Uncle Jeff’s entrepreneurs, a “returning problem”, and Tesco gets into bed with Carrefour
By Maia on Friday, July 6th, 2018
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.
Another rumble in the grocery jungle
Just when we thought we couldn’t get any more landmark news from this industry, Tesco and Carrefour formed a strategic alliance, a move that just a decade ago would’ve been unthinkable.
But times have changed, and these former rivals are now banding together to use their buying power to squeeze suppliers, cut costs, and lower prices. A clear response to the challenges that discount grocers (like Lidl and Aldi), the Sainsbury’s-Asda merger, and Amazon have brought.
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.
The answer to a “returning” problem
Ask any online retailer what keeps them up at night and most will likely say “returns.” The inflated costs associated with consumers’ expectations of “free return” services, made common by retail giants like Alibaba and Amazon, are a thorn in every retailer’s side. It’s an expensive service, in fact, Clear Returns estimates that online returns cost UK retailers an astounding £20bn a year.
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.