How Online Shopping Is Fueling Growth in the Market for Last-Mile Delivery Robots

The robots are coming — to a sidewalk near you.

Unrelenting consumer demand for speedy fulfillment for online purchases is one of the biggest drivers behind the projected 49.5 percent growth in the market for last-mile delivery robots between 2019 and 2024, according to Mordor Intelligence. While the Asian market will grow most quickly, Mordor projects North America to drive the greatest demand for robots capable of delivering packages without human assistance.

For its part, McKinsey & Company says autonomous delivery vehicles, those that don’t need to be attended as they ferry parcels from hub or store to home “have the power to reshuffle the entire industry,” the company wrote in its July 2018 report, “Fast Forwarding Last-Mile Delivery — Implications for the Ecosystem.”

If technology advocates win out, autonomous bots could soon be as ubiquitous on your sidewalks and crosswalks as postal carriers are today. However, McKinsey pointed out that the pilots in play by startups and logistics firms come with high costs prohibitive to “widespread deployment” anytime soon. The consulting firm expects another decade will pass before these delivery bots are commonplace, projecting 2030 and beyond as the time when “robots will take packages right to customers’ front doors.”

Despite McKinsey’s cautious outlook, a number of players are eager to get their delivery bots out into the wild. Scout, Amazon’s six-wheeled trial bot, has been rolling around Washington State’s Snohomish County recently as the e-commerce giant proves the autonomous bot concept following its acquisition of delivery startup Dispatch. Not to be outdone, just weeks after Amazon’s bot came to light, FedEx showed off a similar delivery concept and announced pilot partnerships with high-profile retailers including Target and Walmart.

Of course, Chinese firm JD.com was one of the original innovators in the delivery bot space. After testing out auto-bots on college campuses and other “controlled” environments, China’s second-largest e-commerce player began using the logistics vehicles for Beijing deliveries last summer.

Delivery bots trials are cropping up in tech-friendly locales but McKinsey outlines barriers to scaling the technology, describing how “developing robot-delivery technology is a sizable structural matter.”

In its report, McKinsey continued, “Enabling robots to deliver parcels to a customer’s front door requires a high level of systems integration, which in its own right, is a significant technological undertaking whose development is ongoing.”

Companies in the tech and commercial vehicle sectors could stand to gain and “unlock additional value-creation potential” by throwing their hats into the last-mile ring, developing autonomous fleets or serving tier one retailers with white-label solutions.

While today many startups are jockeying for a place in the last-mile delivery bot market, expect consolidation to reduce the number of players over time — even when legislation aids in enabling larger robot deployments. San Francisco, a notoriously tech-friendly town, pumped the brakes on sidewalk bot testing in 2017, urging politicians and stakeholders to consider better regulation of these strange new devices.

Despite that minor setback, the push for last-mile bots continues because customer desire tends to win out in the end. As McKinsey puts it, “this technology represents key added value — namely customer convenience — as robots will be able to address the ‘last ten yards’ of delivery.”

Plus, delivery robots reduce emissions and roadway congestion caused by conventional trucks, though the push is on for logistics giants to switch to eco-friendly vehicles.

An autonomous approach to last-mile fulfillment could be essential in helping retailers capture and keep customers who increasingly value the role of technology in delivery the experiences they expect at lower costs than traditional measures.

Editor’s Note: This story was reported by FN’s sister magazine Sourcing Journal. For more, visit Sourcingjournal.com.

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