According to business and industry research specialists McKinsey, more than two-thirds of current urban delivery start-up companies are focussed in the prepared-food delivery sector. While medical deliveries are also significant and more individual customers are downloading an on demand delivery system to their smartphone for bulky household items shopped for online, it seems our fast paced lifestyle and desire for fresh food is driving couriers across cities. The ‘Uber for trucking’ type business owner is more likely to be helping with removals, or larger items across states and entire countries.
The bigger players in food delivery are already evident on our streets. Ocado is one such market leader, but in a fast developing market, we are sure to see other brands making a splash kerbside. With market dominance of players who can invest to scale up, they are able to capitalise on increased demand for ‘fast food’, that may also support a healthier lifestyle.
The higher gross margins for fresh and hot meals and other retail goods offer good margins. Unfortunately the grocery and retail sectors dominate the product urgency corner and so established, well-capitalised delivery companies are already out in front. For the newcomer to the on demand trucking and courier world, they will need to determine their unique sector services with their own personalised delivery solutions, which is likely to be challenging for the courier entrepreneur with no investment cash spare.
The reality, say McKinsey is that variable costs per delivery can be as much as $7 to $10 for local deliveries. This obliges start-ups realistically assess the limitations of an instant delivery model, versus same-day or 48 hour deliveries and to “reinvent themselves”.
For instance, pure point-to-point delivery can be time-consuming and costly. Leveraging networks, however, allows for faster and more economical service delivery. McKinsey describe this as “more cost-efficient network-based consolidation”. Newcomers might consider traditional delivery and logistics models, including product warehousing and employment of truck driver staff or car driver couriers, motorbike owners seeking to earn from their vehicle or even keen cyclists. Of course, under-capitalisation is often a key factor in business failure in the first five years and could be a constraint to this supply chain model, even if the business owner had the capability to plan set up.
Nevertheless, the research suggests that “…same-day delivery stands to outgrow instant delivery by ten to one, …over the next decade”. Key to growth here is the retailers; McKinsey estimates value of over $200 billion for retailers in Europe and North America being added by the growth of entrepreneurs unlocking capacity with technologies such as a courier management system, or other on demand delivery system to tap into the growth a market where third party logistics (3PL) is the preferred strategy for T&L brokerages and shipping companies at large.
For advice on capabilities of the latest innovations in on demand trucking and delivery systems, speak to a tech partner with extensive expertise in the transport and logistics sector.