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While drone delivery development is speeding up this year, it’s clear that vehicles on the ground will still play a role in the logistics process that brings a package from a fulfillment center to a customer’s door in the coming years.
At the same time, there’s still plenty of room for innovation in that process. That includes the vehicles moving packages. Changes that are coming to the automotive landscape writ large will impact ecommerce delivery, too.
One of the key areas where a groundswell of change is emerging is the introduction of electric vehicles. With the growth of Tesla and adoption by the big car companies, electric cars doubled consumer market share to 5.6% over the last year, according to Cox Automotive. The arrival of a mass switch to battery-powered cars is moving to a question of supply, rather than demand.
Delivery and ecommerce firms are taking note. As they set ambitious climate goals, they're making moves to electrify the fleet of vehicles that brings packages to doorsteps. After all, switching to electric has a series of cascading benefits for ecommerce companies:
- Environment: Delivering individual packages to shoppers in a vehicle with a combustion engine creates carbon emissions. Optimizing routes has helped to provide reductions in this energy use. But going electric removes the emissions altogether. It’s one contribution an ecommerce company can make at scale to combat the impacts of climate change.
- Leadership: By setting up infrastructure and investing in new technologies, these companies are not just making an impact inside their businesses. They’re also showing others that it can be done, and offering examples of how to do it. Taking things a step further, the potential for shared infrastructure, especially charging capabilities, is easy to picture. After all, it wouldn’t be the first time Amazon created a new business unit out of operational innovation.
- Consumers: Everything comes back to what shoppers want. Recently released survey results show they want companies to do more on sustainability and that retailers are positioned to lead this charge given their direct relationships with consumers. In this sense, ecommerce and delivery companies are responding to consumer demands that concerns the way their companies are run.
- Costs: As shown by rising gas prices, the cost of fuel is volatile. Electric vehicles have the potential to keep this line item more stable.
So what will this electrification of ecommerce look like? In recent weeks, a series of announcements offered a look at the vehicles that are being tested, and how plans are accelerating.
Here’s a look at the latest updates:
Amazon + Rivian
Amazon's Rivian vans. (Courtesy photo)
In 2019, Amazon took an immediate step towards the net-zero goals it set out with the launch of The Climate Pledge as the ecommerce giant signed a partnership with electric automaker Rivian. In the coming weeks, some of the first vehicles to emerge from the collaboration are set to start hitting the road and making deliveries.
On July 21, Amazon said the custom delivery vehicles from Rivian began ferrying packages in Baltimore, Chicago, Dallas, Kansas City, Nashville, Phoenix, San Diego, Seattle and St. Louis. The companies are aiming to have the vehicles in 100 cities by the end of 2022.
Along with running on battery power, Rivian's vehicles are built with safety features such as sensor detection and automatic emergency braking. The vans also have a built-in connection to delivery workflow systems that provides access to routing, navigation and driver support.
An Amazon ebike in London. (Courtesy photo)
Amazon wants to reach net-zero emissions by 2040, and more vans aren’t the only part of the strategy. In July, The Guardian reported that Amazon is testing delivery bicycles in London and is planning to build micromobility hubs around the UK. This will reduce van trips, indicating the company isn't planning a full one-to-one replacement of its current fleet. Operated by companies independent of Amazon, this could be the start of the next generation of Amazon’s delivery partner program.
Walmart + Canoo
A Walmart delivery van. (Courtesy photo)
As Walmart makes moves to grow its fulfillment network with stores and new centers, the retailer is also planning to introduce electric vehicles to its delivery fleet to cover the last mile.
Walmart in July announced an agreement with fellow Bentonville, Arkansas-headquartered company Canoo to purchase 4,500 electric vehicles, with an option to increase the order to 10,000. Vehicles are expected to start to appear on the roads in 2023, and configurations are being finalized in the Dallas area in the coming weeks.
Canoo’s model is called the Lifestyle Delivery Vehicle, and the company said it’s designed specifically for quick dropoffs and small packages.
“Our LDV has the turning radius of a small passenger vehicle on a parking friendly, compact footprint, yet the payload and cargo space of a commercial delivery vehicle. This is the winning algorithm to seriously compete in the last mile delivery race, globally,” said Canoo CEO Tony Aquila, in a statement.
