Grand Junction - Local Delivery Reinvented

Category Archive: Technology

  1. The New Battleground for Customers

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    Over the years, logistics companies and carriers have waged war on various fronts. Pricing is an obvious one, and service level is another (next-day air, next-day AM, same-day), but today these have largely normalized across competitors. Now a new front has opened: customer visibility and experience.

    Shippers—whether retailers, distributors, or manufacturers—are increasingly looking for real-time visibility into where their shipments are in the supply chain in order to identify issues that cause production or availability problems—problems that may ultimately affect their sales. At the same time, customer visibility and experiences provided by ride-sharing companies (Uber, Lyft) and food delivery companies (Instacart, Grubhub) are increasing customers’ expectations. These experiences are rarely seen (yet!) in logistics but, as with fast shipping, are likely to become standard.

    Here’s a partial list of capabilities that drive a great customer experience and are not widely available in logistics. Over the next few years, they will become important for shippers and the carriers they work with if they are to meet evolving customer expectations. (Remember when Amazon Prime seemed like a luxury, and how within six years customers would no longer accept 5-to-7-day delivery?)

    1.  Photo and name of the driver, and vehicle information – Uber has set the standard on this one;

    2.  Real-time driver location – GPS location of driver when inbound for delivery or pickup;

    3.  Estimated delivery time;

    4.  Scheduling – customers should be able to schedule a reasonable time window for their delivery or return pickup (i.e., not the typical cable company four-hour window);

    5.  Driver quality score – know others’ ratings of the driver or carrier;

    6.  Real-time survey – capture feedback immediately after the delivery or pickup is complete;

    7.  Easy customer support access – access that doesn’t require a phone call or a cumbersome contact form, and that reaches the shipper, not the carrier, directly;

    8.  Centralized delivery visibility – one shipper-controlled place for the customer to track deliveries, as opposed to providing a tracking number and making the customer go to the carrier, as is typically the case today;

    9.  Simple online claims submittal and processing – for example for damages, lost items, etc.; and,

    10.  Notifications subscription – customers pick and choose when and how (text or email) they are notified/alerted to events (out for delivery, delivered, etc.).

    As in every competitive environment, there will be early adopters who provide these capabilities before the rest. The early adopters will build market share, potentially gain pricing leverage, and also become stickier relative to the laggards—the capabilities mentioned above have been key ingredients in Uber’s rapid rise. Some of these enhancements are easy (e.g., online claims submittal), but most are difficult due to most companies having old legacy technology and not investing in new technology for logistics.

    Even UPS, who proudly claims to spend more than $1 billion on technology every year, is moving slowly toward this next-frontier customer experience. In 2011 UPS started Fast Forward, which allows recipients to choose a delivery window in certain situations. And in 2016 they rolled out a map for recipients to see the real-time location of their delivery. But these services are only available for non-business customers of Next Day Air and International shipments—both of which are less than 1 percent of their business. This slow progress is an indication of how hard it will be for even large carriers, and therefore their shipper customers as well, to meet emerging customer expectations.

    The irony is that the very technology investments that allow carriers to provide visibility to their shipper customers, and in turn to their end customers, also improve efficiency and reduce costs for the carriers themselves. To provide a high-quality customer experience, carriers need to get their own houses in order first. Real-time operational visibility, systems integrations, and paperwork elimination are all drivers of cost reduction as well as prerequisites for shippers to give customers a great delivery experience.

    The very largest carriers and shippers with in-house technology teams may be able to improve their systems on their own, but the bet here is that most will need to adopt external technology to keep up. Who knows how long it will take for an Uber-like experience to become a requirement for shippers, but good times are likely in store for supply chain software companies that can meet these visibility needs.

  2. Why Every Logistics CEO Should Fear Uber

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    I was recently at an invitation-only conference with the CEOs of most of the important logistics providers in the United States. Several wider themes emerged: the good (not great) economy, the emergence of last mile delivery, et cetera. But the most surprising theme for me was the near-universal assertion that Uber will be entering into delivery but is not a competitive threat. Truckload, LTL, small package, and supply chain technology providers all were dismissive. Each had reasons why Uber could not compete in their portion of the supply chain. It’s true that some of these companies are very well protected; for example, international customs brokerages and dedicated chemical carriers are pretty far from the fray. But many will be impacted directly, and all will be in ways they may not expect.

