Jeff Bezos once famously stated, “I can’t predict the future, but I can focus on things customers will always want. In retail, customers will always want cheaper products delivered faster and easily available.”
Nowhere is the future more at stake—and in some ways difficult to predict—than in the e-commerce space. Whether it’s grocery or retail, it’s shaping up to a massive battleground. Groceries alone are an $800 billion market. While countless industries have shifted from brick-and-mortar to online venues, a very tiny fraction—just 2%—of grocery purchase occur online.
Toward that end, Amazon is no doubt accelerating the shift. Their Prime Pantry program now ships non-perishable goods and household supplies, while its programmable Dash buttons let Prime customers reorder everyday items like laundry detergent in mere seconds. Their grocery delivery service is now bolstered by Whole Foods’ physical footprint around the country. They’re also networked with contractors used for its growing seamless-style food delivery service called Amazon Restaurants.
Not to be outdone, Walmart with its 4,700 stores nationwide gives it access within 10 miles to 90% of the U.S. population. That makes it better poised than any other company to crack the last-mile delivery challenge. All it needs to do now is figure out how build a reliable logistics network.
For all of the retail detail, the “wars” are really about shaping the reality of our lives in the not-too-distant future. Ultimately, the winner of the e-commerce battle, whether groceries or the greater retail one, will come down to which company better understands human behavior. “E-commerce is about the shaping of society and new cultural norms,” Brittain Ladd tells FreightWaves. Ladd is a Forbes contributor who has managed operations, supply chain management, and logistics for such companies as Amazon, Dell and Michaels.
The ways that e-commerce will help shape our economies is through the logistics that e-commerce requires. It starts small.
“E-commerce helps people be individuals,” says Ladd. “We can shop for whatever we want individually. Collectively we’re saying we want cheaper prices, and we want it delivered right to us. What is going to become reality, when planners and architects build cities, they’re going to build them with smart lockers and displays for being able to buy all kinds of food. Bytefoods is already doing this. They’re not vending machines, they smart machines. You’ll see companies work with developers to build offices for dropping off and receiving packages.”
“Amazon is smart,” says Ladd. “The big thing to happen to cities regarding e-commerce is retailers will work together to build distribution centers. They’ll be below ground. A lot of retail is lost if you have it above ground. It’s very challenging for cities to approve large fulfillment centers. They’re large. They require a lot of truck traffic. A smart city can consider building underground. So, essentially you give the people in these cities a sense of instant gratification. You can receive it anywhere—in the trunk of your car, in a restaurant, where you work; not just at your home.”
How our buildings and apartment complexes and homes are designed that are connected through technology to our homes. "Echo and Dash, those things are external to the home. You attach them. In the future smart cities, e-commerce will be built inside the technology inside the home. It could be through speakers. You’ll have more media in the home," says Ladd.
There’s two type of smart cities: the types that are yet to be built and those that have already been built and those you have to retrofit.
Being able to work with developers and architects to invest with them. One way to retrofit an area is to use empty buildings or inexpensive ones and build into these areas e-commerce. Perhaps they build into it the top 100 most ordered items.
It’s also about integration. How do cities integrate with e-commerce providers—whoever they are—and how do they leverage cities for the last-mile delivery? “That’s really the work,” says Ladd. “Maybe an apartment building is leased as a fulfillment center. Maybe they go to a hospital and lease unused space—or perhaps it’s used space, but it’s for materials that the hospital will need anyway.”
By 2025, integrated efforts will be the norm for progressive grocery retailers, Ladd predicts. “Instead of planning and executing by channel, retailers will support a consistent brand experience by viewing consumer touchpoints in more holistic ways. Consumers will engage with brands simultaneously across connected devices and on various platforms.”
One much-discussed aspect of this integration won’t be drones, however. At least not to the extent that may have previously been forecast. Of all the last-mile delivery options, few are more difficult than drones. “They’re susceptible to weather and high winds. They’re not available for use 24/7. You can’t have a drone make a delivery in the rain. Even high temperatures decrease the amount of weight a drone can carry. Then there’s the charging of drones. Where would they charge? Maybe you could have a drone land on a vehicle or a building. From a liability perspective as well. They actually have incredibly limited value. Could you at some point see some drone deliveries? Yes, but they’re going to be incredibly limited,” says Ladd.
“People always talk about last mile, but what about the last sixty feet?” asks Ladd. “How do the packages get into your house? Customers really want a package all the way up to the door. All deliveries won’t be autonomous. There’s still the human element.”
In terms of smart cities that don’t exist yet? China is building ecosystems to maximize the use of technology to automate. Whether it’s ordering or delivering. They’re building apartment complexes that anticipate this. They’re building smart lockers and office buildings for all this. They’re making it easier to build microfulfillment centers. Developers are already being asked how to build a smart home. Not on a large scale yet. “I cannot imagine in just a few years that homes won’t be build with the ability to receive a package,” says Ladd.
The next step may be on-demand food. “To me, this is what we’ll see first. It could be easy to integrate,” asserts Ladd. In fact, Zume is having autonomous trucks that travel throughout neighborhoods and cities that delivers food. These trucks have up to 50 ovens. They pull out the food as it’s ordered, cook it, and arrive at the door with the food hot.
Companies might end up saying, “I can do whatever you want. I can basically meet your needs. I can basically do that without you having to leave your home.”
In other words, the ways the retail and grocery wars will impact our lives is that they will allows us to be individuals and yet remain anonymous. As Ladd observes, there will be a wholesale ripple effect on how people mingle and really as individuals interact. What’s the impact on society?
If people don’t have to go shopping for ingredients, and they honestly don’t want to shop for the ingredients…the question to ask is: Is it “smart” to stay disconnected? Is it smart to never have to shop or go to a store? The ripple effect is going to impact restaurants and grocery stores—and ultimately society.