After blogging last time about the intended roll-out of drone delivery services by Amazon, we’re keeping an interested eye on technological advances that continue to rapidly transform the delivery market. Europe’s postal companies – already under pressure from Amazon’s own nascent carriage service – could soon face a challenge from Uber, which is moving into deliveries, and from other start-ups like PiggyBaggy and Nimber offering similar services.
Industry disrupter Uber, who so effectively carved a chunk out of the people-delivery market with their mould-breaking taxi App, are now rolling out their own parcel delivery service. UberRUSH has already launched successfully in New York, San Francisco and Chicago in partnership with retailers and fashion brands. It’s obvious that the taxi model, relying on ordinary people rather than companies to transport people in a cheaper and faster way, is equally applicable to the delivery market – transforming customers’ experiences and enabling users to rate their service.
Uber is the most financed start-up in the world, valued at $50bn, but the entire international taxi industry is only worth $22bn in income and Uber runs at a loss. Comparatively, the domestic global courier and parcel sector spawns around $246 billion in revenue, and the fast-growing Same Day and On-Demand market in the US alone is worth $8.7bn. Uber sees the UK’s £7.1bn courier market as a particularly fertile sector for logistics and if they were to capture 10% of this market that would represent a £700 million win.
How likely is this to happen? Well, Uber has the scale to enable retailers to ‘get local’, doing away with the need for National Distribution Centres (NDCs). Their technology could also offer clients the prospect of setting the price they wish to pay, and sharing deliveries to cut costs and lessen environmental impact in the future. There is also the possibility of a significant tie-in (and probable merger) with an online giant such as Amazon, Google and Microsoft. Google has already invested at least $258m in Uber, Microsoft reportedly $1bn and Amazon’s Jeff Bezos a substantial sum. Uber is working on projects with all three.
The Same Day and On-Demand delivery markets are lucrative and largely filled with manysmall companies. Start-ups such as PostMates, Shyp and Shutl are expanding the market but still exposed, as the demise of Sidecar’s crowdsourced delivery service at the end of 2015 highlights.
Uber has a vast network of drivers that can also be used for deliveries – over 15% of them with delivery industry experience. But extraordinarily, Uber could bypass drivers entirely in the future and deliver people and packages by autonomous vehicle, which it is already developing.
And how does this affect more localised companies such as Spicer International? Well, Uber only concentrate on the same day market so if your customer is more than a taxi-ride away then Uber would be cost-prohibitive. Then there is the issue of weight and size – unlike Spicer International, Uber isn’t a one-stop-shop for all your deliveries – they are niche. Whilst theirs is certainly a market disrupter for the big players we already offer a more cost-effective Uber-style service for local deliveries. How does all this affect you? Greater competition = better rates and faster services. The big players need to move and move fast.
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