly-earnings announcement and say, ‘Good job, great quarter,’ and I’ll say, ‘Thank you, but that quarter was baked three years ago.’ I’m working on a quarter that’ll happen in 2021 right now.
It took a remarkable confluence of ideas to lay the groundwork for the breakthrough in steam engines that changed the face of transport forever. Rosen kicks off his deep dive into the story of James Watt with this question in his prologue: “If the process of thinking up ‘gadgets’ was, at bottom, the same for Archimedes, Leonardo da Vinci and James Watt, why did it take until the middle of the 18th century for a trickle [of inventions] to become a wave?”
H&M has had a rough run in the last year but the retail giant is coming out swinging. Three months ago, H&M began testing same-day delivery in Berlin, offering fast and convenient deliveries across the city. Last week, it dropped a cool £15 million into Klarna, kicking off a partnership to build an omnichannel payment service.
“We want to make it possible for customers to move freely between the various channels and choose how they want to shop and experience our offering online and in store.” – Daniel Claesson, Head of Business Development, H&M
Clearly, H&M want to elevate its customer experience and evolve with shopping trends – flexible payments and pain-free returns are certainly steps in the right direction. With the company also investing in same-day delivery in Europe, this could be the beginnings of an interesting omnichannel strategy from a retailer that’s always been known as something of an innovator.
Designed to automate an often manual and laborious process, CoROS automatically looks up the customer’s order along the delivery journey and directs the driver to that customer’s packages via LEDs installed on shelves.
Mercedes has also integrated what3words into its entire range of cars and vans, ensuring that even locations without addresses can be found quickly and easily. Could the Sprinter become for the last-mile what the Prius has become to ride-hailing services? Only time will tell.
Partnership makes perfect
Two four-letter “F” words are dominating the world of last-mile delivery: ‘fast’ and ‘flex’.
Bringg and DoorDash know it and have come together in a strategic partnership to enable restaurants to offer fast and flexible deliveries. Similar to Deliveroo’s Marketplace+ proposition, restaurants that use Bringg’s SaaS logistics platform will be able to supplement their in-house operations by tapping into a white label fleet provided by DoorDash, expanding the scale and reach of their deliveries.
We love seeing partnerships like these. Navigating the world of e-commerce and last-mile delivery can be a daunting challenge for young startups and scale-ups, especially when they’re up against giants like Deliveroo and Uber. Perhaps a key to success for all is collaboration and strength in numbers.
Partner insight: PostTag – Last mile partnerships – where do we go from here?
For a while now, I have been adamant that the biggest hurdle in the last mile is the final 100
metres. That’s where the biggest financial and efficiency gains can be made – and certainly the most visible difference from the consumer point of view.
But what’s stopping us even getting to the starting line is the need to bolster partnerships
between tech startups, retailers and delivery companies. What many tech and delivery startups lack in the scale, reach and resource of their would-be retail partners, they more than make up for in agility, collaboration and shortened lead time to deliver – and vice versa.
When we recently gathered 25 tech vendors, delivery companies, food service companies and more for the Last Mile Consortium to discuss partnerships, we heard about a number of ways in which retailers are, often inadvertently, blocking progress. As one of the group said: “to be blunt, we’ve got the skills and the retailers have got the money – why aren’t we working together?”
“The market is simply not set up or ready for the partnership culture we’ll need to fix the last -mile,” said another of the participants in the LMC discussion. “We’ll start with any retailer open to working with us.”
Bottom line? We believe that if all parties realised the potential of collaborating to get the problems of the last 100 metres behind us, we’d be onto a winner.
Illustration: Angelica Alzona/Gizmodo
What kind of acquisitions has Amazon been making in the last-mile across Europe? Will Amazon surpass DPD in its last-mile delivery efforts in the UK? How does Amazon Flex’s crowdsourced model give them a competitive edge? And what technologies will they deploy next to enable faster and more flexible same-day and out of home deliveries?
All these questions and more are answered and discussed by Marek Rozycki (former Amazon VP Logistics Europe) in the latest episode of the Postal Hub. Enjoy.