    The most straightforward challenge is that Uber’s customer service strategies are raising the bar for everyone in logistics in much the same way that Amazon’s raised the bar for all retailers. As a consumer, when you take an Uber ride, you can: see a picture of the driver, view the route, get a prediction of arrival and drop-off times, rate the quality of the ride, and communicate directly with the driver. Put simply, this is a great customer experience. Not coincidentally, it also keeps costs down for Uber by pushing customer support onto the driver, and it drives quality, as drivers are managed based on customer feedback (we call this the driver’s reputation capital).

    As more and more folks use Uber, Lyft, and other providers with this new level of visibility, it will start to become a customer expectation for every type of delivery, whether passenger or package. First for consumers, then for business buyers. How do FedEx, UPS, and all the other logistics providers stack up? Not well. Many of them have little technology, and most do not allow any communication between recipient and driver; some are even prevented from doing so by union rules! How much longer will it be OK to order a $20,000 living room set from Restoration Hardware without this new level of visibility? Not long. How long until 3pl customers begin asking for this level of visibility? It’s already starting to happen.

    As Uber enters delivery, they may not be a direct competitor for every logistics provider, but they are raising the bar for all. Providers that can rise to the higher-visibility challenge will be at a competitive advantage against those that can’t. Logistics will have an altered competitive landscape dependent on investment in technology and a focus on the end recipient.

    Uber as a more direct logistics competitor is also emerging. Through their Uber Everything brand, Uber is beginning to offer delivery via their pool of two million drivers. I’ll cover how Uber is entering the logistics space in another post. In the meantime, if you’re a logistics CEO, CTO, or CIO, you’d better start looking for solutions to match the Uber level of visibility, as that expectation is coming to your market. And for some, Uber itself is coming as well.

  3. Amazon’s Flex Program Is a Private Uber

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    Amazon is quietly expanding a program where they work directly with independent drivers to do package delivery from local Amazon warehouses. The program, called Amazon Flex, is now active in a dozen cities, and pay $18 and $25 per hour to drivers, who work 4-hour shifts. They have some vehicle requirements, but are not overly restrictive in their recruitment. In fact, the requirements sound a lot like Uber driver requirements without the background checks. But why is Amazon building it’s own in-house version of Uber Everything?

    Because of delivery economics and competitive differentiation.

    Amazon Flex is extremely cost efficient as it removes the margin a local delivery carrier normally takes— carriers, which often use the independent contract driver model, have historically done a significant amount of Prime and same-day deliveries for Amazon. Carriers traditionally pay about 65%, of what they charge shippers for a delivery, to their drivers, and they keep the rest to end up with a profit after covering the cost of sales, recruiting drivers, routing and dispatching, warehousing and customer service. Flex dis-intermediates the carrier by using Amazon’s fulfillment centers, customer service and replicating everything else with technology developed in-house (final mile software and a driver app).

    By removing the carrier, Amazon is able to lower the cost by as much as 35%, while gaining even more control by interacting directly with drivers. Amazon is also showing savvy and a willingness to invest in the program by paying hourly wages. It’s a huge challenge to balance the supply (drivers) with demand (orders) when establishing a delivery network. By paying hourly, Amazon takes on the cost of low volume periods, a major departure from the approach of Uber and others that use an independent contractor model—they force drivers to accept low incomes during low volume periods. With sufficient order volume, Amazon Flex can shift to paying on a per delivery basis or towards paying out a higher wage based on a deliveries per hour metric, allowing them to control costs and drive operational efficiency.

    Competitive Differentiation
    Amazon likely wants Amazon Flex to be a closed network (i.e., proprietary) for competitive reasons. By working with carriers (local, regional, UPS or even UberRush), Amazon leaves open the possibility that their competition would simply use the same set of carriers to match their service offering (e.g., 1-hour, AM/PM). And, with Amazon’s massive, rapidly growing volume, they would effectively be subsidizing their competitors’ rates. Amazon Flex eliminates these possibilities, and puts more distance between Amazon and their competition.

    It’s possible that Amazon may go a step further with Amazon Flex, making it “open”—i.e., available for others to use much like they do with Amazon Web Services. Such a move would put Amazon in direct competition with UPS as a common carrier; however, it’s unlikely since Amazon is dependent, for the time being, on UPS and FedEx. And Amazon Flex would need years to mature before they could risk alienating UPS and FedEx.

