Will technology even the last-mile playing field with Amazon?

Discussion
Photo: Getty Images/TommL
Feb 13, 2020
Tom Ryan

Deliverr, which last week raised another $40 million in funding, uses “machine learning and optimization technology” to bring two-day delivery to sellers on marketplaces such as eBay, Shopify and Walmart. The service is pitched as a way to compete with Amazon Prime delivery.

“While massive businesses like Amazon have the scale and expertise to make this a reality, the vast majority of online retailers simply can’t meet this expectation on their own. That’s where Deliverr comes in,” said Michael Krakaris, CEO, in a blog entry announcing the funding that brings the total capital raised by the San Francisco-based start-up to $70 million.

Deliverr leases warehouse space nationwide, then uses predictive algorithms to “intelligently” distribute sellers’ inventory to the warehouses so it will be within two days of potential buyers. The company recently added a program that supports next-day delivery.

With Deliverr’s help, products automatically become eligible for Prime-like programs like Walmart Two-Day Shipping and eBay Guaranteed Delivery that help items earn higher ratings from customers and become more visible on search pages.

With Deliverr, more than 95 percent of consumers shopping on online marketplaces will see item listings with fast shipping tags. If sellers opt to use their own warehouse, Deliverr estimates less than 30 percent of shoppers would see fast shipping tags.

As noted by VentureBeat, others offering online fulfillment solutions include Bringg and Roadie for last-mile delivery; Chaldal, Fabric and Attobotics for micro-fulfillment solutions; and Convoy, Transfix and Loadsmart for long-haul delivery planning. Many also pitch themselves as an answer to Amazon.

In a blog entry last week, Guy Bloch, Briggs’ CEO, projected same-day and next-day delivery will soon be within every brand’s reach.

“Market trends will eventually propel brands to aggregate billions of deliveries to be fulfilled by a network of technology and logistics providers and partners to deliver at scale, in essence, commoditizing the delivery experience,” he wrote. “And this is basic market equilibrium and I call it the Coalition Model — it’s all of us, brands, logistics companies, and technology vendors, coming together to create a real alternative to Amazon, creating a fair game again.”

DISCUSSION QUESTIONS: Do you see machine learning or other technologies helping competitors, large and small, catch up to Amazon in logistics and last-mile delivery? What do you think of Deliverr’s solution?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
"It is a welcome sign that an alternative to Amazon is emerging, though I fully expect Amazon to jump in soon to be a player in this space."
"Too late! It’s hard to imagine a technology or, for that matter, anything that would slow the momentum and drive that is possessed by the current ruler of retail: Amazon."
"Deliverr is helping to solve a challenge that both retailers and DTC firms are facing around mitigating the last mile."

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21 Comments on "Will technology even the last-mile playing field with Amazon?"


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Mark Ryski
BrainTrust

If this works as advertised, it will change the game for many retailers and close the competitive gap with Amazon. Optimizing for delivery requires machine learning, as well as well-executed and efficient physical logistics. Any company that can provide this reliably will find a massive addressable market.

Neil Saunders
BrainTrust

This kind of technology certainly helps as it gives smaller retailers the power of scale through collaboration. However, the success of this ultimately depends on economics. Amazon spends vast amounts on shipping and is happy to absorb the margin hit. Other retailers are in no position to do that, even if they can secure efficiencies through this kind of technology. That’s the real competitive challenge and hurdle to overcome.

Brandon Rael
BrainTrust

Digital transformations and supply chain optimizations are critical for retailers not only to even the competitive playing field with Amazon, but also to be more in line with a customer who is shopping, when, where and whatever channel they wish. Deliverr is helping to solve a challenge that both retailers and DTC firms are facing around mitigating the last mile.

While some may perceive same-day/next-day shipping as a race to the bottom, it clearly is not as it has become the standard expectations for companies. As retailers firm up their supply chain and logistics infrastructure and capabilities, by using Deliverr they can outsource some of these critical components, leverage the latest algorithmic intelligent technologies, and keep up with the competition.