‘Amazon Go’-to-market strategy is focused on the physical
Amazon is doubling down on its move into physical retail – a week after announcing plans to open over 3,000 cashier-free Amazon Go stores across the US by 2021, they launched the Amazon 4-Star store in New York City. Their latest high-street venture is packed with over 1,800 products that are rated 4-stars or more on amazon.com. But what Amazon 4-Star is really selling is Amazon itself.
Amazon’s move into physical retail stems from an ambition to get even closer to its customers and glean a whole new set of data from each purchase. Amazon knows what customers want – often before they do – and it’s created an easy, curated shopping experience that connects its online proposition with its offline one. Free next-day delivery is offered as standard, so no need to ride the subway with shopping in hand.
It will be interesting to see how Amazon continue to blend the convenience of online shopping with the experience of physical retail – with Hema pushing the envelope in China, one gets the sense they can’t rest on their laurels.
From bricks-and-clicks to brick-and-mortar
Zalando was once Europe’s biggest online-only fashion retailer. Today, it’s one of Europe’s largest retailers, full stop. The company has recently opened Zalando Beauty Station, a standalone beauty store in the heart of Berlin’s Mitte district.
Much like its American counterpart, Zalando’s decision to venture offline is simple: They “want to know [their] beauty customers a little bit better”. Zalando customers are encouraged to feel, smell, and try products – an option they don’t have online. Through their interactions with customers and the purchase decisions they make, Zalando adjusts its product mix, both online and off. With beauty a growing market for fast delivery propositions, it’s likely also being thought of as a fulfilment centre by the supply chain experts at Zalando HQ.
Aldi rolls up its sleeves for a discounting duel
Ever since Tesco’s Jack’s made its debut on the discounting circuit, Aldi’s been on high alert, making strides in its proposition to ensure that its UK business goes unscathed.
This week, the German discounter made it clear that it vows to remain the cheapest grocer in the UK, even if that means battling it out in a price war. Following a very profitable year, Aldi confirmed on Monday that it plans to open 130 more stores over the next two years and have 1,200 stores open by 2025 throughout the UK and Ireland.
In another attempt perhaps to cement its position as leading discounter, rumour has it that Aldi could have a same-day delivery proposition in the works to attract even more customers to its online platform. With yours truly delivering on behalf of Tesco, Stuart for Sainsbury’s, Gophr for M&S, and now On-the-dot for Waitrose, can Aldi risk being left of out the same-day game? Not for long would be our bet.
Business Insider Tech 100
Our very own CEO, Bassel El-Koussa, has been named one of Business Insider’s UK 100 coolest people in tech! Thanks to BI for the nod, he’s humbled to be in such good company. We’re hoping some of the cool quotient trickles down to the rest of us soon…
In Sub-Saharan Africa, problems with the last mile can mean life or death. One billion people across the globe lack access to all-season roads, making the delivery of goods, medicine and supplies very difficult in rainy seasons.
Is a better way? Can we use today’s most advanced technology to leapfrog systemic challenges and create a better way to do logistics? Andreas Raptopoulos explains.
Quiqup is a finalist in the running for Growth Champion of the Year 2018!
We need your help to win! Please click on the link below to watch our VP, Michel Kaloustian, in a short video describe our growth journey and make the case for why we should win. You can vote there too – we’d love your support.
Are Storefronts all a front?
Amazon is making nice with high street retailers, introducing Amazon Storefronts, a solution that puts small to medium-sized US businesses (SMBs) at the forefront of a new retail experience. They’re making a big splash, launching a full-fledged PR campaign putting their mom-and-pop shop partners under the spotlight.
With more Amazon own labels on the horizon, critics believe this to be a thinly veiled attempt at shedding its image as the Big Bad Wolf of retail. But it’s not without value or promise. SMBs need help navigating the new retail reality and Storefronts (and the PR engine behind it) may prove to be a great platform from which they can acquire new customers and increase brand visibility.
Our only word of caution: don’t stop selling direct. Keep the e-commerce platform on your website, continue to drive traffic to your site, and partner with a last-mile provider to help you fulfil the deliveries. That’s the only sure-fire way to retain, nurture, and engage directly with your customers.
The rise of e-commerce and speedy last-mile fulfilment has made people’s lives easier, but also led to an increase in traffic and pollution. Following a government-funded trial, e-cargo bikes proved to be commercially viable and efficient, demonstrating that 96.7% of orders could be fulfilled in a single e-cargo bike drop. While £2 million is a drop in the bucket compared to what is needed to reform our urban transport and logistics, it’s a step in the right direction.
