eBay goes up against Amazon, Lidl goes digital, and Alibaba goes further than we thought possible
By Maia on Wednesday, June 6th, 2018
eBay on the offence
In the latest sign that the last mile is becoming the battleground for some of the world’s biggest e-commerce businesses, eBay recently barred its sellers from using Amazon fulfilment services for the delivery of products sold on its platform.
This offensive play by eBay highlights an ever-present threat for retailers – who controls the data, controls the customer. The new addition to the equation is the role of last mile logistics fulfilment. Moral of the story: if you’re a retailer that wants to keep the power of data in your hands, make sure to use a logistics partner that has no interest in owning your customer.
A ‘Lidl’ step for online, a giant leap for grocery
Rumour has it that German grocer, Lidl, is finally going digital after decades of selling its discounted products strictly from physical supermarkets across Europe, and more recently in the US. In a fresh assault on the UK’s supermarket chains (Lidl recently bullishly vowed to keep its prices lower than their competitors in reaction to the Sainsbury and Asda merger), the discounter has created a holding company and officially registered ‘Lidl Digital Logistics’ at Britain’s Companies House.
Historically, Lidl has been reluctant to sell its products online because investing in and managing an e-commerce supply chain – from picking and packing through to delivery – would make it close to impossible to keep prices down. But the rise of Logistics as a Service (LaaS) solutions is opening doors for pure-play retailers, enabling them to power convenient deliveries without the hassle of managing a fleet or developing technology to fuel the process. This could allow Lidl to satisfy customer expectations for online grocery while maintaining the low cost, no frills business model upon which it has built its success. Or they could just reinvent the last-mile in the way they did the grocery supply chain – no small task, in our experience.
Alibaba and the 40 reasons why it’s killing it
Last week, Executive Chair Jack Ma announced that the company will invest billions in a global logistics network to expand reach and efficiency as well as drive down costs. By using data to solve the problem of low transport efficiency and high logistics costs, the aim is to power same day deliveries across China and 72-hour deliveries to the rest of the world. Alibaba led the consortium in a £1.05 billion deal for a 10% stake in Chinese logistics courier ZTO Express and is scouting for warehouse space in Hamburg, Germany to open its own logistics centre that services the European market.
Ma also confirmed a not-too shabby £11.6 billion investment into artificial intelligence and smart logistics that demonstrates a future with even more delivery conveniences. He unveiled two new technologies. The first: G Plus, a new autonomous ground vehicle (AGV) that relies on LIDAR to navigate urban deliveries with parcels of various sizes. The second: a temperature-controlled storage locker for food and other home deliveries installed outside your home that unlocks with facial recognition.
Unlike its European counterparts (especially after GDPR), China benefits from free access to large amounts of data, essential for training algorithms and AI, so expect a lot more from Alibaba in the coming months.
The kings of convenience
The future is bright for Britain’s grocery stores, according to the Institute of Grocery Distribution, who predict that sales through the convenience sector will grow by 17.6% in the period to 2023 – ahead of a rise of 14.8% for the UK industry as a whole.
This is big news for an industry that rarely hits the headlines but constitutes 75% of locations where UK shoppers buy their groceries. The reason behind the forecasted growth is young shoppers. Having grown up in an era of ‘new convenience’ where local shops offer wide ranges catering to various cultures, longer opening hours and often better than supermarket quality produce, younger generations will be key to driving ongoing growth. The shift away from big weekend shops and towards smaller, more frequent shops is also likely to help.
There are implications here for the last mile. Many convenience stores power on-demand deliveries through third party last-mile delivery partners, helping them cater to shoppers who prefer their groceries delivered to their doorsteps. Others use e-commerce to their advantage by serving as a hyper-local warehouse. These often independent retailers could well be creating a different model for fulfilment and delivery that the ‘Big 4’ supermarkets would do well to take heed of.