Flexible delivery options set to separate e-commerce winners and losers

In November 2016, DHL Express announced that it is strengthening its delivery offering across over 100 countries through the course of 2017, by rolling out ‘On Demand Delivery’, which it has been set up to augment its last mile offering. On Demand Delivery offers recipients six delivery options, including DHL click and collect infrastructure such as parcel lockers and shops. On Demand Delivery was specifically developed to serve premium cross-border e-commerce deliveries, which make up approximately 20% of DHL Express volumes in 2016; up from around 10% in 2013.

This service represents a growing recognition that customers are more interested in the variety of delivery options available to them than the speed with which their purchases arrive. According to DHL’s own research with customers in Germany, whilst 66% of e-commerce shoppers said quick deliveries were important to them, 68% wanted the ability to specify the delivery date, whilst 94% were happy when they could specify parcel lockers as alternative delivery addresses. As the company’s head of eCommerce, Charles Brewer, stated, “Speed isn’t everything”.

What is also notable is the variation in preferences by country. For example, whilst Germans tend to use parcel lockers for their deliveries, French consumers prefer click and collect.

In September, this understanding led to DPD’s announcement of a network for parcel drop-off and pick-up by car, called ‘Pickup Drive’; a service initially available within Paris before expanding to the Ile de France region, and then the rest of the country. This service represented an extension of the company’s existing ‘Pickup’ service which utilises physical infrastructure as well as lockers, to consolidate last and first mile deliveries between businesses and customers.

Invariably, some of the most eye-catching last mile methods in development are those that employ autonomous vehicles, and DPD is also represented here. This week, the company announced its deployment of an unmanned aerial vehicle (UAV, or drone), on a weekly service route between Saint-Maximin-La-Sainte-Beaume and Pourrières, in south of France (Provence region).

This followed hot on the heels of Amazon’s latest teasing video promoting its ‘Prime Air’ service, which recorded the company’s first commercial delivery by drone as part of a trial operation in Cambridge.

Meanwhile, at the start of December, the UK-listed food delivery company Just Eat began a pilot project for the use of ground-based delivery robots in Greenwich. The robots, which are manufactured by Starship Technologies, have been tested in more than 40 cities across Europe and cost around £1 per delivery compared with the £3 to £6 it costs for a human courier.

Whilst the deployment of advanced autonomous technologies is still in its infancy, trials in many areas are now in an advanced stage, as the latest announcements show. Nonetheless, it is unrealistic to see these delivery methods as the absolute end-game in the race for the last mile; rather, they will constitute one of several delivery options offered to customers, who will become increasingly discerning.

Source: Transport Intelligence, December 16, 2016

Author: Alex Le Roy