Postmates joins the unicorn club
On the heels of a year of record growth and market expansion, US-based on-demand delivery provider, Postmates, secured a further $300 million in funding led by Tiger Global Management. Just one month after DoorDash raised $250 million effectively tripling its valuation to $4 billion, Postmates is now valued at $1.2 billion, and has officially joined the unicorn club.
Retail Week’s Tech. Sprint Hackathon – The good, the bad and the ugly
Last week, five members of our team embarked on a gruelling yet exhilarating journey in a fiercely contested 24-hour hackathon, to solve a problem around sustainability in retail.
We built Weturns – a crowdsourced collection solution designed to disrupt the traditional returns process. Weturns creates a last-mile exchange; independent couriers return items from several retailers at a time to urban fulfilment centres across the city. This pooling of returns, on foot or on bicycle, reduces their carbon impact. Instead of several carriers navigating our streets in gas-guzzling diesel vans on behalf of various individual retailers, Weturns makes returns easier for shoppers, cheaper for retailers and greener for cities.
The 24 hours tested our resilience and survival skills – we came up with creative ways to keep warm, stay hydrated/caffeinated, and be fed – all the while, staying focused on building a solution that would have far-reaching impact on retail and the environment. Although we didn’t win, our team worked tirelessly to create a functional, well-designed iOS app and pitch to a curated audience of leaders in retail tech. And for that, we’re very proud.
From AI and internet culture to driverless cars and shooting stars on-demand, this exhibition showcases over 100 fascinating projects as a landscape for possibilities for the near future. The material and the virtual worlds are undergoing an exciting transformation and this smart and quietly provocative exhibition demonstrates all that is possible in a not-so-distant future. The Future Starts Here is on now until Sunday, 4 November 2018.
The rise of the urban fulfilment store
The move away from the traditional hub-and-spoke model of online fulfilment continues as retailers move stock closer to customers in a bid to reduce delivery times.
Similarly, on this side of the pond, Amazon is eyeing soon-to-be-closed Homebase stores with the aim of using them as warehouses closer to the customer to better offer same-day services.
And for those that don’t have retail stores to transform into FCs, UPS launched a new service called Ware2Go. Aimed at connecting SMBs with local warehouses to streamline online orders, Ware2Go allows them to access new markets and keep up with e-commerce growth.
Expect to see more of the same from more household names in the months to come, with customer expectations only going one way.
Drones are flying under the radar
Drones are everywhere these days – in the news if not in the skies (click here and here for two applications that stretch the bounds of credibility).
One of the more interesting applications we’ve seen recently is the delivery drone’s introverted cousin; the warehouse drone. Designed specifically for warehouses, these aerial inventory robots have been flying in the shadows for months.
They patrol the skies of warehouses, alerting management to goods that are out of stock, not in their designated spot, or set to expire. They’ve been proven to reduce waste, streamline fulfilment and cut inventory carrying costs by billions.
Look beyond the sometimes sensational headlines and you’ll find the most significant efficiencies that drones bring to the supply chain may well be hidden behind warehouse doors – for now.
Gaining through training
Within one week of each other, Uber and Deliveroo announced investments in programs that will help their riders get the training they need to improve skills both relevant to, and outside of, their work with the companies.
Deliveroo couriers now have access to a £20/month Premium Solo account on Openclassrooms for free to learn anything from a new language to many technical and non-technical topics. Meanwhile, Uber’s Director of Product says that the company is exploring the use of AI to create a more high-touch and assistive onboarding training for prospective drivers where they can actually talk to somebody who guides them through the process.
Although this isn’t a groundbreaking concept in HR, it’s good to see these companies beginning to invest in their driver community. Everyone’s experiences in the last mile will only be better for it.
We’re looking forward to this event. Not only because it’s a platform where retailers, tech solutions, start-ups, investors, and analysts join forces to work out how businesses can nail the digital revolution. But also because five of our own will be competing head-to-head with some of the industry’s strongest tech teams out there in the event’s hackathon, Tech.Sprint. The challenge – 24 hours to make sustainability a retail reality – will see teams compete to create retail-tech that is both sustainable and commercially viable. Our CTO, Danny Hawkins, will also be sneaking out mid-hack to debate The Future of the Last Mile. If you happen to be at the event, please be sure to attend the panel discussion at 9:55am on Thursday 13 September. See you there!
