Introduction
Delivery services have become paramount to the continued operation of many businesses. As the COVID-19 pandemic sweeps across the world, consumers are forced to rapidly and drastically change their shopping habits, relying on e-commerce and efficient shipping. Let’s take a look at the various technologies and solutions that can help your business not only survive, but excel - now, and in the future.
Current Trends
Last Mile delivery improvements
Last Mile delivery is focused on the movement of goods from a transportation hub to a final delivery destination. Typically, a dedicated courier needs to visit your house and hand you your package. This is the most expensive part of the package’s journey - and there are many ways to improve it and reduce costs. More and more services provide improvements to last mile delivery: route optimization, sharing car space for packages, on-demand delivery platforms, and many, many more.
NFC, RFID, QR codes popularity
RFID, NFC, barcode/QR codes are becoming a standard applicable not only in warehouses, but also at small companies for stock management, production processes and delivery automation. It improves the visibility of your inventory and automates the whole production or shipping process. It's easily possible to print dedicated barcode/QR code labels on your products. Right now, devices like scanners are becoming much cheaper than they were years ago. Integration with management systems is also easy, as many professional scanners provide well documented APIs. It's also possible to create simple mobile applications that will handle reading barcode/QR codes and communicate with your systems, so a lot of money can be saved on expensive devices. We had a chance to work with Boomf on their product and their customized ERP system, which uses generated barcodes for production and shipping automatization.
Supply Chain Integrations and 5PL solutions
The term 5PL is gaining popularity in the world of logistics. It concerns providing information technology-based solutions for the supply chain. Blockchain technology may be the key to provide and improve logistics services. Huge amounts of documentation, such as charter party agreements, bills of lading (BoL), letters of credit, and sales contracts, must go through a long chain of parties, which makes the process time-consuming. By adopting the blockchain technology, the documentation process in 5PL solutions becomes accurate and quick, thereby offering complete transparency and security.
Mobile First approach for e-commerce
Mobile shopping is growing. According to Statista, sales made via mobile devices increased by 15% since 2016. It's expected that 73% of ecommerce sales will be made on mobile devices by the end of 2021. We saw that in our clients’ projects as well: for example, Boomf has around 85-90% customers visiting their page via their phones. Right now, ecommerce development should be focused fully on the mobile-first approach to optimize online shops for smaller devices.
*Source: https://www.statista.com/chart/13139/estimated-worldwide-mobile-e-commerce-sales/*
COVID-19’s impact on e-commerce and delivery
When most people stay at home, the stock market is going down, restaurants and public places are closed to visitors, there are still industries that are definitely doing well. Grocery delivery is currently the most desirable option for everyday shopping. In many cities, the earliest delivery times are estimated to be in a few weeks’ time.
In the U.S. grocery delivery apps noticed a huge jump of daily mobile app downloads. According to Apptopia, apps like Instacart or Walmart Grocery have seen increases of 218% and 160%. InstaShop noticed an increased number of orders by over 50% comparing March and February.
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<em>Source: https://blog.apptopia.com/instacart-and-grocery-delivery-apps-set-consecutive-days-of-record-downloads</em>
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It's the perfect time for your company to expand into online shopping. A lot of people will probably do some online shopping in the near future. For some of them, it might be the first time, especially for the elderly. For others, it may be the only way of doing shopping right now. Some of them may change their habits, even after the pandemic ends. This could be the right time for e-commerce and delivery services to adjust their business models and build trust among customers.
E-commerce is constantly growing
The growth of e-commerce is visible in every industry. Based on Statista’s data, retail e-commerce sales worldwide have almost tripled from $1.3 trillion in 2014 to $3.5 trillion in 2019. Forecasts are optimistic: it is anticipated that sales will exceed 6 billion dollars in 2023.
With the growth of online shopping, there will be an increase in delivery services. Along with technological progress, we will see new delivery options, which online stores will have to add to their systems.
*Source: https://www.shopify.com/enterprise/global-ecommerce-statistics*
Because of the COVID-19 pandemic, online sales in 2020 may be an industry breakthrough. Many stores will have to move their business into ecommerce to survive the crisis. Many of them will have to work on additional improvements, especially when they didn't take pay enough attention their online shops before. It’s likely that most companies will look for ways to make savings and one of their options is to choose the right package delivery partner. A well selected courier service can bring benefits to your business and to your customers. Properly negotiated contracts with a courier service may improve your shipping process and reduce costs. Lately, we had the chance to work with Boomf and one of the improvements we helped them introduce was adding direct integration with DHL to their system.
