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Grocery is the first frontier for delivery technology
BI Intelligence
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Growing demand for quick grocery delivery may put online grocers at the forefront of new technology to handle last-mile logistics, The New York Times reports.
Online grocery shopping is projected to grow, but will require logistics innovations to succeed. Nielsen projects that online grocery shopping will make up 20% of all US grocery shopping by 2025, accounting for $100 billion in annual sales.
In order to fulfill that high volume of orders, delivery companies must rethink last-mile logistics, a particularly complicated area for online grocery orders. That's because grocery delivery requires specific temperatures for different products with varying fragility. This increases costs in the last mile of delivery to customers’ homes, which is already the most expensive part of the fulfillment journey.
These high costs will likely push online grocers to adopt new delivery technology early on. Delivery drones and robots — like those being developed by Starship Technologies — can lower shipping expenses by eliminating labor costs associated with last-mile delivery. Delivery robots could be adopted earlier because they can carry larger cargo and are not subject to Federal Aviation Administration (FAA) regulations, which have kept drones grounded in the US for the time being. Without new innovations, grocery delivery services will be stuck constantly battling cost pressures, while trying to stake out their share in an increasingly competitive market.
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