    Why Is Amazon Doing This Now?
    Amazon is unique in that they have the volume to establish a private, dedicated delivery network. They can shift Prime volume from local carriers, or from UPS, to provide instant volume to Amazon Flex drivers. No other retailer has the volume, or efficient local fulfillment centers, to make this happen. Meanwhile, Uber has paved the way for Amazon Flex’s recruitment efforts and independent contractor liability issues. Uber is spending billions developing an independent driver pool, from which Amazon can recruit. Uber is also leading the independent contractor classification charge, and is fighting legal battles that will ultimately benefit Amazon Flex.

    Wrap Up
    Amazon’s private Uber network for package delivery is going to create even more challenges for retailers to overcome, and does not bode well in the long-term for UPS and FedEx. For retailers, a private network makes Amazon’s delivery economics and service levels nearly impossible to replicate. For UPS and FedEx, the proprietary network at minimum provides Amazon with negotiating leverage and potentially introduces their first competitor, one purpose-built for eCommerce and same-day delivery.

  4. Google Express Is Dying. (If It Can’t Evolve to Better Compete with Amazon)

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    Amazon is increasingly eating Google’s lunch when it comes to eCommerce. Amazon and Google compete in a number of areas, but it is their battle in eCommerce and last mile logistics that potentially has the highest stakes.

    Google is reliant on ads with 90% of its revenue coming from advertising sales, therefore, search traffic is critical to Google. But when it comes to online and mobile retail, Amazon has become the dominant brand to the point that consumers are skipping a Google search, and going right to Amazon every time they want to buy, or even research, a product. In fact, according to Retail Dive, 39% of consumers go directly to Amazon vs. 11% starting with a Google search– a complete reversal from 5 years ago, representing billions in lost revenue for Google.

    In response, Google launched Google Express, which picks up from retailers and delivers directly to consumers. Google’s goal is to add value to as many steps of a typical retail transaction as possible: search for the product with Google; checkout with Google Buy Button; process the payment with Google Wallet; and, get the order delivered with Google Express. Google’s eCommerce strategy is to provide services around eCommerce that will keep consumers coming back, and generate enough business for retail partners so that they help support Google (e.g., provide access to real-time inventory data). If you’ve ever used Google Express, it is terrific– it is consistently on time, vehicles are branded, the drivers are in uniforms and orders are nicely packaged. Unfortunately, Google has a service cost that is 3 or 4 times higher than Amazon’s same day delivery program.

    Amazon has a nearly insurmountable cost advantage on Google. They have incredibly efficient, and increasingly automated, distribution centers, whereas Google must “shop” for orders, no differently than I do, at their retail partners’ stores; they have product margin with which to subsidize their value-add services, whereas Google doesn’t markup it’s retail partners’ products (and it is not clear if they ask for a sales “commission”); and, they have huge daily order volumes, which dramatically lowers delivery cost. I estimate that Amazon’s cost for a same-day delivery to be below $4 per package, while Google’s current cost is closer to $14.

    Google’s high cost basis will improve by as much as 30% as retailers start to pick up the cost of “picking” from their own stores, and as their density and volumes grow. Google also has the ability to monetize eCommerce buyers through Google Wallet and ad sales so they do not need to exactly meet Amazon’s cost basis. However, Google Express still needs to lower costs significantly and there a few fundamental flaws that need to be fixed before they can become sustainable. 

    To date, Google is using a dedicated delivery model, using local delivery and courier companies to run branded vehicles for them that contain only their deliveries. This approach produces a high quality consumer experience, but it prevents Google from driving costs down by comingling their shipments with the 2 billion annual shipments the local delivery industry already does per year. By comingling, Google Express will reduce their tight grip on dictating every element of the service offering, but they will get to a much more sustainable cost basis.

    Comingling with existing volume in the local delivery industry will also allow them to expand more quickly and cost effectively. Instead of opening up new operations and building density (i.e., deliveries within a tight geography), Google Express would work with existing couriers to perform their deliveries and share the burden of the infrastructure and the benefits of density. For confirmation of the effectiveness of this comingling strategy, look no further than Amazon itself, who uses a network of local carriers and comingles over 100 million packages a year.

    If Google Express does not evolve, they run the risk of abandoning a key battle due to unsustainable costs, delaying roll-outs to new markets and even worse, losing the underlying retailers who are increasingly innovating in the last mile on their own. Without their underlying retail partners, they will not only lose the battle in the last mile but also the overall war on eCommerce.

