The latest supply chain trend seems just a little too similar to an old and not particularly successful trend for some investors. But for consumers, it means a retail convenience to which they are flocking, as long as it remains available. What’s all this excitement about? Delivery, plain and simple.
A vast batch of new apps promise speedy, personalized delivery of virtually anything, from groceries and take-out food to laundry to service providers who will cut your lawn or clean your house before your surprise guests arrive tonight. The services are attracting significant venture capital and expanding rapidly. Even Uber, the car sharing service, is looking for ways to expand into the delivery of products, in addition to riders.
The scene was similar at the peak of the dot.com bubble, when websites made nearly identical promises of being able to deliver anything a computer user wanted, right to his or her door. But most of these sites struggled and then disappeared by the early 2000s, unable to fulfill their promise of rapid delivery at a reasonable cost.
The greatest hurdle, for both the historic delivery services and their modern counterparts, is the last step: getting goods from some central location to far-flung customers. This portion of the service necessarily requires couriers of some kind, whether they drive their cars up into a suburban driveway or bike their way through city streets to drop off the order. Couriers are expensive; having a fleet that is large enough and appropriately located throughout the delivery area demands a remarkable level of investment by the service firm.
But prior to this final step, something else sets the modern delivery services apart from their predecessors, namely, the influence of mobile, as opposed to PC, technologies and software. Relatively few consumers had access to online options when the previous generation of delivery services attempted to change the way people accessed goods and services. Today, virtually all U.S. consumers have some form of access, and for many of them, that access is in their pocket at all times, so the market of potential users is far larger. Because mobile consumers and mobile delivery providers can remain in constant contact, it also may be possible to achieve better scale economies.
By relying on cutting-edge software and sophisticated algorithms, the modern companies also facilitate better, flexible, and constantly updated links and communication between their customers and their couriers. Such efforts help minimize the time between the order and the delivery and optimize the efficiency of any courier’s daily routes, such that each employee can make more deliveries.
Furthermore, few modern services attempt to maintain the inventory themselves, whereas their web-based ancestors paid excessively to build warehouses and maintain extended supply chains. The mobile apps adopt a single, specific role in the supply chain: Connect the supplier to the end user.
Discussion Questions:
- Can one-day delivery services succeed today, whereas their predecessors failed? Why or why not?
- Do you use one-day delivery services? Would you?
Source: Claire Cain Miller, The New York Times, August 14, 2014