On demand: retail’s ‘uberised’ future?

business strategy 5The sophistication of the Australian consumer relative to the maturity of the local logistics market has been an ongoing challenge and source of disruption in retail for many years.

Aussie shoppers demand a level of immediacy and convenience that cares little for the geographical realities logistics providers and retailers face.

Within that context, the so-called ‘uberisation of the supply chain’ has come to the fore, driven by the expansion of Deliveroo, Foodora and UberEats into Australia’s major cities.

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Now, consumers are beginning to look more closely at their other retail purchases beyond food, as Julie Stevanja, founder and CEO of online athleisure brand Stylerunner, has recently noted.

“Customers are asking, ‘Why can’t I get my yoga pants the same way that my UberEats is delivered?’” she told an audience at Inside Retail Live.

“They want to see how far away it is and potentially even reroute it in a network.”

Stevanja isn’t alone. Solving the last mile problem has stumped even the most ambitious retail mathematicians, but in the last 12 months, on-demand delivery facilitated by the principles underpinning the sharing economy has captured the attention of major names like Walmart and Nordstrom.

The US grocery giant is utilising services provided by Uber, Lyft and Deliv to get groceries to customers faster and cheaper, emerging as a case study in the broader push to tackle the last mile after Uber CEO Travis Kalanick declared in 2015, “If we can get you a car in five minutes, we can get you anything in five minutes”.

Back in Australia, experts are predicting similar services to take off in the next two years, catalysed by the now confirmed entry of Amazon onto our shores, as a host of local retailers begin to experiment with on-demand services for everything from delivery to moving stock.

Solving for the last mile

Arani Satgunaseelan, principal consultant at supply chain consultancy ADP & Co, is convinced that Australia is on the brink of the next wave of logistical disruption. And while retailers have just started becoming familiar with free shipping, it won’t be long before they face a competitive imperative to provide fast shipping.

“Retailers in Australia already recognise what people what, but at the moment, consumer expectations are exceeding what retailers are actually doing,” she told IRW. “The concern is that Australian retailers aren’t moving quickly enough. For the older school retailers it’s just not in their purview to consider these things.”

Companies like Sendle and Zoom2u have already begun paving the way for the ‘uberised’ delivery of assorted retail goods in Australia, with the latter offering Ikea deliveries within three hours in inner Melbourne, Sydney, Adelaide and Brisbane.

Paul Greenberg, CEO of the National Online Retailers Association (NORA), thinks Ikea deliveries are just the beginning. Meanwhile, an increasing number of NORA members are starting to take notice of disruptive delivery partners.

“Collaborative consumption is starting to seep into all areas of retail. We’re just seeing the beginning of it – the results of the sharing economy are extensive and far-reaching,” Greenberg said.

Uberised delivery stands to address several common problems plaguing pureplay online retailers, Greenberg said. Indeed, retailers of all sorts have been partnering with logistics providers since the dawn of home delivery, but in recent years, customer experience has emerged as a challenge.

It’s a catch-22 for many e-commerce providers, who often can’t justify outlaying the capital for their own fulfilment service, but are unable to own their end-to-end customer experience as a result of outsourcing.

Uberised models employ the principles of the sharing economy to create performance-driven marketplaces that are transparent to both enterprise partners and customers. These services, such as courier ratings, live product tracking and accessible interfaces, have proven popular with consumers in flagship sharing economy markets such as ride sharing.

On-demand human resources

nickscaliIt’s not just customer facing supply chain processes that are facing disruption from the on-demand model either. Big box retailers like Nick Scali, Harvey Norman, Snooze and Bing Lee have begun using on-demand recruitment services  to navigate fluctuating and unpredictable labour requirements.

All have partnered with recruitment platform Workfast, which operates a mobile software platform inspired by Uber to provide warehouse workers to companies on short notice. Again, it’s a well-known supply chain pain point for large format retailers that’s being targeted, allowing retailers to use a performance-based system to smooth out labour spikes.

Alan Lewis, general manager of operations at Nick Scali, said the furniture retailer has been using on-demand labour to quickly fill labour shortages for warehouse operations and stock moving, rather than taking sales staff off shop floors.

“It’s helpful when we’ve needed to do major things in retail showrooms that only have a staffing of three or four on average,” he told IRW, revealing that Nick Scali is preparing to expand on-demand recruitment nationally.

“Uberisation is where things are going,” he added.

Workfast CEO Tim Nieuwenhuis, who claims his company has made $1 million in its first five months of operation, said that on-demand workforces will penetrate every industry, with a range of high-end fashion brands and large electronics retailers having already shown interest recently.

“It’s going to happen to every industry. Being on-demand means being able to have a contingent workforce that’s flexible,” Nieuwenhuis said. “Every business will have some element of their workforce on an uber-fied model.”

Attention is now turning to regulatory hurdles, with lessons learned from government reactions to the sharing economy. Nieuwenhuis said he’s already taking steps to ensure workers are following regulatory requirements.

Satgunaseelan also signalled possible regulatory challenges for on-demand delivery models, particularly around shipping dangerous goods, predicting a timeframe of two to five years before on-demand delivery is relatively commonplace in Australian retail.

“In the next few years, this will be a premium service, but I think we’ll be surprised at the consumer uptake, it’s even a verb now – just ‘uber’ it,” she said.

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