Among the chief beneficiaries of Covid-19 have been online shopping platforms. Shares in Amazon were trading at around $2,000 at the start of the year; now they’re going for more than £3,000. Jeff Bezos is on course to being the world’s first trillionaire. To support this explosive growth, the demand on the logistics industry has been incredible. We’ve all been sitting indoors, and had to resort to online shopping for what might previously have been basic necessities. Moreover, we’ve needed to entertain ourselves indoors like never before!
Will things be the same again?
Fortunately, direct business-to-consumer logistics had been in place for some time. Meeting the demand has thus been a matter of rapidly upscaling what’s already out there. It might be the case that, after the virus dissipates, consumers will return to their previous habits. But it seems likelier that this change will be partially ‘sticky’, and that, having gotten used to have groceries delivered online, we’ll stick with the practice even after the supermarkets are back to normal.
So, what might the future hold for the logistics industry? There are a few trends worth keeping an eye on.
Paul Herring, Global Chief Innovation Officer at RSM Global, warns against complacency. “If we look to a company like Amazon, which has seemingly perfected the consumer buying experience, we can see that they are still constantly refining and improving their process,” he says in a recent blog. “Having recently purchased several food retailers in the US, Amazon is looking to completely renovate the consumer buying experience by eradicating the need for cashiers. Amazon have also won approval to start using drones for delivery.”
What about Drones?
Drone-powered delivery is, of course, the science-fiction future that has long been in the making. Automated drones will one day drop parcels directly onto doorsteps, without the need for manned delivery vehicles. There are numerous technical and legal challenges which make this a difficult proposition for both Google and Amazon. First, the hardware will need to be developed: drones will need to be made reliable, cheap to run, and quiet. Noise pollution has been a big problem for early models, and this is only likely to worsen as the operation is upscaled. Dealing with the various air-traffic laws in the territories to which Amazon ships has also set things back considerably.
Bezos himself is quite open about his philosophy, which he summarized in April in his annual letter to his shareholders (a document which is widely circulated and widely respected outside of the business). He has long emphasised the primacy of the customer experience, and the word ‘customers’ appears twice in his opening paragraph. This is a lesson that the logistics industry might consider – if the end customer is happy in the long-term, then the business will succeed.