  5. Top 10 Reasons Why Uber, Lyft and Other On-Demand Companies Will Struggle with Package Delivery

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    It’s a popular belief that the on-demand passenger delivery companies (Sidecar, Lyft, Uber) will soon — and easily — transition their technologies and driver networks to offer package delivery services. These companies do have great brands, cash to spare, and world-class apps, but that transition is going to be harder than most realize:

    1. Pickup – Passenger pickup is straightforward, especially when everyone involved has a mobile phone, is ready and waiting, and has access to photos of who and what to look for. Package pickup is much more complex and involves parking (commercial license plates), waiting in lines, and far less help in identifying the right package.

    2. Drop-off – Package delivery requires customer signatures, scan compliance, taking packages into buildings to seek out the correct addressee, and liability insurance if an item is damaged or mis-delivered — all new procedures for Lyft, Sidecar, and Uber.

    3. Comingling – Human passengers are unlikely to put up with a driver stopping to pick up or drop off a package. That means that drivers will find themselves forced to choose between passenger or package delivery, eliminating potential density benefits. And given that choice, most will probably find passenger delivery more lucrative and more interesting.

    4. Drivers – Drivers who do passenger delivery are not automatically suited for package delivery. Parking, pickups, drop-offs, liability considerations, and the lack of social interaction may be frustrating for drivers used to dealing with live cargo.

    5. Pricing – There are already local delivery companies in every market, making 1 billion package deliveries every year. They may lack strong brands, but they are a tempting alternative for shippers because their price points are already optimized, and they are experienced specifically in the package delivery business.

    6. Enterprise Tools– Retailers and other potential volume shippers need enterprise tools such as dashboards, package scanning, established pricing structures, and payment processing tools. These are beyond the capabilities of the current crop of consumer apps and will take time to develop.

    7. Customer Service – When an Uber driver encounters traffic with a passenger on board, no problem, as the customer is aware of the challenge in real-time. A customer waiting for a package, on the other hand, has a much lower tolerance for traffic, pickup, and drop-off challenges that can make a driver late. Before they are ready to deliver packages, Lyft/Uber drivers will need more elaborate customer support tools, and the companies behind them will need to direct far more of a focus toward operations and customer service.

    8. Exceptions – Package delivery generally comes with a predetermined time window, whereas passenger delivery is more open-ended. It will take time, and probably a lot of disgruntled customers, before Lyft/Uber customers readjust their approach to the realities of package delivery.

    9. Packaging – Passenger delivery has a unique set of concerns (cleanliness, politeness) that don’t translate seamlessly to package delivery (packaging quality, damage claims, controlled substances, perishable substances).

    10. Operations – On-time percentage? Damage rates? Signature capture rate? Scan compliance? Stops per hour? Refused deliveries? Package delivery comes with a universe of operational metrics that passenger delivery providers aren’t yet equipped to address.

    For these reasons and more, look for on-demand app-based providers to hesitate, falter, and even damage their brands while trying to break into the business of local delivery.

  6. Transportation Management Software’s Critical Gaps When It Comes to Local Delivery

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    Enterprises with any complexity or volume in their supply chain have long used technology to improve efficiency and better collaborate with their partners. It’s no surprise, then, that, according to a recent Gartner analyst’s estimate, more than 50 percent of large shippers have a transportation management system/software (TMS). When integrated across transportation providers and populated with contracts and rates across modes, a TMS offers a huge potential return on investment, primarily from optimizing shipments for speed and cost. Unfortunately, enterprises are finding that when it comes to managing last mile logistics and local delivery, their TMS can have significant gaps.

    Although a TMS allows shippers to optimize among the better-known last mile modes of small parcel carriers (FedEx and UPS), truckload (TL), and LTL carriers, they don’t handle shipments through local carriers (aka couriers) and independent contract local drivers. These gaps have been around since the beginning, and the majority of enterprises have been forced to close them through inefficient and ineffective manual processes or by building systems in house. Both a growing focus on improving the customer experience and the inevitable emergence of same-day delivery, storefront delivery, and other similar programs, which only local carriers and independent contract drivers are able to provide, are starting to shine a spotlight on these problems and make them a top priority for most shippers.

    How do existing TMS offerings fall short for local delivery?

    1) TMS providers are not integrated with local carriers. In fact, even the EDI networks / VANs, which many enterprises rely upon to connect them to their carriers, are not integrated with local carriers. This is a huge challenge with seemingly no solution, since there are thousands of local carriers in the United States alone, and by some estimates, nearly 60 percent have proprietary software.