Integrating shipping solutions
When you want to automate your current system with external shipping solutions (such as DHL or UPS), there are basically two ways to achieve that: integration with an aggregate service, or a direct connection with the courier system over their API. The decision isn't so easy, as it depends on your needs and resources. Let’s take a look at the pros and cons of both solutions:
Aggregate Services
An aggregate service is the fastest and the most flexible way of connecting your system with external shipping solutions. Many services have well designed APIs and even custom packages for your programming languages (e.g. EasyPost written in Ruby). The most popular among such services are EasyPost, Shippo, StarShipIT. The biggest advantage of this solution is that you can easily switch to or add any other courier without needing a complex integration and changing your system. It's a very flexible solution, especially for new businesses, when you are not sure which courier should be your top choice.
Direct API integration with courier services
The more complicated solution is to connect your system directly with the chosen courier. Big players like DHL or UPS provide everything that you need to automate shipping. Integration is done via their APIs (mostly REST APIs). Choosing this option could reduce costs as you may negotiate prices directly with your account manager. Negotiation may also improve other parts of the shipping, like delivery time guarantee. It's worth considering this approach when you ship hundreds or thousands of packages per day. However, custom integration may be harder to achieve than using an Aggregate Service.
When you start your business, it's recommended to integrate with an aggregate service, as many things may change at the beginning of your project. One of our clients, Boomf, integrated with EasyPost from the beginning, but decided to move part of their shipment process into a direct DHL contract. We worked on integrating their system with the DHL API. It helped Boomf achieve better pricing and faster shipping outside of the UK. Right now, DHL covers most of the international orders for Boomf.
Modern Delivery Use Cases
Food Delivery
Online food-delivery platforms are getting more and more popular. Nowadays, you don't have to call the restaurant and ask for delivery. You can do it with one of many aggregate services (like Uber Eats, Grubhub, DoorDash) with only a few clicks in an easy-to-use application. Some of them even offer subscription plans.
*Source: https://secondmeasure.com/datapoints/food-delivery-services-grubhub-uber-eats-doordash-postmates/*
Smart Lockers (PUDO)
Do you remember times when you had to wait for a postman to get your package to you and you weren't even sure when it might arrive? Currently, you have many other choices when it comes to delivery. One of them is PUDO points (pick-up and drop-off). This is a very flexible way of getting packages for customers as it's available 24h per day, so you can pick your package up any time. It's also beneficial for courier services as it reduces last-mile delivery costs - multiple packages can be delivered at a single location.
Online Grocery
Did you know that online grocery sales in the US are estimated to reach $59.5 billion by 2023, from $28.7 billion in 2018? Everyone has a smartphone or computer, and digital grocery shopping is becoming easier and cheaper than the classic way. Many modern systems allow you to create your shopping lists and re-order with a few clicks in the application. It's even more flexible thanks to refrigerated lockers, so you can simply pick up your groceries on your way back from work.
Medical Delivery
The medical market is constantly growing. Based on the Credence Research, Inc. report, the global medical courier market was valued at $4164.5 Mn in 2017 and is expected to reach $5958.0 Mn by 2026.
Future
Drones
There are more ways to run a delivery service than one might think. Amazon Prime Air, announced in 2013, focuses on autonomous drones and the promise of delivering packages 30 minutes after the order is placed. The company ran a trial in the Cambridge area in England in 2016, successfully completing deliveries. They are not the only business interested in the aerial autonomous delivery market. UPS Flight Forward and Wingcopter are working on fast, long range drones with the same purpose. UPS already runs a fully functional service for medical samples on the campus of WakeMed hospital in Raleigh.
With the COVID-19 crisis and the need for self isolation, some voices argue that governments should look into drone delivery as a safer alternative to traditional shipping. Such measures have already been taken in China, where the company JD cooperated with government stakeholders to supply quarantined and isolated areas.
Self driven delivery robots/cars/trucks
It’s entirely possible that autonomous delivery cars will become commonplace in the not-too-distant future. Ford Motor Company and Domino’s are about to start testing pizza deliveries via a self-driving Ford Fusion. Many questions need to be answered before the service is ready for the mass consumer, including issues such as customer interactions with autonomous vehicles. Meanwhile, Google has a US patent for a self-driving parcel delivery truck with secure compartments. The projects looks much like a smart locker on wheels.