Quiqup Insight: He huffed and puffed and saved the house from blowing down
House of Fraser has made some pretty grim headlines in the last few weeks. From going into administration to potentially shutting down 59 doors, including its iconic Oxford Street flagship, House of Fraser was set to fall like a house of cards. But just a few days ago, billionaire retail mogul Mike Ashley swooped in and with £90mn, vowed to save over 80% of HoF stores across the country.
A step in the right direction, no doubt, but it’s going to take a lot more than Gucci on the shelves and personalised click and collect reservations to resuscitate the brand. Department stores all over the world have been suffering at the hands of online retailers. With crippling rents, high labour costs, and rising business property taxes, large department stores hardly stand a chance.
In order for HoF to survive, it will need to revamp its online proposition and leverage its high street real estate as hyperlocal fulfilment centres. With thousands of square feet of inventory a short drive away from 90% of their customers, the key to HoF’s success will be in its ability to cut property and logistics costs and operate highly efficient urban delivery centres straight out of their high street stores. To do so, it must ditch its legacy systems and adopt new supply chain processes that allow for real-time visibility on a consolidated pool of inventory. That way, when online orders come in, they can be sourced and packaged from their high street stores and delivered to their customer in no time.
The struggle is real – and the government knows it
Local retailers are feeling the heat from Amazon and Britain wants to do something about it. Finance minister Philip Hammond announced last week that the UK wants to ensure taxation is fair for all retail companies, both traditional and online. There have been whispers in Brussels around a tax on online platform businesses based on value generated, one which the UK will happily consider.
These timely comments from Hammond came shortly after Amazon fell under intense criticism for the decline in its tax bill from £7.4mn last year to £4.8mn this year (despite an operating profit jump from £26.5mn in 2016 to £80mn in 2017).
Should this tax bill pass, both local and traditional retailers will enjoy a more level playing field in which to operate. This’ll be their chance to up the ante and get up close and personal with their customers – in-store through personalisation, online through customisation, and at home through convenient deliveries and great customer experiences.
No more cooks in the kitchen?
Last month, UBS released a report titled “Is the Kitchen Dead?” The study examines a world where fewer people are getting their hands dirty in the kitchen and more are ordering food delivery to their homes. Subsequently, the food delivery market is predicted to grow from $35bn today to $365bn by 2030.
With dark kitchens, kitchen automation, and cheaper, more convenient deliveries, the cost of having food delivered is falling by the day. With that in mind, Miele has designed a microwave oven called the Dialog that can somehow cook different things (that require different cooking methods) at the same time.
But its latest trick is the most interesting. Miele has now launched MChef, a last mile delivery meal kit service that sends restaurant quality meals already plated, to your door. All you have to do is stick it in the Dialog and it does the rest – no fuss, no mess. So the question remains, is the kitchen in fact dead and will delivery replace cooking? We’ll just have to wait and see, but the in meantime, last mile delivery providers will happily deliver ready meals or groceries – whatever your preference may be.
Ready, Scan, Go
Sainsbury’s has joined a growing list of grocers that offer Scan and Go services. With their SmartShop app, shoppers can scan the goods they want and simply walk out of the store, paying for what they’ve scanned via Apple Pay in the app. So far, the service has been well-received – SmartShop has processed over 100,000 transactions and over 3,000 new users register every week.
When it comes to grocery, convenience is king and Sainsbury’s knows it. First, they tackled same day delivery expansion and now checkout-free shopping. We’re interested to see what they do next.
A favourite here at Quiqup, Delivering Happiness details the story of Tony Hsieh and his company Zappos, an example of how thinking long term and following your passions first can lead to not just profits, but a happy life for you, your employees, and customers. A leader in customer service excellence, this book by Hsieh is a must read for anyone operating in the service industry, especially in deliveries. Enjoy!