    2) Unlike the small-parcel, TL, and LTL industries, local carriers tend not to be technology enabled. They don’t have CRM / issue management or standard APIs for data exchange, and, in many instances, they do not have driver-level information. Driver-level information is critical when it comes to managing the customer experience, as drivers are often an enterprise shipper’s face to the customer.

    3) There are no standard service definitions and rate structures in place for local delivery today. There is no CzarLite. To one carrier, a “same-day” delivery could mean pickup and delivery within 90 minutes, whereas to another, it’s pickup by noon and delivery by 6 pm. These differences make pricing and cost optimization very difficult.

    TMS providers have no choice but to tackle these challenges as the last mile increases in importance. I expect to see standardization emerge (service level definitions, pricing, and APIs) in the industry, along with a set of emerging TMS providers focused on the last mile. Every TMS provider needs to address these challenges now, or they may fall prey to the “local delivery TMS gap” in their next sales cycle.

  7. Telematics: Empowering a New Fleet of Delivery Drivers

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    The telematics industry is a rapidly evolving market that provides in-vehicle technology for vehicles such as fleets. Telematics provides data to and from vehicles to manage vehicle performance, routing, and driver metrics. More recently, Telematics providers such as Telogis and Fleetmatics have moved into providing technology for passenger vehicles, such as GPS mapping and voice controls. Fast forward a few years, and Telematics could also be empowering a new fleet of potential independent contract drivers for the local delivery industry.

    Telematics providers will eventually provide access to shipping marketplaces (Uship and Grand Junction) directly into vehicles that will empower individual drivers to sign on as independent drivers whenever it’s convenient for them. The telematics system will know a driver’s location, vehicle type, destination, and other relevant data that will make tendering a delivery pickup extremely efficient. Normal errands and road trips would turn into revenue-generating opportunities for every passenger vehicle. In fact, you may even see vehicle manufactures specifically designing and marketing vehicles with independent contractors in mind. This version of the future seems to match up with the emerging service economy driven by Uber and AirBnB.

    Telematics represents an opportunity and also a threat to the local delivery industry. On the upside, technology costs, recruiting, and driver shortages would be problems of the past for local carriers. On the downside, drivers will no longer be captive to individual delivery companies, which might lead to dis-intermediation of the local carriers entirely. Carriers who bake these evolving dynamics into their business strategy can seize the upside. Those that deny or ignore the emergence of telematics may be left in the rear-view mirror.

  8. It’s Time for Enterprises to Rethink Their Customer Delivery Strategy

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    While couriers have long been used for local or “last mile” business-to-business deliveries in the US, and for consumer deliveries in densely populated areas of the world such as Europe and Asia, the average American, when it comes to delivery, thinks only of big-name players such as FedEx and UPS. Or maybe they think of names, such as Con-way, that they saw on the side of a semi-trailer truck. Couriers, however, don’t only do next-day local delivery at rates lower than FedEx or UPS. They are able to provide a wide range of service levels for (quite literally) any product a business or consumer purchases. Because of their size and focus on a limited geography, couriers can do things that large national carriers cannot.

    First and foremost, they can tailor their service based on the shipper’s desires, whereas national carriers cannot for reasons of efficiency and scale. Are you looking for same-day delivery of headphones from a retail storefront to a consumer, scheduled delivery of pharmaceuticals to drugstore within a 30-minute window, or two-person delivery and installation of a washer and dryer with removal of the old one? The local delivery and courier industry has these unique service levels covered.

    It’s time that shippers reevaluate their delivery strategy, because technology adoption and advancement have solved the local delivery and courier industry’s traditional shortcomings, making couriers a better alternative to the national carriers or even a dedicated fleet. This will enable shippers to provide a better customer experience:

    Geographic Coverage – With a national carrier, a shipper only needs to work with a single company to offer delivery in the top 25 markets. Since couriers focus on a limited geographic area, a shipper looking to have a national local delivery network would potentially need to work with several dozen couriers. More transportation providers means more points of contact and potential failure, more parties to interface with your supply chain, and a generally more complex operation.