Art Suriano
Guest
Maybe it’s me, but there seems to be another method of fast delivery almost every day — it’s causing a clutter. Deliverr’s program is excellent, which frankly is a lot better than their two-minute video I just watched. I am still not sure how important fast delivery is when compared to these other elements: 1.) Can I get find the product I want quickly online? 2.) is the price competitive? 3.) was it easy to pay for? 4.) How was the overall shopping experience? These four elements are vital to the customer for them to make the purchase and return to shop again. Unless it is an item of urgency (and most purchases are not,) the difference of a day or two for delivery won’t matter that much to the customer. Meanwhile, all the online businesses are scrambling to be the first company to get the product to the customer. This is costing tremendous dollars. It’s nice to have, but I don’t know that it’s a must-have. Only time will tell.
Gene Detroyer
BrainTrust

It isn’t you.

Peter Charness
BrainTrust

Succinctly put Art, especially your four-step “customer journey” basics. As to a new program appearing every other day — yup, and at least 50 percent of them are AI/ML enabled as part of the headline.

Suresh Chaganti
BrainTrust
Suresh Chaganti
Co-Founder and Executive Partner, VectorScient
7 months 8 days ago

Definitely an interesting trend. It is like a peer-to-peer network of warehouses. This is a massive shift from shipping only from own-warehouses. This means sellers have to stock the product at the closest points of consumption – from within one hour to two days of delivery. It requires a huge amount of flexibility and agility, and Machine Learning has a major role to play in recommending based on trade offs.

It is a welcome sign that an alternative to Amazon is emerging, though I fully expect Amazon to jump in soon to be a player in this space. It will be like Ford and GM investing in a rideshare company like Lyft.

Zel Bianco
BrainTrust

I hope it works. This will be a win for third-party sellers and the consumer. So much is misunderstood about AI and machine learning. It can be applied or layered on top of many applications and makes the dream of cheaper, faster, better a reality.

If Deliverr can pull this off, it will indeed level the playing field. This will not last long, however, as unfortunately I predict Amazon will move the goalposts once again.

David Naumann
BrainTrust
David Naumann
Retail Industry Analyst
7 months 8 days ago

Deliverr gives retailers another option to accelerate their ability to offer faster delivery options for their customers. Deliverr eliminates the need to invest in building costly warehouses and advanced analytics software to enable same-day and next-day delivery. However, nothing is free. While Deliverr’s fulfillment and storage costs appear reasonable, it may still be challenging for retailers to execute these services profitably. At least this gives retailers some options to compete with Amazon and Walmart.

Shep Hyken
BrainTrust

The short answer is that technology, Machine Learning, AI, etc. can make many areas of business more efficient, which can translate into being more competitive. I like Deliverr’s solution. It looks to be a good option for retailers.

Amazon has set the bar for shipping standards and it will continue to innovate and improve logistics. Walmart, Target and other major retailers are coming up with their solutions to remain competitive. All of this innovation is good for competition and good for the customer.

Jeff Sward
BrainTrust

This conversation pretty quickly boils down to speed and accuracy. First in developing the right product at the right place at the right time, and then on last mile execution. So premium levels of all facets of digital, tech and machine learning are going to separate the winners from the rest of the pack. But it’s more complicated than, “there’s an app for that.” How we humans embrace and utilize the tools becomes the final differentiator.

Oliver Guy
BrainTrust

There is huge potential here. Key to keeping costs down and minimizing concerns over sustainability/traffic, etc. is to increase the drop density. Pooling deliveries a key part of that. Moreover utilizing forward planning powered by AI alongside this offers an interesting approach.

Rob Gallo
BrainTrust

Amazon had the benefit of patience and capital. Others with game-changing technology have too – Uber, Tesla, etc. The issue here is that these companies are now taking on Amazon (the best-in-class incumbent). Amazon started off challenging Barnes & Noble. Uber was initially taking on taxi cabs. Tesla was taking on debt-laden car manufacturers. There’s a huge difference between taking on weaker players ripe for the picking versus best-in-class companies.

I agree with some of the comments made already; this is getting to be a cluttered space. There is huge benefit to figuring out a way to be the anti-Amazon as Microsoft is with Azure, but there will be many more failures than successes. And the funding here is a drop in the bucket versus what Amazon can throw at this.

