What’s Ahead for Last-Mile Delivery in 2020

Delivery is emerging as a competitive advantage for local retailers. In fact, in September 2019, Onfleet surveyed 1,000 US consumers to gather their impressions on online versus local store shopping and delivery expectations. Seventy-six percent said they would be more inclined to order from local stores rather than from Amazon if they could get same-day delivery.

With that in mind, here are some delivery trends we’re expecting for 2020.

• Consumer expectations will rise even further. Same-day delivery will become the standard in 2020, putting more pressure on retailers that want to compete with Amazon. In Onfleet’s survey, 78% of respondents said that their experiences with Amazon had raised their expectations for all types of deliveries.
• More brick-and-mortar retailers will add local same-day delivery. At Onfleet, we’re seeing a huge influx of retailers looking to add this service. Once primarily the bastion of restaurants, same-day delivery has become a popular option not just for national brick-and-mortar chains but also independent retailers with one or just a few locations who recognize that delivery can help them compete more effectively with online-only options such as Amazon. In the Onfleet survey, 54% of consumers said they would be willing to pay local retailers for same-day delivery. 

Brick-and-mortar stores that aren’t yet offering delivery would be well served to try to get this service in place before the holidays. An easy way to start is to work with a third party such as DoorDash or Postmates. Learn everything you can from that partner, and once you are able to accurately predict demand (this typically takes 3-6 months), take the function in house. Assuming the volume is there, you’ll reduce your costs and provide a better customer experience.

• We’ll see more consolidation among delivery networks. DoorDash’s acquisition of Caviar and the rumored sale of Postmates demonstrates that consolidation is the key to unlocking a sustainable business model for these networks. Why? Less competition will lead to increased pricing power, which will allow them to increase their take rate and decrease costs due to greater delivery density. However, retailers, beware — this trend could lead to increased costs for those who outsource delivery. Bringing at least some delivery resources in-house is the only real way for retailers to hedge against this inevitable future.
• Robotic delivery (a.k.a., drone and autonomous network) pilots will expand beyond the publicity stunt stage, but we aren’t likely to see widespread deployment until 2022. There are still regulatory issues, and the hardware costs are still prohibitive for most. The completion of NASA-designed UTM, a system for managing drone traffic, will provide a big boost for safe drone delivery. UTM is in testing right now. 

Today’s consumers expect everything on demand, and their retail purchases are no exception. Delivery volume is only going to increase over time. So, all retailers, from the smallest to the largest, need to develop a strategy to meet that demand.

Khaled Naim is co-founder and CEO of Onfleet.