WHY IT MATTERS: Digital Transformation

WHY IT MATTERS: Amazon will use failing and bankrupt stores and shopping malls to build warehouses so close to consumers that 1-2hr delivery becomes possible - the last hurdle in making eCommerce viable in many product categories (grocery, food, meals, and other high volume / low margin categories come to mind first of course).

WHY IT MATTERS: amazon appears to be testing another method of grocery fulfillment that leverages dark stores that are close to households (with dedicated staff and soon micro-fulfillment automation) and a network of freelance drivers that delivers orders in a very small area in order to solve the last remaining problem of eCommerce: delivery cost and speed.

WHY IT MATTERS: one of the best webinar on eCommerce fulfillment out there - in french!

WHY IT MATTERS: this is the Holy Grail of eCommerce: cheap, fast, reliable delivery of orders. Looks like grocery delivery, with its high frequency and large order size is the killer app as evidenced by these many tests by Walmart and - my own opinion - the acquisition of Whole Foods by Amazon. 

WHY IT MATTERS: order fulfillment and delivery is the last remaining hurdle to eCommerce. Loblaws in Canada will pilot a micro-fulfillment solution from TakeOff that impressed me last year at Shoptalk. In short, they create an automated back-store where eCommerce orders are prepared with a huge amount of automation. The question remains whether the economics is better for micro-fulfillment or if centralized warehouse fulfillment with hub-and-spoke delivery is better suited for high volume / low margin eCommerce that grocery is about. Thus this "test" by Loblaws. Note that Sobeys has decided in favor of more centralized ocado-driven automated warehouse and Metro remains with the more traditional decentralized (and manual) store-based pick-pack-deliver process. Given the low volume of orders for online grocery in Canada I remain partisan of a store-based manual approach but the economics I got from TakeOff was promising. Below additional links if you want to read more about takeoff and ocado.

- http://fmcs.digital/blog/a-new-store-experience-windowless-automated-micro-warehouse-with-hyperlocal-presence-may-be-the-future-of-grocery-shopping-takeoff-solution-suggests-this-may-be-the-case-robots-ai/

- http://fmcs.digital/blog/video-of-the-inside-of-ocados-robotic-warehouse-where-thousands-of-robots-pack-groceries-retail-robots/

- https://www.takeoff.com/why-takeoff

WHY IT MATTERS: the final frontier in eCommerce is delivery to the home - the "last mile". Retailers have been great at solving technical issues around selling online and fulfilling orders cost effectively in large warehouses. Delivery remains plagued with slow and costly solutions that have not much changed since the FarWest postal delivery by horse-drawn carriage (think about it). This must change and we must apply automation, robotics and other tech to improve that and make it so that any retailer can send a parcel in few hours for as little as the cost of gas/electricity to get the parcel to the customer...

WHY IT MATTERS: delivery is the final frontier in eCommerce and Amazon has made it a lot more expensive for retailers to compete. Who else has a network of distribution centers like this? Walmart? Kroger and other large grocers? They should invest in marketplace technologies to let smaller retailers leverage their distribution network because otherwise, HOW ARE SMALL RETAILER GOING TO COMPETE AGAINST AMAZON?

Once this battle is won by Amazon the last remaining blocker will be last-mile delivery and here UPS-FEDEX-USPS-CanadaPost-etc. are not making moves to cut down on costs so the land is open for a cost effective solution to emerge. Self driving cars? maybe? bringing back the milk runs? maybe.

Any ideas or solutions that come to mind?

WHY IT MATTERS: holiday season starts with black friday / cyber monday. Companies need to prepare to get their logistics and delivery ready. Some useful insights in this shameless plug from Canada Post...!

WHY IT MATTERS: when Walmart gets into something, you should watch out. Here it seems they are exploring options for grocery fulfillment and delivery - as everyone is trying to figure out what will customer prefer and where to make money. But the solution feels like back to the future: the concept looks like a sears pickup counter from the old days! The article also mentions some delivery options being tested by Walmart including autonomous cars and crowdsourcing.

