The consumer appetite for faster delivery is accelerating and is being visualized as a key competitive weapon by many firms that you buy from. An enormous number of ventures are vying for differentiation and dominance, and you will have the opportunity at the end of this article to participate in the forecasting of future dominance.
History
First a little history on important events to date:
Hermes, Greek god and Mercury, Roman god both represented speed and other attributes in the fourth century before the birth of Christ.
Wells Fargo began its history moving gold from the Sacramento hills to San Francisco in 1848 and became a bank when customers began requesting that the gold be inventoried, protected, and rewarded.
The Pony Express began in 1849 as a delivery service in Leavenworth, KS.
American Express started as a messenger service in 1850 from Manhattan.
UPS started as a delivery service in Seattle in 1907.
Airborne, Emery, and Flying Tigers started as forwarders right after WW II.
DHL was initially a service that had agents checking packages as baggage onto airlines and flying with them as passengers; they were started in 1969, were bought by the German Post Office in 2002, bought Airborne in 2003, and cancelled US domestic services in 2008.
Federal Express was incorporated in 1971 with the initial concept of moving checks for the Federal Reserve board. FedEx became the first company in history to hit $1b in revenue without acquisitions in less than 10 years. Apple was second and achieved the goal even more quickly.
This holiday season broke many delivery records for parcel carriers with FedEx estimating 280 million deliveries (13% over 2011), UPS with 527 million deliveries and the USPS at 385 million packages.
Express deliveries of one or two days are no longer the objective of many firms. Same Day delivery is the new mantra with dozens of initiatives under way and is literally the last mile of the global supply chain.
Competitive Field
A. Amazon – is very active in this space and has made investments:
1. Lockers located at Rite Aid and other sites
2. A robotic picker solution called Kiva Systems
3. Price is reportedly $8.99
B. USPS has a test called Metro Post:
1. 800.Flowers and some of its units like Popcorn Factory as beta accounts
2. Clients must have at least 10 US locations
3. Test lasts a year with extensions starting 11.12.12 with pick up by 3 PM for delivery by 8 PM
4. 200 packages a day maximum
5. Price must be at least 6x minimum first class rates = an estimated $2.70
6. Meanwhile, Pitney Bowes has funded a study to see if the USPS was converted to a last mile delivery only model with intercity transportation being outsourced to private industry, to help reduce the $16b deficit that the USPS created in 2012 alone
C. eBay service is called eBay Now
1. Delivery personnel are called Valets
2. Best Buy, JC Penney, and Target are reportedly in beta
3. Using technology they have like Milo and PayPal
4. Price is reportedly in the $5 range
D. Shutl, from the UK, received $2 million from a UPS fund, is considering the US for a new service and estimates this to be a $26 billion market by 2016
E. Task Rabbit and Exec both offer multiple delivery and task and job services.
F. Post Mates:
1. I spoke with Bastian Lehmann, CEO of PostMates, who has launched a same day service in San Francisco that is getting a lot of attention. Bastian sees these strengths for his business model:
a. Do not hold any inventory
1. This unlocks a virtual global inventory
2. Emphasizes buy local
b. Use smart phones for delivery and payment
1. Has developed a unique iPhone app
2. App has menus of 4000+ restaurants
3. App has 40,000 items from Whole Foods and Safeway
4. The driver utilizes the technology called square that is attached to their iPhone to receive payment for product and delivery when handing the recipient their order (I used this recently with my hair cutter and was amazed at the ease and reasonable 2.75% fee square charges the merchant)
c. Web usage is enormous and growing rapidly
1. Previous web fears are dismissed
d. My mom now uses the web and everyone under 30 has no hesitation
e. PostMates is using an open information environment, incorporates independent contractors, has been funded by $7 million and plans to soon open NYC and SEA. Bastian compares his company to what Uber has done in the limousine industry and sees restaurants as possibly 60% of his market.
G. FedEx also shows 20 markets on its website for same day metro delivery, on the ground, for:
1. PHX, LAX, SFO, DEN, MIA, TPA, ATL, ORD, BLT, BOS, DET, STL, NYC, CLE, PHL, MEM, DFW, HOU, SEA and DCA.
2. FedEx acquired many companies over the years including Flying Tigers Lines, Caliber Logistics (including Roadway Package Service), Kinkos, Tower, Parcel
Direct and 30 smaller carriers in Europe.
3. FedEx has a strong brand, covers over 200 countries, has thousands of vehicles, hundredss of aircraft, over 1000 sales people, thousands of national accounts, millions of customers, one of the strongest IT systems in the world, well placed hubs, and thousands of drop boxes. FedEx has routes as an airline and has some unique global landing rights. FedEx unlike UPS is considered to be an express carrier providing more flexibility of its work force.
H. UPS has acquired and absorbed Mail Boxes Etc., Sonic, Menlo, First International Bancorp, Fritz and recently gave up buying TNT Express.
