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-strategise 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.
Listed below are the key technology trends impacting the delivery innovation in retail theme, as identified by GlobalData
Autonomous delivery vehicles
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. This includes restrictions that limit drivers to 11 hours on the road per day. Also, autonomous deliveries will help retailers reduce labour costs, as over 75% of shipping costs are related to labour in the US.
The introduction of faster and cheaper deliveries will encourage shoppers to opt for home delivery services. Autonomous technology companies such as Nuro and Starship Technologies, which traditionally retrofit existing delivery vehicles with autonomous technology, are now building new autonomous delivery vehicles from the ground up to suit retail-specific needs.
Though retailers have been striving to incorporate autonomous delivery vehicles into their supply chains to reduce costs and increase delivery efficiency for some time, the Covid-19 outbreak has accelerated the process and brought an urgent need to incorporate contactless delivery processes. For example, throughout 2020, Amazon expanded the use of its autonomous delivery rover ‘Scout’ to build on its contactless delivery capabilities in the wake of the pandemic.
There is potential for drone delivery in the global retail landscape. According to a GlobalData survey, more than one-third (36%) of UK consumers would consider receiving online orders of small goods, such as grocery and health and beauty items, by drone. The survey also revealed that the Covid-19 crisis has driven interest in drone delivery; 41.2% of those that would consider the service believe that it is more hygienic than receiving a delivery from a person.
However, receptiveness to drone delivery is conditional and many customers who consider the fulfilment method expect it to be free. This will be particularly true for Amazon’s drone venture ‘Prime Air’, which it is currently developing in the US and the UK, as Prime has elevated consumer expectations for free delivery. While drone delivery is still in its infancy in the retail industry, trials are paving the way for future expansion. In October 2020, Tesco launched a drone delivery service in County Galway, Ireland, and in December 2020, Royal Mail announced plans to deliver parcels via drone to residents on the Isle of Mull, Scotland.
Warehouse automation has been a prominent way for retailers to streamline their supply chains for some time now. The use of robotics in order fulfilment 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. These technologies are being leveraged by retailers right from picking and packing products in warehouses and fulfilment centres, to making automated deliveries using autonomous vehicles and drones.
In April 2021, The Kroger Co. introduced its first Ocado automated online grocery warehouse in Ohio, US. The warehouse is one of 20 planned to open in the US in collaboration with the UK-based e-grocery specialist. In April 2020, Ocado launched its first robotic automated warehouse in North America. The warehouse is used by the Empire company to operate its online grocery home delivery service, Voilà, in the Greater Toronto Area, Canada. Earlier, in March 2020, Ocado launched an automated warehouse for Casino Group in France.
Blockchain technology is often referred to as ‘distributed ledger technology’ (DLT), where all the participants in a distributed network maintain a copy of the ledger of transactions. This cannot be changed over time as the next transaction is stacked over it to form an unbreakable chain of information. Blockchain can help retailers to better track the origin of stock, give them greater control over what they sell, and provide guarantees for food safety.
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 optimised and sustainable decision before sourcing from various suppliers, which can be invaluable in these uncertain times.
Retailers are striving to improve their delivery and logistics capabilities by launching various technology-driven initiatives aimed at providing a seamless delivery service to customers. Computer vision attempts to capture and interpret images or videos in a meaningful way. Retailers can leverage this technology to visualise how much inventory is present in a distribution centre and adjust their supply chains according to demand requirements.
Radio frequency identification (RFID) solutions
Many retailers have invested in integrated RFID solutions to monitor the real-time location of merchandise, minimise errors in managing inventory and returns, offer traceability and transparency, and prevent product theft. The technology allows retailers to track inventory throughout the supply chain process, from warehouse to store stock rooms to the shop floor. It is used to support shipping, as it enables retailers to track the movement of goods as well as check storage conditions, including temperature, and ensure that the handling of products is per suggested guidelines.
By combining RFID-enabled inventory with sophisticated electronic article surveillance (EAS), retailers gain insights into what products are best sold via ecommerce or physical stores and what stock replenishment is needed on the shop floor. RFID and the internet of things (IoT)-enabled technology—a combination of smart displays, store-shelf sensors, cameras, and digital price tags—help retailers manage inventory data with complete visibility.
This is an edited extract from the Delivery Innovation in Retail – Thematic Research report produced by GlobalData Thematic Research.