One of the sayings we have here in the halls of Omni Talk (and by “halls” I mean the guy next to me at Starbucks) is that some of what we say might be right, some of what we say might be wrong, but no matter what we should always aim to promote further curiosity about the retail industry that we all know and love.
Today’s post clearly embodies this ethos. Last-mile delivery, as it should be, is all the rage in the industry right now. It has become the often argued “table stakes” play within the war on retail — or the retail equivalent of eating broccoli as a kid to justify getting dessert.
Yearning to comment on the recent outbreak of last-mile delivery news stories, I struggled coming up with something important to say. There was no sense rewriting what others have already written. The “what” and the “why” behind last-mile just seemed pretty cut, dried, and self-explanatory.
But then something hit me as I spoke to a friend about my dilemma. Jokingly, my friend, Anne, reminded me of the great Kmart advertisement of yesteryear – “Ship My Pants.”
Two things immediately came to mind as I watched the “Ship My Pants” video above.
Kmart came up with something so viral and brilliant? When was the last time that was said? March 3rd, 1979? I am still laughing from the video. It was pretty damn funny.
Second, while the “what” and the “why” of last-mile delivery are well-established, the “how,” just like the beauty of what makes a wonderful comedic sketch, like “Ship My Pants,” is still open to interpretation, and this “how” could in fact be the difference between “table stakes” and an enormous financial value grab over the long-term.
The recent moves about which we have heard so much – Target’s acquisition of Shipt, Whole Foods (cough, I mean the now Evil Empire’s) partnership with Instacart, and even Walmart’s weekly PR drop in June 2017 of employees delivering products to customers on their way home from work – all make complete sense.
In fact, I 100% applaud these efforts.
Last-mile delivery is indeed table stakes. Funneling money into last-mile initiatives not only sets the table, but it forces entire organizations to adapt. No matter what the price tag, this activity is cheap compared to bankruptcy. In addition, it forces retailers to think differently about their businesses. It forces them to start asking difficult questions, questions like “Can I rely on the same product categories to drive traffic to my stores or is it now more important than ever that my product be ready-to-ship rather than ready-to-show? (i.e. ready for delivery vs. ready for shelf display).”
For product categories that have already reached the tipping point of e-commerce penetration (i.e. 20%) or are well on their way at 10% penetration thus far, the answer is the former, and last-mile initiatives therefore ready the foundation for the further build out of the omnichannel capabilities required to enable customers to consume anything they want, whenever they want, however they want. Last-mile initiatives are the houses that need to be built, and the capabilities that grow out of them then are like the furnishings or the window treatments.
But a smart man once said to me, “Would you rather build the house or the tools to make the house?”
While you can make a lot of money building houses, other people can still build houses too, and so you can make even more money building the tools that every home builder needs.
The tool in our conversation is software. Software development around last-mile delivery is what will enable companies to move beyond the logistics provider rat race we see now. Software is what will enable retailers to move upstream and to grab the largest share of the financial pie as possible, regardless of who or what ends up delivering that tube of toothpaste, just a few miles away to a customer’s door.
The question that matters more than any of the activity we have seen thus far is – “Who will develop the platform by which retailers can pick and choose any last-mile delivery provider within any market?”
Last-mile delivery is an incredibly competitive space. Nearly any schmo (technical term) with a delivery truck can get into the game, and the schmo providers are different from locale to locale too. Therefore, what matters is not the provider, but the capability of a retailer to assess the providers within a market quickly and to pit every provider within an area against one another competitively, based on the retailer’s expectations and based on customer performance feedback in real-time, just as Uber, Lyft, or AirBnB do with their platforms.
Yes, Instacart and Shipt may be pitting their own drivers against one another within their own platforms already, but make a platform where Instacart and Shipt are competing against each other, and that is where the real magic will happen.
Will this hypothesis come true? Quite possibly, and the one company that may be able to pull it off is a company on which I have had my eye for some time now. It is a small startup out of Dallas, TX called Delivery Solutions.
Started by Manil Uppal and Arshaad Mirza, Delivery Solutions earned its stripes as a local delivery provider in Texas called LASH that specialized in same-day alcohol delivery. Through LASH Manil and Arshaad learned all the ins and outs of local delivery service. Together they endured the many bumps and bruises to deliver product, especially highly regulated product, like alcohol, from retailers’ shelves to consumers’ doors.
Now Manil and Arshaad seek to move upstream – to white label last-mile delivery. Their idea is simple. Manil, trained at the Fuqua School of Business, and Arshaad, trained at Carnegie Mellon, want to create the platform that easily enables retailers to create a branded delivery experience from any number of delivery providers within a market as opposed to having to tie themselves to just one or even a few.
Here’s how their idea works. First, an order comes into a retailer from a given customer. Second, their software platform knows the retailer’s expectations on delivery quality, customer feedback, pricing, etc. and then assigns the delivery to a local provider. Third, the customer can then track the delivery via a retailer-branded interface. Fourth, and finally, the customer can leave feedback real-time (a la Uber) for the delivery provider and for the retailer to see, all of which ultimately ends up back within the assignment algorithm again.
Everything is done behind the scenes, white glove, for the retailer, and the customer never knows the difference.
Even if a retailer is dubious of turning over its last-mile delivery to third parties and prefers to handle it in house, Delivery Solutions can handle that as well. With their unique Build – Operate – Transfer model, Delivery Solutions, knowing the playbook, will set up, contract out, and manage a delivery service operation for any retailer (i.e. build), then provide the software platform (discussed above) by which to run the operation (i.e. operate), and then move the delivery entity back under the retailer’s umbrella (i.e. transfer), once the retailer is comfortable managing everything that is required.
Manil and Arshaad are thinking through every angle because they understand that the phenomenon of the driver pulling up to your door with both an Uber and a Lyft sticker is real. They don’t expect retail delivery to evolve any differently, and neither should we. Sure, retailers could place bets with Instacart, Postmates, whomever, but Delivery Solutions is already thinking beyond that play. They are playing the next game ahead of everyone else – the game of giving retailers the ultimate flexibility in their last-mile delivery options, whether via their own trucks or through third parties.
Manil and Arshaad are going up one level and asking why shouldn’t the same software platform power it all?
Pretty cool (and heady) stuff.
Be careful out there,
P.S. The Superbowl is this weekend in Minneapolis. I will be dressing my two boys up in full Tom Brady worship gear. Go Pats!
P.PS. I currently do not have a relationship with Delivery Solutions, for those wondering. Of course that doesn’t mean I wouldn’t entertain one if Delivery Solutions is listening.