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Ecommerce marries the internet-based selling of goods and the physical process of moving those goods to a customer’s door.
The latter took center stage in Philadelphia this week at Home Delivery World, where logistics, fulfillment and delivery professionals gathered to check out the latest in last-mile at a time when the growth of ecommerce and supply chain challenges make this typically behind-the-scenes part of the equation more important than ever.
On the expo floor, attendees didn’t have to look too hard to find the future. Innovative vehicles, robots and devices were front and center in many of the booths. Throughout, sustainability was just as important as efficiency.
Here’s a look at five products that point toward where delivery is heading next:
Gatik: Autonomous box trucks for B2B short-haul logistics
A Gatik truck. (Photo by The Current)
This commerce conference doubled as an auto show. A standout feature at Home Delivery World was the vehicles on display around the expo floor.
Even with a number of vans and systems on display, Gatik’s box truck was impossible to miss. The company operates class 3-6 autonomous trucks, which range from 11-26 feet. They are designed for urban, semi-urban and highway environments.
It points toward an area that logistics companies are exploring that could have benefits for efficiency and the environment: The rise of autonomous technology brings opportunities to deploy vehicles without drivers. Gatik said its vehicles arriving at a time when the growth of ecommerce will necessitate more last-mile trips to be taken from hubs that are closer to consumers. Being able to send an unmanned vehicle to traverse the middle mile, in turn, will help transport goods through the network of distribution centers, micro fulfillment and stores or pickup locations that puts items in place for eventual delivery.
This truck isn’t just appearing on trade show floors. As the conference was kicking off, Gatik announced a new partnership with Pitney Bowes that will see its Class 6 trucks deployed in Dallas, starting in Q1 2023. According to the companies, Gatik’s trucks will make multiple deliveries a day as part of a “continuous, operational loop” across Pitney Bowes’ logistics network for ecommerce in Dallas.
Locus Origin: Autonomous mobile robots for fulfillment and distribution
Locus Origin's mobile robots. (Courtesy photo)
Efficiency is critical for logistics operations, meaning space and movement is critical, even in warehouses. This is an area where robotics is making a difference, as machines can assist humans with accuracy, and even remove some of the physically arduous work of lifting and walking. Locus Origin is the maker of an autonomous mobile robot system with multiple devices that are designed to hold the items that people pick from shelves in warehouses like fulfillment distribution centers, and help them organize it. The robots can hold a range of containers, such as bulk bucks, tote-arrays and shipping boxes. Plus, they have a tablet-based interface that gets workers up to speed.
They will soon be fanning out around the world, thanks to a new deal announced in late August that is said to be one of the largest in the industry. Transport and logistics provider GEODIS is set to deploy 1,000 of the autonomous mobile robots at 14 of its sites around the globe, including warehouses in the US and Europe. It marks an expansion of a partnership that began in an Indiana warehouse in 2018.
“As we continue to navigate industry-wide challenges such as skyrocketing ecommerce demand and labor constraints, it is crucial we remain committed to implementing the most innovative and effective robotics automation solutions available into our warehouses to allow us to best serve our customers,” said Eric Douglas, EVP of technology and engineering at GEODIS for the Americas, in a statement.
DroneUp: Unmanned aerial vehicles for last-mile delivery
DroneUp's UAV. (Courtesy photo)
When talk turns to the future of ecommerce, few innovations have the power to shift the paradigm like drone delivery. It would not only make delivery an unmanned endeavor, but move the transport of goods from the ground to the air. The idea of a drop takes on a new dimension when the package is being lowered from the sky.
It’s why DroneUp drew plenty of interest at Home Delivery World. The company’s delivery drones are currently being used in a pilot program with Walmart that is set to enable the retailer to reach 4 million households in the US. As we wrote when the pilot was launched in May:
Walmart’s service will make under-30-minute delivery available between the hours of 8 a.m. and 8 p.m. The fee is $3.99 for items totaling up to 10 pounds.
In testing, Walmart said it expected customers to use the service for emergency items. But the more popular use case has been the convenience it provides. The most-ordered item so far, the company said, is Hamburger Helper.
With drone delivery, operating at scale, this pilot has implications in plenty of areas, from the ongoing evolution of FAA regulations to customer interest in drone delivery in general. The results are likely to be influential.
Phononic: The Intelligent Actively-Cooled Tote
Phononic's cooling tote. (Photo by The Current.)
Curbside pickup and delivery have blossomed in the grocery space over the last two years, leading customers to increasingly expect that all items will be able to be ordered online, and that they will be able to arrive fresh. This brings a need for cooling solutions in the area of frozen and refrigerated goods, so that items can stay cold not just when they are being delivered, but also in a logistics network that is now involving a growing number of facilities beyond retail supermarkets.
Phononic’s totes are designed to answer that call. The totes harness cold chain innovation that uses CO2 and water to keep items cool while they are transported during the fulfillment process. Using basic elements as opposed to refrigerants, the totes are built with sustainability in mind.
According to the company, the totes offer a compact container to refrigerate or freeze items. They can be used to move items around a fulfillment hub, or create efficiencies in delivery by batching multiple items. Given the size and uniformity of the totes, grocers can scale the volume of totes they use as operations grow.
The totes can be deployed in a variety of steps of the grocery ecommerce process. One use in micro fulfillment centers, which are the smaller hubs being stood up in close proximity to customers to enable fast delivery. The totes can be moved around the centers, preventing the need to build large refrigerators. They could also offer an easy way to keep and move items for curbside pickup at grocery stores, or they could be used in delivery. It’s a reminder that logistics doesn’t only require considering the vehicles that transport goods or the warehouses where they are stored, but the containers they are carried during and between those steps, as well.