1. UPS also has a strong brand, covers over 200 countries, has thousands of vehicles, hundreds of aircraft, over 1000 salespeople, thousands of national accounts, millions of customers, one of the strongest IT systems in the world, well placed hubs and 1000s of drop boxes. UPS started as a trucking company and emulated FedEx’ hub and spoke system in 1988; unlike FedEx, UPS is considered to not be an express carrier creating an environment where all of their drivers are in the teamster union.
I. Instacart is a new company that is focused on groceries.
a. In the dotcom period there were also major initiatives for the same day grocery delivery business with firms like WebVan in Silicon Valley and Home Grocer in SEA.
J. 3PD has claimed to have achieved five million annual deliveries for the last mile.
K. 1-800Courier, headquartered in Atlanta, offers same day service in most markets in the US using a network of same day courier companies.
Skip Trevathan is the former COO of Kozmo and remembers very well the incredible attention they received in the dotcom era. I have known Skip since he was Managing Director of FedEx Logistics Services and can attest to his leadership, knowledge, and operational skills. Kozmo offered one hour delivery and complete service to the five boroughs in NYC from three distribution centers. Skip said, “Downtown markets were dense enough to be profitable. The key then was to be the leader in major markets for Same Day B to B and become the biggest last mile delivery system with four to eight hour delivery so everyone could tap into it. Franchising would have been a natural for smaller markets.” Kozmo found that one dc in broad markets like Houston, LA and San Diego would cover at best 30% of the population. Kozmo was closed in 2001 even though it was very profitable in dense markets and had raised a reported $250 million (including $60 million from Amazon).
Forecasting
The battle for this valuable space will probably be ultimately decided with these factors:
1. Who is funded best and has a strong long term commitment
2. Whose network has the most attributes needed for success
3. Who is willing to invest in multiple acquisitions
4. Whether an open or closed environment is best for the service provider and the public
5. How quickly the organization’s focus can be turned onto this objective (it is difficult for the Queen Mary to make a U-Turn in the NY/NJ harbor)
6. Whether the USPS actually becomes a “hybrid model” responsible only on last mile delivery
I invite you to email me with your input as to who will come out on top of this potential mega market.
Your input will be used as summary data for possible future articles, and if you are right, I will also make it public that you called this correctly.
“The best thing about the future is it comes one day at a time,” Abraham Lincoln.
Rob Shirley is President of ExpresShip serving as a consultant in the global supply chain and can be reached through email rsxpship@gmail.com or reviewed on Expresship.com or LinkedIn.com.
History
First a little history on important events to date:
Hermes, Greek god and Mercury, Roman god both represented speed and other attributes in the fourth century before the birth of Christ.
Wells Fargo began its history moving gold from the Sacramento hills to San Francisco in 1848 and became a bank when customers began requesting that the gold be inventoried, protected, and rewarded.
The Pony Express began in 1849 as a delivery service in Leavenworth, KS.
American Express started as a messenger service in 1850 from Manhattan.
UPS started as a delivery service in Seattle in 1907.
Airborne, Emery, and Flying Tigers started as forwarders right after WW II.
DHL was initially a service that had agents checking packages as baggage onto airlines and flying with them as passengers; they were started in 1969, were bought by the German Post Office in 2002, bought Airborne in 2003, and cancelled US domestic services in 2008.
Federal Express was incorporated in 1971 with the initial concept of moving checks for the Federal Reserve board. FedEx became the first company in history to hit $1b in revenue without acquisitions in less than 10 years. Apple was second and achieved the goal even more quickly.
This holiday season broke many delivery records for parcel carriers with FedEx estimating 280 million deliveries (13% over 2011), UPS with 527 million deliveries and the USPS at 385 million packages.
Express deliveries of one or two days are no longer the objective of many firms. Same Day delivery is the new mantra with dozens of initiatives under way and is literally the last mile of the global supply chain.
Competitive Field
A. Amazon – is very active in this space and has made investments:
1. Lockers located at Rite Aid and other sites
2. A robotic picker solution called Kiva Systems
3. Price is reportedly $8.99
B. USPS has a test called Metro Post:
1. 800.Flowers and some of its units like Popcorn Factory as beta accounts
2. Clients must have at least 10 US locations
3. Test lasts a year with extensions starting 11.12.12 with pick up by 3 PM for delivery by 8 PM
4. 200 packages a day maximum
5. Price must be at least 6x minimum first class rates = an estimated $2.70
6. Meanwhile, Pitney Bowes has funded a study to see if the USPS was converted to a last mile delivery only model with intercity transportation being outsourced to private industry, to help reduce the $16b deficit that the USPS created in 2012 alone
C. eBay service is called eBay Now
1. Delivery personnel are called Valets
2. Best Buy, JC Penney, and Target are reportedly in beta
3. Using technology they have like Milo and PayPal
4. Price is reportedly in the $5 range
D. Shutl, from the UK, received $2 million from a UPS fund, is considering the US for a new service and estimates this to be a $26 billion market by 2016