Lee Peterson
BrainTrust

Too late! It’s hard to imagine a technology or, for that matter, anything that would slow the momentum and drive that is possessed by the current ruler of retail: Amazon. If anything, it’s efforts like these that can perhaps (operative term) allow a company to at least keep pace vs. the current runaway scenario. And P.S.: true or not, it’s good marketing on their part to bill themselves as having “the secret technology to catch Amazon that only we possess” — who wouldn’t want that?

Gene Detroyer
BrainTrust

“Anything you can do, I can do better…” If technology is a significant factor (I believe it is), there is nothing that prevents Amazon from adopting the same or better technology. The technology playing field will always be level.

But Amazon will continue to have scale and expertise and resources that others will have a hard time meeting.

Ryan Mathews
BrainTrust

As I have said over and over again here, technology is an enabler, never a strategy. The problem with all technological advantages is that they can be cloned over time. And that often means the “innovator’s” system ends up being the least effective solution. Those with long enough memories or students of technological history may recall when Kmart’s retail technology led the industry, until it really didn’t. So yes, machine learning tools will help Amazon’s competitors on one level, but on another they will still lack the scale and capital to match Amazon’s insatiable R&D budget. And so it goes.

Richard J. George, Ph.D.
BrainTrust

While these latest technologies will assist in the “last mile” battle, I am not convinced they will level the playing field with Amazon. Amazon is more than a logistics company. It is a customer focused, convenience oriented organization which knows its customers better than anyone else. Plus, it is prepared to defend its leading position. The problem I see with these new technologies is that many companies see them as “bolt on” solutions to distribution issues. While they may enhance distribution they need to be viewed in the full context of providing a delightful online customer shopping experience.

Mohamed Amer
BrainTrust
This is a very tall order but certainly worthy of pursuit. Put simply, Deliverr set out to deliver an Amazon-like fulfillment network and speed of delivery for the rest of online retailing. While artificial intelligence will be key in anticipating demand and pre-positioning items to the right fulfillment sites, you need to make significant investments in a national physical network, the technology within the DCs, the logistics partners and delivery network, and a robust and extensive enterprise system. The offer here is an entire supply chain infrastructure capped by advanced artificial intelligence to drive efficiency and effectiveness. Deliverr’s closing of their Series C funding is a solid milestone and suggestive of high expectations. However, I caution on overly optimistic projections given the four core supply chain elements the company must continuously invest in and excel at, in addition to an incessant application of artificial intelligence. Moreover, Amazon will not cease investing and experimenting as they continue to raise the fulfillment bar. I’m not suggesting we throw up our hands and cede it all to Amazon;… Read more »
Craig Sundstrom
Guest

Catch up? Ah hah hah! As most of us answered correctly, I would say, whatever advantages technology has to offer are most likely to go first to whoever has the most resources/money … and guess who that is. (You’ll get one try.)

And of course there’s always the big issue of how big or small those advantages really are. Sure, drones and other gizmos attract all the headlines, but “last mile” is usually more about fighting the mundane — traffic, finding a parking space, keeping labor costs under control — Amazon has a huge advantage in scale in dealing with these issues.

James Tenser
BrainTrust

Not to sound snarky, but doesn’t everybody use “machine learning and optimization technology” these days? That includes Amazon.com.

With that off my chest, let me say that Deliverr may in fact be on to something here. The so-called “last mile” problem really isn’t about the last mile, it’s about how quick is the first step? The van can’t drive any faster, so the one that leaves the nearest fulfillment center first wins the race.

Gene Detroyer
BrainTrust

Excellent observation.

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Braintrust
"It is a welcome sign that an alternative to Amazon is emerging, though I fully expect Amazon to jump in soon to be a player in this space."
"Too late! It’s hard to imagine a technology or, for that matter, anything that would slow the momentum and drive that is possessed by the current ruler of retail: Amazon."
"Deliverr is helping to solve a challenge that both retailers and DTC firms are facing around mitigating the last mile."

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