Over the next 5-10 years, last-mile delivery is set to be disrupted in much the same way as banking is being disrupted today.
Decades-old workflows are set to be replaced with technology-enabled processes that both significantly improve the delivery experience for recipients, whilst drastically reducing the cost of last-mile delivery.
Disruption will occur as the result of companies combining current-day technology with a novel and pragmatic approach to the same problems the industry has struggled with for 30 years.
Here are the specifics of how we see it playing out at Circuit:
The availability of effective route optimization will approach 100%.
Up from the ~50% or we estimate it to be now.
Route optimization itself becomes increasingly commoditized.
As a result, companies’ ability to charge for it will trend towards purely the cost of compute.
Value from the solutions used by Couriers and Retailers will come from the other areas of last-mile delivery.
Reduced failed deliveries, minimized the time spent at each stop, and better-served recipients.
Disruption will stem from higher vehicle utilization and a pragmatic approach to recipient preferences.
The cost of delivery is a function of the utilisation of the vehicle, the % of failed deliveries, and the time spent actually delivering each package to the recipient.
Highly liquid marketplaces will assign deliveries to drivers already heading in that direction.
Significantly reducing the incremental cost of the additional delivery, and enabling much faster delivery options.
Marketplaces will provide same-day delivery at a lower cost than traditional courier can even offer next day.
Cheaper, and faster delivery is enabled by removing the trip to the depot.
Couriers will finally begin to differentiate pricing between local and national deliveries.
Shipping a package 3 miles will no longer cost the same as moving it 300.
Couriers will begin outsourcing their last-mile operations.
Couriers will increasingly in-house only the long-haul part of shipping, as simply they’re unable to compete with last-mile marketplaces.
Same-day delivery will gain significant momentum with recipients.
Given there will finally be a cost-effective way to provide same-day delivery and it no longer costs ~2x the price of next day delivery.
Deliveries will continue to be carried about by a human, delivered right to the recipient’s door.
Autonomous vehicles are not ready. Recipients also value convenient (to the door) delivery.
Grocery style “book a time slot” becomes common for all types of delivery.
Recipients will be able to specify a time on the day for a small fee, removing the need to wait in for hours. Think an additional $2 for 10-11am, not $10 just to ensure AM.
Driver analytics will allow Couriers to expel those doing a poor job and hurting their brands.
Horror stories of packages thrown over the gate and left in the rain will be a past memory.
Recipient perception of the delivery industry will shift from severely negative to positive.
Search twitter for “[COURIER] delivery” and check the perception today.
Brands will increasingly see the delivery experience as a reflection of themselves.
Delivery providers will no longer be competing purely on price but on a balance of price, speed, and recipient satisfaction.
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