    Many shippers choose to reduce what they have to deal with by working with a managed transportation services (MTS) provider that specializes in local delivery or “the last mile,” such as RR Donnelley or Ensenda. A growing trend among progressive companies that do not want to outsource — for example Restoration Hardware — is to use technology that streamlines communication and collaboration across internal teams and with their couriers, minimizing the need to scale using people. Until recently, these companies had two choices: develop and maintain software in-house, which was the approach most long-standing users of local delivery chose, or significantly customize existing transportation or fleet management software (TMS or FMS) and integrate it with customer relationship management (CRM). However, over the past few years, a segment of local delivery software specialists, which includes us (Grand Junction), has emerged in the supply chain management software industry.

    Visibility – When a retailer, for example, uses a national carrier, their customers get real-time, detailed tracking information throughout every step of the delivery process. Historically, couriers have struggled to provide anything other than proof-of-delivery, and even then up to 48 hours after the delivery’s completion; however, technology has enabled couriers to provide a competitive customer experience. Through the adoption of mobile technology for drivers and the emergence of sophisticated dispatch software, couriers have the information to manage their businesses better and provide FedEx- or UPS-like visibility.

    A major challenge for shippers comes when they need to actually gather and present courier-provided information to their customer, or even make it usable internally to monitor and manage their couriers. Quickly it becomes apparent that the shipper’s IT team has a lot of work in front of them not only to build courier integrations, but also to maintain them. Unfortunately, many software providers, even the well-known TMS providers, don’t manage these integrations as a part of their solution, requiring companies to turn to EDI vendors. Grand Junction does, however, have preexisting integrations with >600 couriers and tools to monitor and drive scanning compliance, which makes the data usable and complete.

    Quality – The local delivery and courier industry long had a reputation for being low quality because it operated in an extremely low-cost and unsophisticated model. Whereas the national carriers hired full-time drivers and invested in training and technology to help them perform better, couriers did everything they could to keep costs low, from using independent contractors, who regularly came and went while working for multiple companies, to running their business by phone and paper. It’s not surprising that quality suffered. Today the industry is very different. The same technologies that have addressed the visibility challenges have given couriers information to better monitor driver performance and quality.

    Shippers, however, still need to monitor quality and work with their couriers to achieve the customer delivery experience they want. Unless the vehicle has a recognizable name on the side, a customer is more than likely to hold the shipper accountable for delivery issues. Heavy users of couriers, such as Office Depot/Max (a Grand Junction customer), recognize this is the case and use automated alerts and business intelligence on top of real-time information to proactively monitor quality and performance throughout the delivery process.

    While companies such as Amazon, Restoration Hardware, and Office Depot/Max may be far ahead of their competition as adopters of couriers, the bottom line is that technology makes it possible for any company to enjoy the advantages couriers have over the large national carriers without having to make hard trade-off decisions. Now is the time to reevaluate your customer delivery strategy and consider couriers. As a result, you can improve customer satisfaction and have the ability to implement same-day, storefront, scheduled, and two-person deliveries, all while saving money.

  9. A Proprietary Delivery Network…INSANITY

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    There seem to be daily announcements from technology companies that have local delivery as part of their offerings: Munchery, Postmates, Shyp, Instacart, Sprig, and a host of others. Each of these new companies faces significant challenges when introducing, and cost-effectively scaling, their delivery operations in new markets. Matching up supply (i.e., drivers) with demand (orders) is a challenge and usually results in back-breaking Yelp reviews and disastrous customer challenges. Check out the poor reviews for each of these companies, and more often than not, they’re due to delivery issues. Worse, the cost of recruiting, building, and managing these proprietary delivery networks requires serious capital and clumsy geographical roll-outs.

    Does every new tech company really need to build a proprietary delivery network? A shared delivery network, where multiple shippers access the same set of drivers and carriers, would improve availability, broaden geographical coverage, and dramatically lower costs. This shared supply model emerged in airline ticket shopping (i.e., SABRE), pharmaceutical distribution (e.g., McKesson), office supplies (United Stationers), and other industries as they matured. Why not learn from history and start out on the right foot? I fully expect the shared model to emerge in local delivery (led by Grand Junction); it would free up all these emerging companies to focus on where their value creation really lies: on sales, marketing, and the consumer front-end instead of the back-end logistics.

  10. Independent or Dependent? Use of Contractors Exposes Courier Companies

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    Need a cab? No problem! Need a driver? Let me get back to you.

    The local delivery and courier industry’s shift toward using independent contractors as drivers has had unexpected results. The movement started because owners wanted to increase flexibility, avoid tax, and reduce insurance costs. But as a recent article in the San Francisco Chronicle pointed out, the shift to an independent contractor model has combined with a mobile app to create a highly flexible and available workforce that is no longer captive.

