If you live in a city, chances are you’ve had packages delivered hours after you ordered them online. Same-day or next-day shipping is popular for obvious reasons and Amazon’s estimated 65 million Prime customers are proof of that.
Customers are getting their packages faster and online retailers are making more money, but what’s happening to the middle man as delivery times decrease?
A new report by CBRE found that the rise in online shopping has completely overhauled the logistics industry. Companies can no longer rely on a few distant warehouses to transport their goods. Instead, they’re moving into smaller sites closer to city centers.
In other words, the shift into same-day and next-day delivery is literally reshaping how warehouses look. In order to fit into to urban areas, fulfillment centers are getting smaller and more prevalent.
According to CBRE, this move illustrates the logistics industry’s new focus on “the last mile” or the last leg of delivery. This last mile, from distribution centers to customers, has seen the most innovation as shipping times decrease.
“Customers expect speed and convenience, and logistics operators are compelled to give them what they expect in order to survive in this competitive business,” CBRE writes. “This is where technology comes into play.”
Tech startups such as Bringg and Deliv have responded to this demand. Bringg offers consumers real-time tracking information for their package, while allowing distributors to dispatch and manage orders from the web. With the service, drivers can interact directly with both customers and distributors. The same way you track your Uber or Lyft, you can now watch your package arrive.
Deliv also taps into the ride-hailing industry’s crowd-source model. With this startup, companies can mobilize a team of drivers when they schedule deliveries in a city. Much like ride-hailing, it’s both cheaper and more efficient than traditional delivery methods.
“For the first time in history, the fastest and most flexible same-day delivery is now also the cheapest shipping option,” Deliv touts on its website.
The other solution to last-mile logistics are lockers, according to CBRE. Deliveries to locker locations allow retailers to focus on getting their packages to one location, instead of hundreds. Amazon has led innovation in this market, and currently has them in 13 markets across the U.S.
With shipping times continuing to shorten, there’s a new market for innovation in logistics within the city, CBRE concludes. Growth in e-commerce has spotlighted a market for startups to disrupt.