WHY IT MATTERS: I tried this electric powered trailer at CES 2018 and it is truly amazing. Is this the missing piece in the delivery logistics nightmare of urban areas? Not sure but certainly fills a missing piece of the puzzle.

WHY IT MATTERS: delivery models are plenty and need to be expanded to reduce the cost of eCommerce deliveries.

WHY IT MATTERS: delivery is the last problem to solve to continue ecommerce growth. McKinsey explores the different delivery models for the last mile in this article.

WHY IT MATTERS: Amazon spends 14.2% of its net sales to fulfill orders and 12.2% to deliver them to consumers. Thus a quarter of the costs of products sold is allocated to logistical costs and this is the biggest hurdle to eCommerce wide adoption. Amazon and other pure plays have a number of key advantages over established brick-n-mortar retailers (no retail store costs, no store employees, etc.) but they have to battle with order preparation and delivery which traditional retailers delegate to their customers as they push their carts in the store aisle. In that context, recent announcement of Sobeys to leverage Ocado's automated warehouse technology or recent Amazon announcement to create a parcel delivery solution that competes with FedEx and UPS makes sense. Any retailer thinking of scaling its eCommerce operation should thus make sure that its business model is viable regarding fulfillment and shipping - all other elements of eCommerce are not an issue.

- Amazon SWA service: http://fmcs.digital/blog/amazon-package-delivery-service-to-compete-with-fedex-and-ups-swa-ecommerce-disruption-retailapocalypse/ 

- Sobeys Ocado partnership: http://fmcs.digital/blog/u-k-s-ocado-taps-into-canadas-online-grocery-market-with-sobeys-tie-up-is-canada-mature-enough-to-have-automated-grocery-fulfillment-centers-ecommerce-robots/ 

- Ocado's technology: http://fmcs.digital/blog/video-shows-ocado-warehouse-technology-that-sobeys-has-acquired-to-prepare-grocery-orders-is-based-on-an-army-of-small-robots-working-on-3d-hive/ 

WHY THIS IS IMPORTANT

The first question a good friend of mine always asks when I come to her with this great new idea (and it happens more often than not) is: "how are you going to make money?". And she is right: if the business model is not there, then no matter how much funding you get at some point in time, you will run out and will have to close. Simple. But frustrating for an entrepreneur to hear because my ideas are so great...!

That being said, I am old enough to remember the dotcom bust in 2000 and the various same-day delivery outfits that folded. Because they did not have a viable business model. So it may seem that the same has repeated here with one difference: the market is much larger than in 2000. Thus there may be some niche markets or geo that provide sufficient margins to make this a money making business. All others, see you next time.

I wrote about possible doom of same day delivery in the past so you can verify that I am not just saying in retrospect but that I called the shot years ago (earliest post is in 2013).

- first warning in 2013: http://sco.lt/6nkd4z

- same day delivery:  http://www.scoop.it/t/digital-transformation-of-businesses?q=same+day+delivery 

- food delivery: http://sco.lt/8tvFnl 

- same day not good, next day is great: http://sco.lt/4wpmQT 

- google same day not a great idea: http://sco.lt/67V5iz 

WHY THIS IS IMPORTANT

WE always think of grocery as non technical and very hands-on, touchy-feely. This is becoming less and less so, a testament of the profound impact that digital technologies are having in our society at large.

WHY THIS IS IMPORTANT

We think of robots as fixed machines that assemble cars. However, with the advances in autonomous driving we may see an explosion of delivery robots. We have seen experiments with the use of drones to deliver products (Amazon and others) and now we are seeing self driving robots appear on the streets as it is much easier to get permits for those than it is for flying objects that can crash and hurt people. This is important because delivery remains the Achille's heel of eCommerce (slow, expensive): whoever cracks this problem and comes up with a low cost and economical solution will make a killing.