Amazon’s doing a bit of Christmas shopping this week with news that it may be trying to acquire Morrisons, Britain’s fourth largest supermarket chain.
The acquisition is far from certain, with plenty of doubters who think the reports are ‘wild speculation’. But there are few who called Amazon’s acquisition of Whole Foods likely either, and many of those who don’t see the logic in this proposed move don’t fully understand Amazon’s last-mile strategy.
“If true, it would be the biggest of deals to sweep through the retail market, one to send a shudder through rivals,” said Louisa Clarence-Smith, The Times.
As reported before in this newsletter, physical stores are a central plank in Amazon’s plan to bring their operations closer and closer to the end-customer. Barely a week goes by without news of more Amazon locations opening, and their portfolio now stretches to a range of retail propositions – Amazon Fresh, Amazon Go, Amazon 4-Star, and Whole Foods. Each of them serves as a key link in their supply chain, allowing them to hold inventory close to urban populations, leverage the presence of Lockers, and ultimately get goods into the hands of customers faster and more seamlessly. So whilst this particular piece of news may turn out to be a bit of a red herring, there’s rarely smoke without fire and our view is that this may just be a sign of things to come.
They tore down parking lots, put up a fulfilment centre
In what seems like something of a bellwether for how cities and last mile infrastructure is changing, news has come from Chicago that the largest parking lot in the city is being redeveloped into last-mile fulfilment centres.
Real-estate firm JLL is taking the almost 4 million square ft lot under the city’s Millenium Park into logistics facilities for retailers, many of who will likely be based in the ‘Magnificent Mile’ shopping district a few blocks away. The garage was designed to allow truck and similar large vehicles, so it’s possible that the facility will be used to replenish stock for the nearby stores as well as act as a base for forward-deployed inventory, ready to be shipped quickly to consumers.
“If you’re no longer going to walk to a store, there needs to be a place for that inventory that’s local,” said Lee Hnetinka, Darkstore Founder and CEO.
Chicago isn’t alone. In New York, some businesses are using recently demolished building sites – where construction has yet to begin – to stage vehicles for deliveries. In three metropolitan areas, Amazon is using tents on vacant pieces of land as delivery stations, likely a tactic to deal with the spike in holiday volume. And startups like Darkstore continue to expand – its anonymous warehouse on 36th Street in Manhattan now fulfils Nike orders to sneaker-crazed New Yorkers.
Our sense is that this is the first in a series of changes we’ll be seeing in cities around the world. Pulling down parking lots in favour of logistics centres is a sign of the times, and the times are a changing.
DHL’s electric future?
This one has slipped under the radar a bit – DHL has an electric scooter subsidiary called StreetScooter, and it’s doing rather well. Originally started to build electric vehicles for the DHL fleet, it’s now emerging as an EV maker in its own right.
The company is set to double its production capacity to up to 20,000 electric vans a year with the opening of a new factory, and they recently started selling to businesses beyond DHL (namely British milk truck company Milk and More, where electric milk floats really never went out of style).
DHL is not alone in the space – UPS’ eBike program, active in Portland, Oregon and Pittsburgh, is an electric take on micro-mobility in the last-mile space. And readers of this newsletter may remember the last edition carried news of Royal Mail’s move into electric. But DHL seems to have found particular success with their own-brand efforts; one wonders if, like Amazon Web Services, this business unit could prove an unexpected (and money-making) hit.
In this short TED talk, Esther Ndichu, Humanitarian Supply Chain Director at UPS, argues that the challenges are less about food and more about logistics – that solving the last mile can help solve hunger. A bold claim, but an inspiring talk – well worth a watch, especially at this time of year.
PS: The Last Mile will be taking a Christmas Break just like everyone else, so we’ll see back on 11th January 2019. Thanks for reading and see you next year!