Walmart and partner startup Nuro are looking into autonomous grocery delivery. They intend to use custom vehicles called R2s, and autonomous Toyota Priuses. This project is also in its early stages, with a focus on testing and establishing an effective process. However, it’s clear that the concept appeals to many. The project raised over $1 bln from partners.
AI for optimizing logistics routes & warehouse management
Ensuring that deliveries arrive on time and at the lowest possible cost is obviously a beneficial pursuit. Route optimization makes this possible by minimizing lost time (traffic congestion adds billions to the operational costs of the trucking industry), speeding up delivery, finding new routes, and limiting costs (optimal routes translate into optimal fuel expenditures).
Artificial intelligence and machine learning can further improve on this, using reports from drivers and distribution centers, traffic reports, a truck’s current geocoordinates, etc. Computers can quickly make calculations based on multiple, dynamically changing conditions. Better yet, AIs can learn and improve their efficiency over time. This can lead to effectively organized transport orders, reduced distances, minimization of empty runs, ease of monitoring fleet performance, and other major benefits.
Warehouse management is another area in which AI can shine. Systems using AI and ML algorithms can communicate much more effectively than human workers, with improved speed and accuracy. Better logistics will allow for calculations regarding the equipment needed for handling a particular number of packages, stock movement forecasting, and more. Automated inventory control could lead to significant cost reductions in warehouses while also offering more precision.
3D Printing
Sometimes, printing a product could be a better option than shipping it from afar. In the traditional process, the costs of procuring raw materials, storage, transport, production, assembly and distribution are not insignificant. With 3D printing, customers could take over procurement, production and distribution by printing products at home or at the nearest printing house. DHL is one of the companies ready to participate in the 3D printing revolution.
Blockchain
Blockchain could be the answer to major issues of the transportation industry. The current system involves $140 billion tied up in payment disputes every day. Its processing and administration costs are high (20% of the total cost of transportation). Matching the demand with the supply is a struggle, and quality of service isn’t always high enough (for example, 8.5% of pharmaceutical shipments are wasted because of temperature deviations during transport).
Blockchain has the solutions. A shared distributed ledger for documentation will reduce administrative costs. Smart contracts will speed up customs clearance. Blockchain-enabled refrigerated containers could vastly limit temperature deviation. Constantly updated data will give companies a better basis for decision making. And a scalable tracking solution made with blockchain technology will be better equipped to deal with faster delivery services.
Wearables (AR glasses, watches with scanners for warehouses)
Augmented reality can help with shipping in multiple ways. One could be the reduction of errors and a higher fulfillment speed made possible thanks to “pick by vision” solutions, which wouldn’t require clipboards or handheld scanners. Additionally, AR can allow businesses to gather insights on employees’ behavior and on internal processes. These insights can then be translated into smarter business decisions.
5G, IoT
With 5G and IoT, information about goods moving between manufacturing plants and shipping depos could be delivered live. Companies could follow their products until they land in customers’ hands. This could be possible thanks to IoT sensors and cloud storage for the data, supported by 5G’s low latency, high speed and wide availability. The logistics sector is estimated to grow by 83% between 2013 and 2035 - it needs the technology to match its scale.
Additional benefits could include more connectivity between vehicles and smart cities, full accountability, accurate predictions, and a 90% reduction in power consumption. In China, 5G will be used to improve the layout and development of automated warehouses and autonomous vehicles. It will also make enhanced virtual reality a viable option for on-the-road assistance (e.g. by a remote mechanic), reducing downtime and improving driver safety.
Customer expectations
It might be crucial for your e-commerce to provide the expected delivery options. Having overpriced or slow deliveries may be the reason of your drop-offs in the checkout flow.
It might be important to provide more flexibility to the delivery. An easy way of changing the delivery address, even if the package was already sent, might be important for some. For others, it may be an easy way of changing delivery hours. In the world of mobile apps used for everything, customers would appreciate the ability to see all relevant details and options in one place. Real time location of packages and more detailed notifications about a package’s journey is possible right now. Customers will be pleased to see the option of changing door delivery into PO BOX, when their plans change and they cannot pick the package up at home. Easy returns are also very welcome by customers, especially when it comes to the clothing business.
Summary
Thanks to emerging technologies, the sky is the limit for improvements in the transportation and logistics industry. Or perhaps it is not, if we consider drone delivery services. During times such as these, when the COVID-19 crisis pushes companies to compete in new areas, it’s especially important to consider technological enhancements to your business.
If you want to give your company a new competitive edge, consider adapting your delivery system to consumers’ current and future needs. We’ve already helped Boomf achieve this, and we would be happy to advise you on how to proceed.