    With the rise of Uber, Lyft, and others, taxi companies in the San Francisco Bay Area are losing access to their independent contract drivers at an alarming rate. Many taxi companies are unable even to put cabs on the road, since so many drivers have switched to the upstart providers. Gone are the days where drivers were forced to work for taxi companies to get access to fares.

    The non-captive nature of the independent contractor workforce in the taxi industry made it ripe for disruption. When the ride-sharing services launched, they never had to endure the huge costs of hiring employees to match up supply and demand. Once consumers had new options, they moved toward the new providers, and the drivers followed.

    The local delivery industry is about to experience exactly the same disruption. In fact, this industry is even more ripe for disruption, since it is a larger market ($46 billion), it has no national branding (the taxi industry at least has Yellow Cab), and the model has already been proven with the ride-sharing services.

    So what can courier companies do? One bit of advice is for local delivery owners to embrace, participate in, and potentially even lead in these changes. Taxi companies fought the changes, and as a result may be going the way of local bookstores and video rental outlets.

  11. Is Uber Delivery Coming?

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    Uber is doing an amazing job at disrupting the local delivery industry — at least the local delivery of people. But while it’s been applauded for opening up users’ access to taxis, what many analysts have ignored is its significant effect on drivers. Not only has Uber enabled drivers to escape from working for a taxi or black car company, but it has also empowered them to truly strike out on their own and be successful.

    It’s inevitable that the local delivery industry also will soon be “Uberized.” Today, although local delivery drivers operate as independent contractors, they are dependent on delivery companies who drum up business using modest sales organizations and local brands. If local drivers had direct access to this pipeline, they would jump at the chance to control their situation more tightly and would probably benefit economically, since local delivery companies retain 30-40% of revenue.

    The rise in driver independence is propelled by three changes. First, low internet and mobile technology costs now enable every driver to receive orders electronically. In the old days, delivery firms needed to provide Nextel phones or two-way radios. Secondly, local delivery companies have pushed more and more costs onto local drivers. By forcing them to work as independent contractors, delivery companies have freed them up to provide delivery services to anyone. And the last change? Powerful brands that aggregate the delivery orders and tender them directly to local drivers. That is where Uber, or another strong brand, will step in.

    There are segments of the local delivery industry that are protected (for example, sorting for routes and store replenishment programs need cross-docks). But when it comes to on-demand delivery, local carriers are at high risk of being dis-intermediated.

  12. The Quietest Company in Same-Day Delivery

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    Few people have heard of Grand Junction, and we’re OK with that. We’re the engine behind the emergence of same-day delivery in the US and Canada, and the architect of many recent quality improvements in the local delivery industry that have allowed it to become a true alternative to UPS and FedEx, private fleets, and the trucking industry. Our software-as-a-service (SaaS) platform processes a local delivery every two seconds, 24 hours a day.

    Why are so many using the Grand Junction platform for local delivery? We did the hard work of integrating the entire local delivery industry, whose members are sometimes called “couriers” or “local carriers.” It was hard work, since nearly 60% of the industry runs on proprietary or small providers’ software. These integrations are rich, flexible, ever evolving, and require a lot of effort working one on one with carriers to keep them running. Retailers, 3PLs or “app” start-ups looking to offer same-day, scheduled or 2-person delivery now have a single point to access couriers and roll-out nationwide delivery.

    We’ve also professionalized the local delivery industry, and upped the game in terms of quality, by taking the innovative approach of giving tools to local carriers so that they can self-manage quality, leaving less for the shipper to manage and a better experience for the customer. We believe this approach is a first in supply-chain software. Prior to Grand Junction, local carriers did not have tools such as CRM, GPS tracking, learning management, or alerts to manage by exception. As a result of our efforts and innovations, the local delivery industry, which was formerly the backwater of transportation, is moving up to prime time. OfficeMax, Transforce,  and dozens of other retailers, distributors and 3PLs  are managing or rolling out local delivery programs using Grand Junction’s platform.

    Local carriers are the only game in town if you, as a shipper, are looking to offer same-day, scheduled, two-person, or AM/PM delivery programs, and Grand Junction makes it possible for shippers to roll out these programs quickly and with confidence. This “Last Word on the Last Mile” blog is a place for folks to join in the conversation about local delivery. I promise not to talk much about Grand Junction and will mostly share my 15 years of experience, making observations about this rapidly evolving market as the changes are taking place.