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How grocery can innovate last-mile delivery

The ‘last mile’ has become an increasingly competitive place, as the food industry and disruptors continue to create solutions that make online shopping even more convenient, which is a big appeal to shoppers. With retailers making significant investments in this area globally, IGD’s head of innovations and futures Toby Pickard rounds up the latest innovations helping online shoppers embrace this convenience.

Increase in unattended in-home delivery

During 2018, we saw numerous leading global retailers trialling unattended in-home delivery services.

The customer grants access to a delivery driver using smart-lock technology, by setting a temporary access code for the lock, which is then sent to the delivery driver via a secure app. Refrigerated and frozen goods are put away by the delivery driver, and other groceries as instructed by the customer. Edeka, Waitrose & Partners and Albert Heijn all joined Walmart, Amazon, Jet.com and ICA with trials in their respective markets.

There is a significant amount of trust required on the behalf of the shopper to sign up to such trials. However, if the service delivers and meets shopper expectations it is hard to see a more convenient and easy way to shop online.

There are also benefits for retailers. For example, they can optimise delivery routes to save time and fuel costs, as they will not be delivering based on predetermined hourly delivery slots. It also enables better use of delivery vehicle capacity.

Robot deliveries

Delivery by robots is another last-mile solution that retailers and disruptors are trialling.

JD.com’s driverless delivery vehicles have been deployed in the cities of Changsha and Hohhot in China. The unmanned vehicles can carry 30 items and deliver them within a 5km radius.

The vehicles can plan routes, avoid obstacles and recognise traffic lights. Facial recognition technology enables users to easily and securely collect their parcels. Running at full capacity the delivery stations – operating with a 50-50 split between robots and couriers – can deliver up to 2,000 packages a day. 

Meanwhile, back in the UK, Tesco customers in Milton Keynes can now have their groceries delivered by robot. The service, from robotics company Starship Technologies, is available via a Tesco Extra in the Kingston Centre.

Starship Technologies has been working with Tesco and the Co-Op
Starship Technologies has been working with Tesco and the Co-Op

This follows Tesco’s trial in London with Starship during 2017, in which it tested robot delivery as part of a wider ‘Tesco Now’ one-hour delivery trial.

Starship Technologies currently also delivers hundreds of orders a week for a Co-Op branch in Milton Keynes, and the local customer response been positive so far.

Autonomous vehicles

Walmart is partnering with Udelv to test its autonomous delivery vans in Surprise, Arizona, which will see a cargo van customised to support Walmart’s grocery delivery operation. The trial will begin in February 2019 and will initially involve human backup drivers until both companies and regulators believe it’s safe to remove the driver.

The test will build on Walmart’s existing self-driving vehicle pilots. These include a program with Ford and its delivery partner Postmates, and a similar initiative with Waymo, Google’s self-driving project.

The company behind Walmart’s eCommerce pickup towers has developed a self-driving vehicle that could revolutionise last-mile delivery. The vehicle, called Lotte, is a robotic courier which autonomously transports goods to a predesignated location, and using a robotic arm it can allegedly place goods in a pickup locker. It claims to be one of the only self-driving delivery vehicles that can complete deliveries without any human intervention. 

Delivery by drone

JD.com, China’s largest retailer, has completed Indonesia’s first government-approved drone flight – a breakthrough for drone delivery in Southeast Asia. The successful pilot opens the door for commercial drone use in Indonesia and the Southeast Asia region, subject to further regulatory approvals.

JD.com claims automation is needed to keep up with the relentless eCommerce growth
JD.com claims automation is needed to keep up with the relentless eCommerce growth

Indonesia is a challenging country for eCommerce deliveries, given the fact it’s spread out across many islands. JD.com will be able to provide more efficient, reliable services by regularly using drones, and it will help the retailer realise its goal of delivering 85% of orders on the same or next day.

JD.com plans to build 150 drone launch sites in southwestern Sichuan province of China for unmanned aerial vehicle parcel deliveries. JD.com has been developing its drone capabilities since October 2015, and claims drone deliveries would reduce the cost of shipping freight by 70%, compared to conventional truck delivery. 

Wing, a drone delivery company which is part of Alphabet (Google), will start a pilot initiative around Helsinki, Finland, in the spring of 2019. In September 2016, Wing delivered burritos to students at Virginia Tech in what was, at the time, the largest and longest drone delivery test in the US.

Food is a great test case for drone delivery technology because it can be fragile and temperature sensitive, and therefore needs to be delivered quickly and carefully.

Where next?

Shoppers’ expectations are continuously increasing when it comes to getting the goods they want in a quick and easy way. So far, retailers have been able to meet and often reset these expectations with innovative delivery solutions.

We expect to see increased competition amongst retailers to get goods to shoppers in more innovative and creative ways. The online channel and technological advances have created most of the solutions to meet shoppers’ desire for increased convenience. However, many retailers still face a challenge of delivering fresh produce to customers at a reasonable cost.

These pilots will help retailers to better understand the future of delivery and the role of these vehicles in a broader mix of fulfilment options.

Using technology in this way is one of the five retail trends IGD has identified as shaping the global retail market this year. Download your free IGD Retail Analysis Global Retail Trends 2019 report.