#3 Keeping your competitive advantage: delivery
The last entry on this series was about retail. This time, I’ll try to understand one of the most dynamic and ruthless industries: delivery.
For over a century we have been sending parcels from one person to another. We have used trains, horses, planes, cars or bikes to deliver anything from people (yes, it has happened) to objects.
Today, with almost 80% of the US population buying at some point or another online and an industry that has grown to be $350 BN we can’t afford to have delivery services that are unreliable, expensive or slow (in some US cities Amazon Prime customers get whatever they bought online within 2 hours).
UPS, Fedex and Amazon are investing huge amounts of money to push technology even further in order to decrease delivery times and increase turnover.
Before the railway connected countries, we had to be patient to get something sent from abroad , or even within our own country. However, James E. Casey, disrupted the delivery industry when he came up with “parcels” or smaller packages his company was delivering -by foot- in 1907.
The American Messenger Company was borned because Casey owned a bank of telephones and regular people, rarely had one of this “things” at home; that is when the opportunity to deliver voice messages came to be.
Delivery boys would walk long distances to deliver this voice messages face to face for 1 nickel a piece.
Back then, Casey understood that messages were just the beginning. Soon after that, those delivery boys were carrying anything they could move. 2 years later, the same company was rebranded as United Parcel Services, or UPS.
In the early 20’s phones were more common among americans, that’s when Casey realized he had to reinvent or die. However, delivering things was something much needed, especially now, when trucks and cars were commonplace.
To differentiate UPS, Casey started working with department stores. His drives and trucks were spotless and all of a sudden, he had a “luxurious” company delivering premium goods. Without knowing, he also invented consolidated delivery, something that was quite useful when his drivers were collecting several items from the same store and later on, delivering them in specific routes.
Then again, with the arrival of commercial stores and people driving to buy and get all those products by themselves, he had to pivot again: from now on, UPS was going to deliver not only in Seattle but nationwide.
Now that the game was expanding, competition came in. The biggest of them all? Federal Express, which in the 70’s had a disruptive idea: an integrated delivery network using planes, cars, trucks and ships, which could deliver a package within the US overnight. And not only that, but Federal Express was going to own its own fleet of vehicles to deliver on its promise!
Last Mile hackahon
Early this year, HackerEarth partnered up with Flipkart -India’s largest ecommerce- to address Bangalore’s traffic. By applying innovative ideas, teams came together to address the last mile:
Facing The Last Mile
In the late 70’s, with millions of packages in motion, keeping track of all those units was an entirely new challenge. The solution? The barcode, which at the beginning was round, and later on reimagined by George Laurer at IBM, who made it rectangular and able to capture rich information on each string of numbers.
Today, billions of parcels are tracked thanks to barcodes. Big data, a term recently created as something revolutionary, was something this companies have been doing for decades.
However, despite all of the tech advances, this new logistics industry still tries to solve one of its biggest challenges: the last mile
I lived in India for 1 ½ years and I witness the worst traffic I have ever seen. Cities like Bangalore have real challenges delivering products with a traffic that seems to be our worst nightmare.
Today, brand new companies like Flirtey are going a step further by using drones that could carry almost anything on time (86% of Amazon inventory, weights less than 5 pounds, a weight a normal drone can comfortably move). The company is currently delivering Domino’s pizzas in New Zealand and also medical supplies in the US. So far, they are leading a brand new industry in which Alibaba, Amazon and Walmart (among many others) are running to lead.
The UK scenario
The UK is not lagging behind. Today, consumer behaviour is moving towards online. Food services like Deliveroo, Just Eat, Hungry House and UberEats eats are competing hard to deliver hot meals on time. This behaviour has pushed the UK parcel market to almost £9bn (source). Here, the market is dominated by the likes of Royal Mail, UPS, Hermes and DHL
Automated machines, lockers, same day delivery, integrated supply chains and electric vehicles are some of the executions UK companies are deploying to stay on top of the game.
Is supremely important to understand when your market share is being eroded by competition and when you need to push your company into a new direction. Strategic teams -most of the times- will have a thick layer of technology to address challenges like this one. Unfortunately, the logistics industry does not seem to have time to think. Time is gold and the time to market your company, has might (or might not) lead to a larger dominance in one of the most dynamic industries we can witness today.
To go deeper on the Last mile in the UK; check this report done by Barclay’s