In a twist that shows there’s still competition in the business of creating a better environment for all, Amazon’s deal with Canoo blocks Amazon from buying vehicles from the company, according to Bloomberg.
US Postal Service doubles down
The USPS' next-gen delivery vehicle.
The US Postal Service is undergoing a modernization process that in part came about due to the growth of ecommerce. As it progresses, electric vehicles are becoming a bigger part of that future plan.
Last week, the USPS announced a revision to a contract that means a much bigger proportion of its new mail truck fleet will be electric than originally announced. Up to 40% of the new vehicles the postal service expects to purchase over the next two years will be electric, a news release states. That’s up markedly from the 10% that USPS initially detailed in plans released in February that faced criticism from inside the Biden administration.
The new order states that up to half of the vehicles that USPS plans to purchase from Oshkosh Defense will be electric. And the postal service isn't just changing the engine. The new model is a serious upgrade from the recognizable mail trucks that currently traverse streets. Known as Grumman LLVs, the previous trucks were built between 1987 and 1994. They also lack air conditioning and airbags, which the new models will add, Car and Driver reports. The trucks will also include a 360-degree camera and automated emergency braking.
FedEx + BrightDrop
FedEx's Zevo 600s. (Courtesy photo)
The big names in transportation have a role in electrification, too. That’s on view as FedEx’s electric delivery trucks start to hit the road.
The logistics company partnered with BrightDrop, a startup backed by storied car company General Motors. In June, the first order of 150 electric vehicles were delivered to a FedEx Express location in Southern California. In all, the companies plan to introduce 2,500 vehicles across FedEx operations over the next three years.
Powered by GM’s Ultium platform for electric vehicles, FedEx said the Zevo 600s have a range of up to 250 miles on a single charge.
UPS is giving electric assist to ebikes. (Courtesy photo)
In New York, UPS has a test underway that is designed to explore not only electrification of its vehicles, but also reducing their size.
The company’s eQuads are pedal-powered, with an electric-assist feature. Designed to get between buildings and navigate skinny streets, they would add to a fleet that already includes 1,000 electric vehicles.
While New Yorkers interviewed by the AP for a recent article mused at the design, we’ll take the opportunity to offer a reminder: The car probably looked funny to people at first, too.
Trending in Operations
Applications are open for startups interested in the 12-week Store Nº8 dCommerce Base Camp.
Walmart incubation arm Store Nº8 and Web3 accelerator Outlier Ventures are teaming up to support retail startups.
The organizations opened applications this week for the Store Nº8 dCommerce Base Camp accelerator. The virtual program will offer education, funding and mentorship to startups building solutions in Web3 that are designed for the retail and commerce experience.
Focus areas for selected startups will include decentralized infrastructure, data and growth solutions, immersive experiences and the metaverse and the intersection of AI and blockchain technology.
“We think dCommerce represents a huge opportunity to unbundle ecommerce into its constituent parts, and into a more decentralized and composable stack of protocols to create a more efficient, equitable and improved experience for retailers and consumers from CRM to last-mile delivery," said Outlier Ventures CEO Jamie Burke, in a statement. "There is clearly no better partner than Store Nº8, as Walmart's incubation arm, so we are thrilled to launch this accelerator program together.”
Beginning in mid-August, founders will take part in a 12-week program. The cohort members will receive funding and access to subject matter experts from Store Nº8 and Outlier Ventures. They will also receive support from industry mentors in areas such as product roadmap development, the token economy and fundraising.
“Decentralized commerce has the potential to unlock new value in the global commerce ecosystem, so we are excited to partner with Outlier Ventures to support and engage with entrepreneurs building at the forefront of this technology on their path to scale," said Store Nº8 VP Thomas Kang, in a statement.
The new program arrives in the year after Web3 and the metaverse saw a spike in interest from brands and retailers, as the arrival of immersive platforms opened up new digital environments where consumers gathered. Walmart entered the metaverse through an activation on Roblox, and also introduced a platform for digital collectibles. But it remains a nascent space, so there’s room for startups bringing fresh ideas to help larger enterprises develop capabilities. Alongside connections that help startups move forward, such learning is one potential outcome of the accelerator could last beyond the 12 weeks.
Applications for the accelerator are available here.