Argos is speeding things up
This week, Argos announced a £2.5m investment in a 69,000sq ft distribution centre (DC) in Croydon – the piece de resistance following a series of moves to improve their fulfilment, including the opening of 100 new online order collection points and 14 new stores within stores in Sainsbury’s Locals and supermarkets across London.
These moves are all part of the retailer’s larger strategy to improve its customer experience by speeding up its online sales and deliveries. The DC in Croydon alone is set to give 3.4m people quicker access 15,000 more of its products through same-day fast track deliveries and same or next-day click & collect orders.
“The new battleground is speed and convenience and getting customers what they want, when they want it” – John Rogers, Argos CEO
Need we say more? We’ve spoken before in this newsletter about how retailers are moving DCs closer and closer to cities to ensure a better delivery experience, and Argos – a relative innovator on the high street – is moving on this in a big way. First of many, we suspect.
IKEA is moving to the city
Argos isn’t the only retailer that got the memo on making sure its products are accessible to the ever-growing urban population. This week, IKEA announced that it’s sick of the suburban life and needs a pied-a-terre in the city.
With that in mind, the Swedish retailer will be opening 30 new small format stores in city centres over the next two years, refocusing efforts on e-commerce and delivery – the first of which will be in Paris, London, New York City, and Riyadh. They will be changing the layouts of the stores, making in-store shopping more inspiring and experiential.
Their main focus, however, will be on delivery. Following their acquisition of Task Rabbit last year, the company said it’s planning to invest more in delivery and assembly services so as to make the whole experience more convenient to its urban customers. Overall, it seems like these are changes designed not just to change the stores, but to change the way that customers think about IKEA. We all know that in today’s retail world, convenience is key and while for decades Ikea was always the cheap and cheerful choice, it needs to evolve to keep its customers coming.
“We see of course that the world around us is changing, and we want to be part of that,” Tolga Oncu, IKEA Head of Retail.
Restaurant delivery wars
London is proving to be one of the most interesting battlegrounds in last-mile restaurant deliveries. With massive players like Deliveroo, Uber Eats, and Just Eat on the frontlines, it’s no surprise that some players will have to throw in the towel.
“We are closing Amazon Restaurants UK. We would like to thank all our customers and merchants, and delivery partners for their support” – Amazon spokesperson
The secret is apparently in the sauce – to be successful in this industry it seems, you have to be more than just a logistics provider delivering food, but rather a food provider delivering logistics. Something Deliveroo (who is rumoured to be preparing for a new funding round to set a valuation floor for a formal takeover bid from rival technology firm Uber) knows all too well.
Is ‘New Retail’ the new retail?
Source: Time Person of the Year
Alibaba’s Jack Ma, who coined the term himself, thinks so. To Ma, ‘New Retail’ describes the increasingly blurred boundary between offline and online commerce as retailers focus on fulfilling the personalised needs of each customer.
In ‘New Retail’, customers should be able to shop online, have their items delivered the same-day and return the item in-store. Or they should be able to shop in-store with the help of VR technology in fitting rooms, skip the queue and purchase the items via a mobile app, and have their items delivered to their doorsteps when they get home. The online/offline variations are endless but one constant remains; variety and convenience for every customer.
In order for ‘New Retail’ to work, retailers must upgrade their business models to create a seamless convergence of offline and online. A great example of this is Freshippo (formerly Hema, previously covered in this newsletter), Alibaba’s supercharged supermarket in China.
“[Freshippo] is an experience centre, consumption centre, plus logistics centre rolled into one” – Hou Yi, Freshippo CEO
‘New Retail’ is probably getting a bit old by now if you count how much, and for how long, people have been talking about it. But Alibaba is that rare beast in the world of retail actually walking the talk, bringing experience and fulfilment together under one roof – so we can forgive Jack Ma the slightly hackneyed terminology.
With the rise of online retail, expectations about delivery speed have changed. But at what cost? This week, we bring you chilling stories of people who have suffered while doing honest work to help pick and pack our online shopping orders. Please use discretion when listening but listening is important.
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.