I remember watching the fanfare around Alibaba’s IPO in 2014 and marveling at the number of transactions done online in China. At the time, I was running an on-demand delivery startup. I was getting more interested in e-commerce and offline-to-online transactions. E-commerce hadn’t yet penetrated the U.S. like it had in other developed regions of the world. Back then, it was growing at about 11 percent to 14 percent year over year in the states. But that growth was quickly rising.
According to the U.S. Department of Commerce, “sales on the web reached $394.86 billion” in 2016, which was “a 15.6 percent increase” over 2015. This has created a problem, one I experienced firsthand as an on-demand courier: E-commerce is growing so fast delivery infrastructure can’t keep up. This problem has led to inefficiencies known as the “Last Mile” issue, which has amounted to significant financial losses for couriers and retailers alike. Couriers have lost billions from delivery delays and repeat delivery attempts, and e-commerce retailers lose nearly 1 percent of all revenue due to stolen packages and “Friendly Fraud.”
Today, this problem — and the various strategies couriers, large retailers and small startups have put in place to overcome it — has given rise to the battle for delivery market dominance. There have already been many casualties among the startups in the on-demand delivery marketplace — including my first startup, Arrow Food Courier, which was bought for pennies on the dollar.
But there are startups whose on-demand delivery techniques are succeeding even though they lack the scale and capital of large retailers like Amazon and Walmart.
How Amazon has dominated the market
E-commerce behemoth Amazon has acquired so much momentum that it seems unstoppable, the competitor to beat. E-commerce accounted for 42 percent of all growth in retail in 2016, and the majority of those gains went to Amazon. According to Internet Retailer and the Channel Advisory Corp, “The total value of transactions from U.S. consumers on Amazon.com reached $147.0 billion last year, a 31.3 percent increase compared with $112.0 billion in 2015.”
It’s not surprising that Amazon, which spent $16.1 billion on R&D last year, has been proactive in dealing with the realities of e-commerce increases and its implications on the most expensive part of the supply chain, the Last Mile. The Last Mile also factors in greatly to customers’ post-purchase experience. In the drive for faster delivery, Amazon has invested heavily in its own logistics infrastructure. It was also an early adopter of automated reception kiosks (Amazon Lockers), even after Google acquired BufferBox and shut it down a few years later. An Amazon executive once told me that because the lockers are so popular in urban areas, the leading customer complaint is they fill up too fast.
Amazon is looking to leverage its Prime membership to increase average sales among its customers, and it recently acquired Whole Foods. While there has been varying analysis on why and what this means for Amazon, I believe that the acquisition:
● Gives Amazon a large hyperlocal retail presence among shoppers, which could leverage showcasing goods that shoppers prefer to interact with physically before making a purchasing decision.
● Allows Amazon to implement automation, thereby reducing human labor. Cost savings on labor, along with increased purchasing power, could allow Amazon to slash prices despite the razor-thin margins associated with grocery store chains.
● Leverages its new hyperlocal presence to create a mini-supply chain and logistics hub for fulfilling on-demand delivery.
The last point is particularly important when considering this comment from Amazon Prime Now head Stephenie Landry: “10 years ago, people thought two-day shipping seemed really fast, now we think two-hour shipping and one-hour shipping will be the standard.”
With Whole Foods’ new hyperlocal presence, Amazon can make incredibly short delivery times a reality, whether it’s on-demand delivery of groceries, wine or items that are stocked based on the local buying habits of that particular community. This is something that the startup Bodega is trying to do on a smaller scale — more about that later. Whole Foods gives Amazon the additional infrastructure required to scale Prime Now across the U.S., making the two-day shipping standard it has set even harder for others to compete with. And with Amazon’s recent partnership with Kohl’s — the chain is allowing its stores to serve as customer-return drop points — Amazon has established a physical presence that relieves its shoppers from two experiences they dislike: Waiting for packages and making returns.