A strategy we’ve been promoting for months, Zara is making moves to ensure the processes and tech are in place to run the operation as smoothly as possible. The rationale is simple: the faster and more conveniently an item can be delivered, the more a customer will be likely to purchase it at full price. The rollout will include 2,000 stores across 45 countries, with a complete transformation by the end of the year, making it one of the largest-scale attempt by any fashion company to repurpose high street shops into urban fulfilment centres. A bold move we strongly believe in.
As mentioned in last issue’s ‘Quiqup Insights,’ this will require the full integration between store and online inventory. The effort, however, will prove worth it; it makes far more sense to deliver a product to a consumer from a store shelf less than a mile away than from a warehouse outside the city. With last mile delivery partners available to power their deliveries in smaller cleaner vehicles, Zara will begin to help get gas-guzzling lorries off the streets and deliver outstanding experiences its customers have come to expect. This level of innovation sets Zara apart, a spirit that other retailers would do well to take heed of.
The aim is to work with logistics companies to replace diesel-run trucks with clean vehicles such as electrically powered vans, cars, and bikes (autonomous or otherwise) that will continue to enable fast and convenient deliveries for consumers. All the while benefiting air quality and reducing our city’s carbon footprint. The growth in online shopping has had immediate economic benefits for consumers but it has also led to congestion, noise and air pollution. With over 300k HGVs and 4mn vans on our roads today, that number will only grow as online sales do.
We’re on the cusp of a profound change in urban transport and last mile delivery providers have the biggest role to play. By investing in an increasingly green fleet, they have an opportunity to change the way goods move and contribute to building a city of the future we can all get excited about.
Hocus BOPIS – The superpower of superconsumers
Like omnichannel, conversational commerce, and the Internet of Things, BOPIS is yet another term we need to add to our lexicon. A new breed of buy-online-pickup-in-store (BOPIS) consumer is on the rise and 37% make unplanned additional purchases while doing so. But “superconsumers” – consumers who BOPIS at least twice a year – go one step further. Studies show that they buy even more items while picking up their order in-store than they did online. For retailers, superconsumers are the bee’s knees.
Retailers are catching on and some are going out of their way(mo) to keep their superconsumers happy. In fact, Walmart is piloting a self-driving grocery chauffeur service for its customers in Arizona. BOPIS consumers shop for their groceries online and a driverless Waymo picks them up when it’s time for collection. Shoppers, of course, pick up a few more items while in-store and the Waymo car chauffeurs them back home while they sit back, relax, nap, text…
Brick and mortar retailers are rapidly embracing BOPIS and home delivery. Shoppers love the comfort of being able to browse leisurely at home. Some enjoy picking their items up, others want them delivered to their homes. Either way, the message to retailers is clear: create a dynamic model of last mile fulfilment that accommodates all your consumers’ preferences. That’s what turns shoppers into superconsumers.
NHS is flying high
The NHS is going where it’s never gone before. A project team from innovation foundation, Nesta, collaborated with 5 UK city-regions and experts from the NHS to test drone delivery for blood, medical equipment, and pathology samples.
They found “no insurmountable barriers” to the creation of a large-scale drone delivery network linking to the NHS hospitals. But there are surmountable ones: London’s complex and restricted airspace presenting the biggest challenge. The benefits, it seems, far outweigh the challenges. The increased speed and reliability could cut costs and significantly improve patient care.
The report goes even further, claiming that by increasing businesses’ productivity and the city’s overall efficiency, the use of drones could provide a £42bn boost to the UK economy by 2030. It might seem far-fetched today, but sooner than we think, London will evolve and drones will be flying overhead – delivering everything from medical supplies to online retail orders. While, for some, this paints an unsettling picture for the future of the city, when done efficiently and cautiously, these last mile deliveries will help save lives – or at the very least, an outfit.
In this seriously fascinating TED@UPS talk, Wanis Kabbaj visualises a city’s transportation network that runs as efficiently as the blood in our veins. He believes we can find inspiration inside us to design the transit systems of the future. Kabbaj previews exciting concepts like modular buses, flying cars and networks of suspended magnetic pods that could help make the dream of a dynamic, driverless world into a reality.
Zennor Rd is the new Bond St.
The big money in London commercial real estate isn’t in veteran properties like Mayfair, Soho, or Knightsbridge anymore, it’s chasing microwarehouses 8km out – in Balham. As consumer expectations for faster deliveries rise, online retailers like Amazon and Asos seek local fulfilment centres to cut delivery times.
