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WHAT’S NEXT?
How Google, Amazon and Uber Plan to Disrupt Online Retail Logistics
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Agenda
ONLINE RETAIL LOGISTICS
Online retail’s last mile challenge
What is disruption?
3 potential disruptions of online retail logistics
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3The biggest challenge for the first online retailers was covering the cost of last mile fulfilment
ONLINE RETAIL LOGISTICS
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420 years on… and online retail still faces the challenge of unprofitable last mile fulfilment
ONLINE RETAIL LOGISTICS
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5With online sales doubling every six years, the economics of this unsolved problem are unsustainable
ONLINE RETAIL LOGISTICS
SALES THROUGH A DIGITAL CHANNELEx: PURCHASING ONLINE, DELIVERY AT HOME
2000 2015
1%7%
2030
?
Online accounts for 7% of retail sales and it’s doubling every six years
2/3 of online sales attract free shipping
Only 16% of online fulfilment is profitable
Amazon makes only 0.75 cents profit for every dollar of sales
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6Most current efforts are incremental
ONLINE RETAIL LOGISTICS
Today
Productivity
Required
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Things have to change
ONLINE RETAIL LOGISTICS
“We can not solve our problems with the
same level of thinking that created them“
Albert Einstein
We need to completely re-think online retail logistics
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Agenda
ONLINE RETAIL LOGISTICS
Online retail’s last mile challenge
What is disruption?
3 potential disruptions of online retail logistics
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Everybody is talking about disruption
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Source: HBR, December 2015 (Christensen, Raynor, McDonald)
NUMBER OF ARTICLES QUOTING “DISRUPTIVE INNOVATION” AND
“DISRUPTIVE TECHNOLOGY”
ONLINE RETAIL LOGISTICS
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10Disruption is when a low-end innovation is introduced
and refined and eventually takes over the market
ONLINE RETAIL LOGISTICS
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Incumbents have a “blind spot” for disruptors
ONLINE RETAIL LOGISTICS
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Agenda
ONLINE RETAIL LOGISTICS
Online retail’s last mile challenge
What is disruption?
3 potential disruptions of online retail logistics
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Potential disruption 1: “Natural monopoly”
ONLINE RETAIL LOGISTICS
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Potential disruption 2: “On-demand logistics”
ONLINE RETAIL LOGISTICS
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Potential disruption 3: “Infinite variety at low cost”
ONLINE RETAIL LOGISTICS
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Summary
ONLINE RETAIL LOGISTICS
“People don’t want to buy a quarter-inch
drill. They want a quarter-inch hole.“
Clayton Christensen