29 November 2017 Startup 2018: The companies and issues to watch

Tackling the last mile in same-day delivery

Startup 2018: Robots, lockers and shops that function as warehouses are being tested to realise same-day delivery.

If a warm burrito can arrive at a person’s front door in 30 minutes, why does it take a week for a pair of jeans to turn up?

This conundrum could come to an end over the coming year as retailers, delivery companies and robotics firms start trialling schemes that make rapid delivery of products possible and profitable.

The world of logistics, delivery and e-commerce has been zeroing in on a time frame that’s proven tough to crack: same-day or next-day. And in making it possible, the focus is on the ‘last mile’: the final step before an order gets to a customer’s front door. It’s the most expensive component of delivery, jeopardising the value of the entire transaction.

Go small for big results

A lot of the work going on now is based on eliminating huge – and expensive – out-of-town logistics centres and warehouses.
In September, delivery firms Parcelly and Quiqup combined to form a ‘decentralised micro-warehouse’, which used Quiqup’s software to ensure products would be in a customer’s hands an hour after ordering.

The idea is to use spare space in cities for these micro-warehouses, which could be in the back of a dry cleaner’s or a small section of an underground car park. Instead of using one mega warehouse, companies could use hundreds of smaller ones, and get items into customers’ hands faster.

One way to avoid using an expensive human courier to deliver parcels is to set up local hubs where customers can conveniently collect packages themselves.

Amazon has, of course, done a lot of the running in same-day delivery through its Prime service. Since 2011, it has been setting up lockers so people can pick up their deliveries at places like petrol station forecourts, gyms and pharmacies across the US and UK. In October, it emerged Amazon has agreed deals with 850,000 US landlords. These are called ‘Amazon Hub’s and will allow all deliveries to be made at any time.

When London startup Doddle shut most of its pick-up points earlier this year, analysts concluded it had been a mistake for the company to open expensive shops, rather than just rent space for lockers. Bring Me is a Belgian startup doing just that, but focusing on private rather than public spots; it’s placing lockers in corporate and residential lobbies.

Simplifying operations

But there is still belief that people want products delivered directly to them, rather than collecting them from any kind of hub.

Two companies are at the forefront of making this possible, and both are involved in robotics: CS Robotics of Tel Aviv and Starship Technologies from London, the latter of which was set up by the co-founders of Skype.

In June 2017, Tesco teamed up with Starship to pack a basket of shopping into what looks like a squat bin with six wheels
and an aerial, and send it to a customer’s home three miles away.

CS Robotics, meanwhile, has been building very small automated warehouses, suited to cities and operated by robots.

The first networks of micro-warehouses, automated collection hubs and robots will be offered to residents in densely-populated, affluent areas across New York, London and Tokyo over the coming months.

Unsurprisingly, it will be near impossible to make deliveries fast and cheap in areas where the population is small and sprawled out. A McKinsey report estimated that same-day delivery can only work efficiently in urban areas with a minimum of 500,000 people, and where there are 3,000 people packed into a square mile.