The Amazon effect first reached rural warehouses, where they would store inventory for standard and next day deliveries. Now, with same day deliveries increasingly becoming the norm, urban warehouse space is becoming more attractive and the supply chain creeps ever closer to the heart of cities. The model is simple – instead of storing goods in big box warehouses outside the city and trucking them in daily, distribute them in micro-warehouses across the city and have them delivered by smaller, more efficient modes of transport such as bicycles or scooters.
This is good news not just for suburban estate agents, but the city itself. Moving goods closer to the customer helps cities run faster, cheaper and more sustainably. The less goods coming from big box rural warehouses, the less lorries we have navigating our streets. The less lorries, the less traffic and pollution. To put it another way, the more bikes, scooters, electric cars or small vans picking up from urban warehouses and delivering straight to doorstep, the better it is for customers and the cities that adopt it. A win-win we can all get excited about.
What’s in your Prime Wardrobe?
Amazon Prime Wardrobe is jumping out of beta and into every US Prime members’ closet. The ‘Try before you buy’ shopping service allows customers to have clothing delivered to their homes, where they can try them on, keep what they like and return what they don’t (for free).
A number of big name brands – like Adidas, Levi’s, and Lacoste – have come on board. These retailers stand to acquire new customers but some commentators have pointed out the potential conflict of interest inherent in the proposition – so far, Amazon’s private labels are the top performing brands on the site.
Meanwhile, those that have decided against selling on the platform now have to compete with the retail juggernaut by offering a similar experience and level of convenience online. A difficult position to find yourself in, one imagines.
As ever with Amazon, this is likely to drive broader consumer expectations about service quality. It will undoubtedly drive the market to meet if not beat the Prime Wardrobe proposition; an interesting development particularly for 3PLs looking to encourage broader adoption of fast, local deliveries.
Nike just got personal
Last week, Nike unveiled its first ‘Nike Live’ project in LA, a personalised retail concept store that’s built on data and runs on digital.
This store is dubbed ‘Nike by Melrose’ because everything about it – from its location to the products that it stocks – has been determined by data about how the locals interact with Nike. Nike Live stores will stock city-specific products rotated every two weeks, again, based on commercial data analysis.
With the Nike App at Retail, you can browse and reserve products, scan barcodes to discover available sizes and colors, see real-time inventory, and request a try-on by connecting to a Nike athlete who brings out your perfect size either directly to you or to a fitting room. You’ll be recognised as soon as you enter a geofenced area around the store, and recommended items automatically set aside, in your size, regardless of whether a request has been made. This service converts 40 times more than any other tried and tested at Nike. Such is the power of personalisation.
Clearly, Nike Live is no side hobby and we think other retailers should take note. But digital transformation of the physical is just part of the story. It’s likely that Nike will utilise fast local delivery both to take the store beyond its geofence and to unearth more insight on customers in the surrounding area. As ever, Nike leading the way in innovation when it comes to retail experiences.
Quiqup Insight – The game’s changing!
Open the newspaper these days and you’d be forgiven for thinking the high street was dead. Stories around store closures (John Lewis and House of Fraser being the largest and most recent victims), household names going up in flames, and restaurants chains falling into administration have captured headlines across the UK, with more such news coming in every day.
What was once unthinkable is now a reality; traditional retailers, some that have been part of the fabric of UK society for centuries, are taking massive blows as consumers increasingly choose the convenience of shopping online over visiting a store.
The panacea, we are told, is omnichannel – particularly retail stores doubling as urban warehouses for click and collect and home delivery orders. But the problem is that the traditional supply chain wasn’t designed to do that.
So in order to fulfil demand across all channels and customer expectations for convenience, retailers need to reconcile their entire inventory across the supply chain. That way, shops will be able to both sell products in store but also fulfil online orders to support home delivery and click and collect. The treatment and visibility of inventory as a single unit from rural warehouses through to individual stores across the city centre in real-time is the linchpin that makes omnichannel retailing possible.
This level of fulfilment agility requires retailers to do two things. One – adopt dynamic inventory systems through the use of cloud-based supply chain solutions. Two – partner with tech-enabled logistics providers both to move inventory and fulfil demand effectively.
