Interviews, insight & analysis on digital media & marketing

The delivery robot always rings twice?

by Glynn Davis, founder, Retail Insider

When attending a technology conference hosted by Oracle around 2015 at the newly opened St Pancras Hotel in London the afternoon sessions included a presentation by the founders of Starship Technologies showcasing their autonomous delivery robot.

As the six-wheeled rectangular box with protruding aerial ambled around the stage I’ll admit I initially thought it was more gimmick than anything and had zero chance of gaining any sort of traction in its aim of delivering food items to people’s homes. 

Although the robots are hardly a regular sighting on most high streets around the UK they continue to be rolled out, notably through a partnership with the Co-op. This has involved the recent announcement of a service that will supply over 6,500 homes in the Wakefield area with groceries picked from local Co-op stores. This adds to services around areas including Milton Keynes, Northampton, Bedford and Cambridge. Overseas it has partnered with Grubhub in the US and S-Group in Finland.  

Starship currently operates a fleet of 2,000 robots – with the industry-wide acronym of ARDRs (autonomous roadside delivery robots) – that use a combination of GPS, cameras, ultrasonic sensors, radar, neural networks and (of course) AI to enable them to map environments to an impressive accuracy of only one inch. What this results in is a service that could be delivering food for a cost of only 6 cents per mile versus 20-times this amount for solutions involving humans, according to research from ARK Invest, which calculates larger deliver robots would cost around 40 cents per mile. 

One such larger solution has been developed by Nuro and utilises long and short-range sensors, thermal imaging cameras, radar, and audio/microphone sensors on its autonomous vehicles. It has agreed a deal with Uber Eats and is undertaking testing in Texas that could see the ARDR being rolled out widely.

The costs-per-mile for such delivery solutions are certainly impressive because the so-called ‘last mile’ of delivery continues to be problematic for online retailers. It is not only expensive but is prone to missed deliveries that simply add further cost onto the already economically onerous fulfilment process. As many as 36% of people have received a ‘sorry you were out’ card even for a delivery when they were at home, according to research from Parcel Pending by Quadient, which also found that 35% of people surveyed are more worried about parcel theft now than they were before Covid-19.

Robots are obviously not the only last mile solution available to retailers. Quadient is advocating secure lockers as an alternative both to robots and more meaningfully to click & collect, which has been the preferred cost-effective fulfilment method of many retailers. Even for mighty Amazon – without many of its own physical stores – this type of solution is proving increasingly attractive.

It has been promoting alternatives to home delivery in the US, with a recent initiative involving offering customers $10 to pick-up goods rather than have them delivered. Locations include Whole Foods, Amazon Fresh and Kohl’s stores. The company also has secure lockers.

Certainly these click & collect-type services, which include curbside pick-up in the US, can have a meaningful impact on a retailer’s economics. Target has found its average fulfilment cost per unit has fallen 40% over the past four years as these services have grown. The company now has a very impressive 95% of its total sales, including digital, fulfilled from its stores.

Care has to be taken though because, according to Quadient, as many as 45% of people say existing click & collect services, which often involve a customer services desk or a dedicated counter, have involved a poor experience leaving them with the view that they are too frustrating to use on a regular basis.

The balancing of economics and customer service is a perennial consideration for retailers and this is particularly acute when it comes to delivery – especially the last mile component – because e-commerce continues to be the fastest growing part of most retailers’ operations.

Whether this means Starship robots will become a feature on many more high streets remains to be seen but whatever happens they have already proved me wrong and I no longer regard them, or any other rival ARDRs, as gimmicks.