How large retailers are responding
Among the larger companies in the race for delivery and e-commerce dominance, Target has doubled down on its initial delivery efforts with the acquisition of Grand Junction transportation company, which has led to the launch of its same-day delivery program, Restock.
Although Amazon is leading the way, Walmart isn’t far behind. After acquiring Jet, Walmart got to work implementing new strategies at startup speeds. Walmart is experimenting with large kiosks that allow suburban customers to order online and conveniently pick up their orders themselves. And Walmart and Amazon have both been testing alternate methods of delivery. Amazon Flex allows people to sign up to pick up Amazon orders that they can deliver en route to their destination, similar to UberRush. And Walmart has launched a similar program for its employees that allows them to make deliveries on their way home from work. But there are edge cases that challenge the practicality of the program: The recipient has to be home to receive their packages, making it less flexible. This is a problem that automated reception devices like communal and personal delivery lockers can solve.
Walmart is also partnering directly with Uber to facilitate on-demand grocery deliveries. This Uber partnership may be a strong one for Walmart; there is a Walmart within five miles of 70 percent of the U.S .population, making it fairly feasible and cost-effective for Uber to make deliveries without having to deal with long distances, which reduces what would otherwise be high on-demand delivery costs. The last mile of delivery is so important to Walmart that it is running all these cost-reducing experiments at the same time. Walmart recently announced the acquisition of same-day delivery startup, Parcel to help with behind-the-scenes logistics. The company is also testing methods of reducing missed deliveries — a problem we are solving at my startup, MailHaven — with the August smart lock. The idea is to give couriers access to enter homes to safely deliver packages. It would be interesting to find out if customers are willing to risk strangers in their homes to solve this.
While large grocery chains like Kroger and Blue Apron are not yet focused on fast or same-day delivery, they have started testing programs to launch these initiatives. Conducting testing may pose a larger challenge to Blue Apron than Kroger, which is more established and has more capital available for R&D. Kroger, the largest pure-play grocery store, launched ClickList, which has been a favorite among consumers because they can just shop for an item online, pull up to the store and have an employee place it in their car. So it’s apparent that Kroger understands that convenience is now key, and while grocery delivery is still in it’s early days — only 1 percent of retail — it has a lot of potential, considering that we are turning toward a more carless society. None of these players want to be left behind, including national chain grocer Albertsons, which very recently acquired Blue Apron competitor, Plated.
Can startups survive decentralized innovation?
Small and medium startups may be concerned about their odds for survival in the on-demand delivery battle. Why should consumers shop with an unknown brand when they can get lower prices and fast, cheap shipping with Amazon? Why would consumers shop with a smaller brand when Walmart is offering them instant gratification via online orders that they can pick up from kiosks while they’re out-and-about?
While the horrendous launch of the startup Bodega — a locked box stocked with for-sale items designed for placement in lobbies, gyms, offices and dormitories — might have increased the view that tech elites and investors suffer a disconnect from the real world, the idea has some merit to it. Like Amazon Go stores that plan to automate transactions with computer vision and a fusion of sensors, Bodega hopes to do the same and more. The idea is that by having an immediate hyperlocal presence in dense points of interest, the company can cut Last Mile inefficiency and cost while providing instant gratification. Machine learning and historical data on transactions can help stock the needs of customers, preempting demand and providing consistent supply of desired items.
While I understand the thought process behind decentralized supply centers to create instant convenient access, I believe it may be more advantageous in other areas, like bigger units in parking lots that understand what nearby customers want and stocks those items. While physical retail continues to wane, I expect that we will see better-implemented versions of automated pick-up points.
Walmart
Some startups have found the answer to survival through carving out a niche and developing a strong following with aggressive community building and a solid social media presence. Farmigo is one startup that I find impressive. It uses a modern twist on the CSA box to reduce its Last Mile delivery costs; it has a communal program in place that saves customers money when they get their neighbors to order from Farmigo, too. The company is passing on its delivery savings to its customers and acquiring new customers at the same time.
