On-Demand Fulfilment — Understanding the Last Mile

If you look at Uber’s strategy, especially since the pandemic began, they are letting go of tangential businesses. They’re selling off their Uber freight business. They’re moving their advanced technology and self-driving group. They’re looking to explore a sale there while doubling down at moving people and delivery. They are buying Postmates to expand that reach effectively. Their entire business has been supported over the past two quarters by local deliveries and, I think, in that same way, that idea of local merchants being complemented by these national delivery mechanisms of last-mile delivery, whether it be your DoorDash or Postmates or TaskRabbit or whatever, the next technology is going to be that they can look to outsource the things that you’re not great at. Uber is very good at moving people and packages a short distance, with the local touch and local community flavor that a local merchant provides.

And what does that do with the concept of free shipping? Because Uber’s not going to do this for free. One of the challenges that I’ve always had is these delivery services for meals: you end up with a 30 hamburger a second meal you’re paying for a second meal.

That’s exactly right. They can deliver and, yes, they can manage the last mile, but at what cost? Because we’ve always been taught a lot of the retail business, like free shipping, right? So, what does that mean? Shipping isn’t free, though, right? And I think that’s what the consumer gets conditioned, right? We talk to our merchant partners on the Gooten platform and utilize the Gooten supply chain to think of shipping as a product because that’s what it is. When you buy an item to get it to the customer, you’re buying the product itself; and you’re effectively buying shipping. Now the consumer is conditioned to free shipping. Then you utilize “shipping the product” as an inducement to drive the customer towards where you’re trying to drive them to, typically providing free shipping or subsidizing the cost of shipping at 110 or 115 percent of your average cart value. They have to add one more incremental product, but what these local delivery services actually are doing is shifting consumer expectations, which I’ll admit I’m surprised about because I’m like you; I always expect free shipping.

There is a cost in getting that item to the end customer, to the door and, so, what is the value of that convenience? And what we see now is post mates and DoorDash in these and Instacart, and these delivery services are now putting a real economic price on the convenience of home delivery. And while that is the current situation, where you really don’t have other options, safely go out and shop. I think when we’re truly back to normal, you’re going to see a solidification. I think of the value of the delivery of that convenience, that time, that speed, while simultaneously recognizing that Walmart, for example, will start turning more and more of their real estate space into pickup and drop-off centers.

So, that last-mile delivery can effectively be done by the customer. So, they take the in-store experience and the time of shopping in-store out, which is a major convenience, but they don’t have to set up really complicated logistics networks. I think you’re going to see that more and more businesses and storefronts effectively act as hybrid logistics centers to get things to the end customer.

Read our interview with Gooten’s Brian Rainey