Easier said than done, we know. But the time for planning for change is up, and those who haven’t moved fast enough are already rueing their lack of action. Retail supply chains must be reinvented – before we see more flagship stores on Oxford Street shut down for good.
Ninety Percent of Everything: Inside Shipping, the Invisible Industry That Puts Clothes on Your Back, Gas in Your Car, and Food on Your Plate by Rose George
The author, Rose George, is a British journalist that writes about the things we often don’t or try hard not to think about. In Ninety Percent of Everything, George, hitches a ride on a giant container ship, the Maersk Kendal, across 9,288 nautical miles from the UK all the way to Singapore. While this book focuses on ocean shipping, it highlights the economies of scale and the role container shipping plays in driving global commerce. “Shipping is so cheap that it makes more financial sense for Scottish cod to be sent 10,000 miles to China to be filleted, then sent back to Scottish shops and restaurants, than to pay Scottish filleters,” she writes. An absorbing ode to the industry that delivers us 90% of everything we consume and love.
Uncle Jeff wants you (to deliver Amazon packages)
If you work for FedEx, DHL, UPS, or USPS, you woke up to news last week that your client just became your competitor.
Amazon has announced its new last-mile partner delivery programme in the US. The e-commerce giant has begun recruiting entrepreneurs across the country to run their own local last-mile logistics networks and deliver packages to Amazon customers. With $10,000 and can-do attitude, anyone can apply to start a business dedicated to delivering Amazon packages to their customers’ doorsteps.
As part of this new programme, Amazon has developed an algorithm aimed at maximising efficiency that determines if a package ordered on Amazon is either taken to one of 75 local Amazon fulfilment centres, where the deliveries will be fulfilled by their new “Delivery Service Partners”, or one operated by an external partner.
It’s extraordinary that the world’s largest logistics carriers can no longer handle Amazon’s package volume in a cost effective way. It seems that the faster and more robustly e-commerce sales grow, the more retailers will have to turn to agile local last-mile delivery partners to rise to the challenge and fulfil demand.
Tesco is also trialling new a “shop and go” proposition, enabling shoppers to use their phones as a way to scan and pay for their shopping. As with Microsoft’s efforts for Walmart, it could make it even easier for Tesco stores to be used as fulfilment centres – the app’s functionality could easily be extended to in-store pickers or even delivery drivers working for 3PLs.
Last week, XPO Logistics, the largest provider of last-mile logistics for heavy goods in North America, announced plans to use augmented reality (AR) to reduce final mile returns. The technology will allow customers to visualise large items like sofas, beds, and wardrobes in their homes prior to purchase – the idea being is that if you get a chance to see what the item will look like in your space, you’d be less likely to return it once delivered.
It’s interesting to see a 3PL innovate in this fashion, proactively looking to solve a problem that would otherwise be left to the retailer. Another example, perhaps, of how the customer and delivery experience are becoming increasingly intertwined – and how logistics providers need to deliver more than just deliveries to stay ahead.
Ready or not. Here driverless cars come!
When Amazon went public with its blockbuster deal to acquire Whole Foods last year, Kroger’s shares plummeted 25% in a day. But now, one year later, Kroger is posting “much better than expected earnings” and implementing a digital strategy that’s delivering results.
The latest in a series of acquisitions and partnerships made over the past few months, Kroger has just announced another with Silicon Valley startup, Nuro. Created by two Google Self-Driving Car Project veterans, Nuro has arranged a big debut for its little autonomous vehicles in an on-demand grocery delivery pilot program this autumn with the US grocery giant.
Cost effective and efficient last mile delivery is one of the hardest challenges in the delivery of fresh food – will autonomous vehicles like Nuro’s prove to be a viable solution? Are they feasible in densely populated urban areas? What about the legal implications? All valid questions. Most of which we don’t have the answers to, but we do know this: autonomous delivery is coming, one way or another. Until then, we’ll need to build out the infrastructure necessary to support it at scale. Buckle up, it might be a bumpy ride.
An interesting podcast from UPS’ Longitudes, presented by the director of the MIT Megacity Logistics Lab, covering cutting-edge thinking and developments in urban logistics. It’s the second episode in a three-part series, but arguably the most interesting for those concerned with the last-mile.