Shipt attacking the grocery delivery market. While the Bay area is home to delivery startups flush with cash and horrible unit economics, this Birmingham, Ala., startup, started out with less capital raised than its competitors, and focused on less-urbanized, less-competitive markets. It survived the death of most on-demand startups in 2015, and is partnering with large grocery store brands to perform deliveries on their behalf, a strategy that seems to be a winning one for grocers, efficient couriers and consumers.
Beyond a strong sales strategy and customer acquisition and retention, startups must satisfy their customers’ need for fast delivery. Getting goods to customers fast and cheap is where the retail giants excel, but the democratization of tools and new infrastructure has been beneficial for smaller startups. Companies like Shippo allow brands to implement package tracking with a simple API integration, and encourage a focus on customer engagement post-purchase. Small companies can create stronger brand affinity by actively segmenting and engaging customers at their most anxious point of the purchase process — when the package is in transit. Studie show that a customer is three times more likely to interact with a retailer’s call to action if they send their message post-purchase.
Another service, Doorman, started out as a collection depot for shoppers. Shoppers have their packages mailed from retailer to Doorman, and Doorman delivers the packages to the customer’s home at a time that is convenient for the customer. However, it was obvious to me when Doorman launched that it would need to bundle other services with its primary service to achieve better unit economics. Attaining scale to create enough “milk run” per mile would have been a monumental task on its own. Now Doorman offers services like same-day delivery and pick up for retailers. Unfortunately, its new business model was unable to save them from shutting down last month.
Other startups like Deliv and Darkstore have also been providing the same service of same-day fulfilment to startups and enterprises who would like to get Amazon-like fulfilment without the capital expenditure. UberRush can be used to achieve speedy delivery with real time tracking, too.
An area of opportunity
Larger retailers have focused on the urban population. Startups like Wish and Shipt, have experienced meteoric growth by catering to the underserved population of price-conscious, middle-class Americans in less-dense areas. It’s clear that consumers in single-family homes need their own version of Amazon Locker. They’re still experiencing the inconvenience of driving to the post office, or delayed delivery when they miss a package, an opening that my startup, MailHaven, is poised to fill. Retail startups should have a strategy for this space, because contrary to popular talk, urban growth will not be at the cost of suburbia.
Even though Amazon has established itself as the e-commerce leader, smaller startups can band together to defend their turf in the battle for on-demand delivery. I predict large retailers will continue the trend of consolidations and capital investments, but hope is not lost. Infrastructure for the future of delivery is being democratized by its creators. And as creators, I think we can all find value in something Dan Makoski, Walmart’s VP of design, once said to me, “Customers don’t want to shop, they want things that help them live a better life to magically appear.”
Kela Ivonye is the founder and CEO of MailHaven, an early-stage startup that designs services and solutions for the future of delivery infrastructure. He was recognized by the U.N. Climate Change Secretariat as a champion of the United Nations Climate Neutral Now Initiative. Reach him @kelaivy.
Read Again https://www.recode.net/2017/10/13/16392676/ecommerce-delivery-dominance-amazon-alibaba-last-mile-pickup-kiosk-locker
Bagikan Berita Ini
Related Posts :
Walmart 4th of July Sale 2021: The best deals to shop today - Digital Trends- Walmart, AT&T and Pfizer back lawmakers who supported Trump election fraud lies 6 months after Capitol attack - USA TODAY
- Is Walmart Doing Enough to Hold Off Amazon? - Motley Fool
- WATCH: Customers Stop To Sing National Anthem At Walmart In Haslet - CBS Dallas / Fort Worth
- Is Walmart open today on July 5th, 2021? - nj.com
0 Response to "This is how Walmart, Amazon, Target and others are coming up with new ways of getting more stuff to you faster"
Post a Comment