Amazon making moves, DHL electrifies, and hunger hinges on the last-mile
By Maia on Friday, December 14th, 2018
Amazon hits the High Street
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!