Zoomo: E-bikes for last-mile delivery
A Zoomo ebike. (Courtesy photo)
As delivery must cover more terrain, specialized vehicles can be applied to navigate distinct environments. In cities, ebikes can be useful for traversing a last mile with narrower streets, heavier traffic and shorter distances. Zoomo is providing these two-wheeled delivery vehicles to marketplaces and retailers, alike. The company is pitching itself as a solution for fleet management. With a motor onboard to make pedaling easier and GPS tracking, the ebikes are built for efficiency. A trailer can also be affixed to carry larger goods, pointing toward the potential for ebikes to carry more than just a few orders.
Taken together, the innovation on display at Home Delivery World made it clear that there won’t be just one way to get a product to a customer’s door. Logistics requires a network that is moving an ever-growing assortment of goods with different needs. A variety of technologies and vehicles will be necessary to transport them. The winners will be those who make it all work together, in the most efficient way possible.
Trending in Operations
Sortation centers are helping the retailer build on its stores-as-hubs strategy.
Like many retailers, Target undertook a massive digital buildout during the pandemic as ecommerce demand spiked.
The new capabilities proved to be the launchpad for impressive growth. In 2020, store pickup grew 600%. Same-day fulfillment grew 400% from 2019 to 2021. By 2022, the company was ready to double down on digital. It announced plans to invest up to $5 billion to scale operations, with store-based fulfillment capabilities among the big areas that would receive a boost.
It was an example of how the pandemic’s digital shift left a lasting imprint that would change a retailer’s footprint well into the future. But it’s worth remembering that Target already had the strategy that shaped this operational transformation in place well before COVID-19 arrived.
In the mid-2010s, Target adopted a stores-as-hubs strategy that put brick-and-mortar at the center of all operations, including digital. This meant that ecommerce orders would run through the store, just like in-person shopping. This has remained in place, and only grown. In the first quarter of 2023, more than 97% of sales were fulfilled by stores.
Stores-as-hubs was a radical approach at the time it was introduced. CEO Brian Cornell faced criticism that the two channels would cannibalize each other, and was out-of-step with the massive warehouse-based fulfillment network that Amazon was building. But in the end, Cornell was vindicated. The strategy put Target not only in position to capitalize on the pandemic’s digital shift, but to continue to see its stores be a destination when consumers returned to in-person shopping when restrictions were lifted.
At this point, Target’s nearly 2,000 stores are cemented as the center of ecommerce operations. But as it seeks to gain efficiency and speed in delivery, the retailer is bringing additional facilities into the network.
Now, Target sees opportunity to build ecommerce from the inside out.
Scaling with sortation centers
This year, evidence is emerging in the form of Target’s sortation centers. Positioned downstream of stores, these facilities combine technology and process logic to triage packages for last-mile delivery by the Target-owned service Shipt. Orders are still picked and packed at the store, but the sortation centers serve as the staging grounds that get packages out the door for delivery.
On the company’s first-quarter earnings call with investors, Target COO John Mulligan stressed that these centers are not highly automated.
“In fact, it's because of the relative simplicity in the design of these buildings and the efforts of an incredibly innovative and energetic team that we've been able to scale the number of these buildings so quickly,” Mulligan said.
Target is placing a big bet on these facilities. In February, it announced plans for a further investment in the supply chain of $100 million, focused on the sortation centers. It is enabling rapid growth. In 2022, the company had three centers, and now has nine. By 2026, it expects to have 15 centers in place.
These facilities are also serving as testing grounds as Target seeks to scale the delivery network.
A new facility in the Atlanta area is serving as an extension of the sortation center that has enabled Target to reach 3 million customers with next-day delivery.
“With this new facility, online orders that have been packed by Atlanta area stores continue to flow to the sortation center, where they're sorted and delivered via our national carrier partners or a ship driver,” Mulligan said. “However, a portion of local orders falling outside the sortation center's last-mile delivery area can now be transferred to the Smyrna extension, where Shipt drivers can pick them up and serve additional neighborhoods.”
Target and Shipt are also refining the path that packages take to reach customers. Shipt vehicles are being shifted to high-capacity models such as SUVs and minivans. These were used in 65% of last-mile deliveries in the first quarter, compared with zero a year ago. The vans service nearly five times as many packages, and enable route optimization that increases the number of packages delivered per hour.
It all adds up to reduced service costs for Target, and the company is continuing to build and refine processes at the sortation centers.
“Based on the success of these efforts, we're developing plans to begin testing high capacity vans at a larger scale,” Mulligan said. “In addition, we're developing a standardized faster way to load those vans, enabling package containerization and easy identification of the correct packages at delivery. In addition to simplifying the load process for the drivers, this new process will enable us to safely move a larger number of Shipt drivers in and out of our sort centers in a given amount of time, expanding our last-mile delivery capacity in these markets.”
Improving the ecommerce experience
To expand this last-mile capability, Target won’t be building massive fulfillment centers like Amazon. It already has large stores that offer proximity to large swaths of the population. Those can be outfitted to serve the same functions as large warehouses, and sortation centers help to expand them. Add in a delivery network via Shipt, and the pieces are in place to continue expanding and optimizing capabilities.
A scaled logistics network on the backend could also improve Target’s ecommerce experience on the frontend. For instance, increasing fast delivery could also open up more opportunities to deliver items with a shorter shelf life such as groceries, which is an area where Target is looking to expand. As Amazon has shown, consumers are also more likely to buy if they receive items in a convenient manner. Target’s stores have long benefitted from customers associating the shopping experience with their affinity for a retailer, just as much as they do the products they buy. Through fulfillment and delivery, it can extend the Tarjay cachet online, as well.
Ecommerce has always held the promise of being able to bring the store home. Target’s logistics strategy is putting that idea into action in a very literal way.