Delivery Innovation in Retail – Thematic Research

Over the last decade, delivery methods have undergone fundamental changes driven by technological advancements, increasing competition, and rising consumer expectations. Many retailers have been quick to re-strategize and restructure their logistics to find new ways to provide a convenient shopping experience to customers and gain their loyalty, while others have been slow to react and have fallen behind.  Despite the many advantages that online retailers have, the rise of the online channel has created a rapidly growing issue the last-mile delivery. For consumers, a convenient delivery experience comes down to three core aspects: the cost of delivery, the speed of delivery, and the flexibility of both.

Following the outbreak of COVID-19, many consumers shifted their spending from brick-and-mortar stores to online and are continuing to demand the fast and convenient delivery of products to their doorsteps. This has put significant strain on retailers and delivery companies working to fulfill last-mile deliveries. Last-mile delivery refers to the final stage of supply chain operations and is often described as the most challenging phase of any supply chain. During the early days of the pandemic, traditional brick-and-mortar companies like Walmart struggled to cater to the sudden increase in online orders, despite 90% of Americans living within 10 miles of a Walmart store. Online retailers such as Amazon are generally better equipped to deal with last-mile delivery challenges thanks to their well-established logistics channels and distribution networks.

As competition in the retail industry intensifies, retailers are adopting new strategies to provide a convenient shopping experience to consumers. Many retailers are introducing innovative delivery solutions in a bid to differentiate themselves from the competition. Consumer concerns over COVID-19 and the resulting shift to online have spurred retailers to invest in innovative delivery solutions to enhance their reach and cater to evolving demand with fulfilment options and short delivery times being of high importance to shoppers. While this was initially driven by the impressive fulfillment offer from a handful of selected companies (most notably Amazon), retailers across sectors are now shifting capital expenditure towards their supply chains.

What are the main trends shaping the delivery innovation in retail?

The main trends shaping the delivery innovation in retail are technology trends, industry trends and consumer trends.

Technology trends:

Autonomous delivery vehicles can lower the delivery time of online orders considerably as they can run and deliver products all day, unlike traditional deliveries that require human intervention. There is potential for drone delivery in the global retail landscape. Warehouse automation has been a prominent way for retailers to streamline their supply chains for some time now. The use of robotics in order fulfillment processes has been intensified in recent years, with numerous retailers adopting the latest technologies that require minimal human intervention to offer fast and error-free deliveries. Blockchain is widely used in supply chains to enhance product traceability from raw material sourcing to the end product. These technologies can help companies to virtually evaluate various scenarios to arrive at an optimized and sustainable decision before sourcing from various suppliers. Retailers can also leverage computer vision technology to accurately deliver products to customers through various distribution channels.

Blockchain is widely used in supply chains to enhance product traceability from raw material sourcing to the end product. These technologies can help companies to virtually evaluate various scenarios to arrive at an optimized and sustainable decision before sourcing from various suppliers, which can be invaluable in these uncertain times. As the COVID-19 crisis uncovered the advantages of supply chain diversification, retailers can use blockchain technology to partner with new suppliers and launch new supply chains.

Industry trends:

Across the board, the ecommerce channel has emerged as a winner during the COVID-19 pandemic, as it was the only channel that generated substantial revenue for many retailers. Convenience and compulsion have been the defining factors of the ecommerce boom. Quick commerce (q-commerce) is all about the fast delivery of small orders, unlike traditional ecommerce, which has average delivery times of 3–5 business days and accommodates larger orders. Retailers are incorporating more scalable and adaptable solutions in supply chain management to stay relevant in a highly dynamic and rapidly changing market.

As consumers are increasingly demanding quick delivery and convenient shopping options, there is a need for retailers to differentiate themselves by moving towards demand-driven supply chains and focusing on innovative approaches to sourcing, replenishment, distribution, and logistics. Although the initial cost of advanced technologies is extremely high and can cause short-term disruption, the potential long-term profitability will encourage retailers to adopt the systems.

Consumer trends:

The popularity of organic and sustainable products will continue to grow. There has been a sudden spike in the number of retailers offering sustainable products to appeal to millennials and Gen Z. These consumer demographics are particularly concerned about climate protection and the general well-being of the environment, especially after the global pandemic. Retailers will have to re-align their delivery approach to keep up with consumer demands surrounding sustainability.

Who are the key players in delivery innovation in retail?

Ocado, Amazon, Magazine Luiza, Mercado Libre, Tesco, Alibaba, Big Basket and Walmart are few of the key players in delivery innovation in retail industry.

Key players in delivery innovation in retail market

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Market report scope

Scope

• Value chains within retail industry.
• The technological, industry, and consumer factors that are driving delivery innovations.

Reasons to Buy

• Understand how delivery innovation in retail industry can help generate value.
• Equip yourself to deal with the disruption in delivery innovation.