E. Task Rabbit and Exec both offer multiple delivery and task and job services.
F. Post Mates:
1. I spoke with Bastian Lehmann, CEO of PostMates, who has launched a same day service in San Francisco that is getting a lot of attention. Bastian sees these strengths for his business model:
a. Do not hold any inventory
1. This unlocks a virtual global inventory
2. Emphasizes buy local
b. Use smart phones for delivery and payment
1. Has developed a unique iPhone app
2. App has menus of 4000+ restaurants
3. App has 40,000 items from Whole Foods and Safeway
4. The driver utilizes the technology called square that is attached to their iPhone to receive payment for product and delivery when handing the recipient their order (I used this recently with my hair cutter and was amazed at the ease and reasonable 2.75% fee square charges the merchant)
c. Web usage is enormous and growing rapidly
1. Previous web fears are dismissed
d. My mom now uses the web and everyone under 30 has no hesitation
e. PostMates is using an open information environment, incorporates independent contractors, has been funded by $7 million and plans to soon open NYC and SEA. Bastian compares his company to what Uber has done in the limousine industry and sees restaurants as possibly 60% of his market.
G. FedEx also shows 20 markets on its website for same day metro delivery, on the ground, for:
1. PHX, LAX, SFO, DEN, MIA, TPA, ATL, ORD, BLT, BOS, DET, STL, NYC, CLE, PHL, MEM, DFW, HOU, SEA and DCA.
2. FedEx acquired many companies over the years including Flying Tigers Lines, Caliber Logistics (including Roadway Package Service), Kinkos, Tower, Parcel
Direct and 30 smaller carriers in Europe.
3. FedEx has a strong brand, covers over 200 countries, has thousands of vehicles, hundredss of aircraft, over 1000 sales people, thousands of national accounts, millions of customers, one of the strongest IT systems in the world, well placed hubs, and thousands of drop boxes. FedEx has routes as an airline and has some unique global landing rights. FedEx unlike UPS is considered to be an express carrier providing more flexibility of its work force.
H. UPS has acquired and absorbed Mail Boxes Etc., Sonic, Menlo, First International Bancorp, Fritz and recently gave up buying TNT Express.
1. UPS also has a strong brand, covers over 200 countries, has thousands of vehicles, hundreds of aircraft, over 1000 salespeople, thousands of national accounts, millions of customers, one of the strongest IT systems in the world, well placed hubs and 1000s of drop boxes. UPS started as a trucking company and emulated FedEx’ hub and spoke system in 1988; unlike FedEx, UPS is considered to not be an express carrier creating an environment where all of their drivers are in the teamster union.
I. Instacart is a new company that is focused on groceries.
a. In the dotcom period there were also major initiatives for the same day grocery delivery business with firms like WebVan in Silicon Valley and Home Grocer in SEA.
J. 3PD has claimed to have achieved five million annual deliveries for the last mile.
K. 1-800Courier, headquartered in Atlanta, offers same day service in most markets in the US using a network of same day courier companies.
Skip Trevathan is the former COO of Kozmo and remembers very well the incredible attention they received in the dotcom era. I have known Skip since he was Managing Director of FedEx Logistics Services and can attest to his leadership, knowledge, and operational skills. Kozmo offered one hour delivery and complete service to the five boroughs in NYC from three distribution centers. Skip said, “Downtown markets were dense enough to be profitable. The key then was to be the leader in major markets for Same Day B to B and become the biggest last mile delivery system with four to eight hour delivery so everyone could tap into it. Franchising would have been a natural for smaller markets.” Kozmo found that one dc in broad markets like Houston, LA and San Diego would cover at best 30% of the population. Kozmo was closed in 2001 even though it was very profitable in dense markets and had raised a reported $250 million (including $60 million from Amazon).
Forecasting
The battle for this valuable space will probably be ultimately decided with these factors:
1. Who is funded best and has a strong long term commitment
2. Whose network has the most attributes needed for success
3. Who is willing to invest in multiple acquisitions
4. Whether an open or closed environment is best for the service provider and the public
5. How quickly the organization’s focus can be turned onto this objective (it is difficult for the Queen Mary to make a U-Turn in the NY/NJ harbor)
6. Whether the USPS actually becomes a “hybrid model” responsible only on last mile delivery
I invite you to email me with your input as to who will come out on top of this potential mega market.
Your input will be used as summary data for possible future articles, and if you are right, I will also make it public that you called this correctly.
“The best thing about the future is it comes one day at a time,” Abraham Lincoln.
Rob Shirley is President of ExpresShip serving as a consultant in the global supply chain and can be reached through email rsxpship@gmail.com or reviewed on Expresship.com or LinkedIn.com.
