Faster, simpler, better: The delivery Olympics

The Olympic games are underway in Tokyo, and all eyes have been glued to the screen as we watch athletes leverage years of practice to beat out their competitors, often by mere microseconds. The question that plays on my mind when I watch some of these races is this — ‘What does it take to win?’. Can someone with clear genetic advantages beat out someone who has put in 10X more practice hours? Does money, and access to the best training facilities determine the winner?

There’s no clear answer of course — but it’s an interesting parallel to examine a race we have brewing closer home. The idea of who can be the ‘fastest to deliver’ seems to have captured the imagination of all the large delivery companies in India, with many starting to offer grocery and convenience deliveries within 45 mins.

Mo’ money mo’ problems

The Indian quick commerce market is starting off from a very different point as compared to other geos — there are no established players here yet, and thus the entire market is up for grabs. While capital will be key to scale and acquire customers fast, it is operational efficiency that will help you retain them without bleeding money.

The story is still very nascent in India and we have some exciting times ahead as we watch the stalwarts of the delivery world try and deliver the perfect last mile run.

The blitzscaling of quick commerce

The coveted ‘15-minute delivery’ has captured both the minds and wallets of VCs across the globe, with more than $14 billion being poured into this sector in the past few years. While GoPuff in the US and Getir in Turkey had been perfecting this model for years, it was COVID that lifted the wraps on what is now widely regarded as Delivery 2.0. Today there are a slew of well funded companies going after this, from Gorillas, Jokr, Dija, Flink etc. along with established food & grocery delivery giants like Doordash, DeliveryHero, UberEats and many more.

The idea is straightforward: The faster you deliver, the better your customer experience, and higher your retention – To deliver faster you need to have the right products as close to your customers as possible – To be able to stock cost-effectively within a city you need to have a network of micro fulfillment centers or dark stores.

Convenience over everything

The idea of on-demand delivery is to place convenience at the fore. Doesn’t matter if you’ve forgotten paneer while making matar paneer. Keep calm and continue chopping tomatoes, and the paneer should be at your door as the gravy thickens. It’s 2 am and you’re craving Rocky road ice cream – A quick tap on your phone and the delivery arrives before you’ve teed up the next episode.

Of course today this is a product for the top 5% of this country- but it’s a segment of the market that’s growing fast, is willing to pay and has now realized they need not move from home ever again.

The perfect last mile lap

The core customer proposition here remains your ability to deliver faster than anyone else, or in other words execute the perfect delivery lap —thus delivering an unbeatable customer experience. Perfecting this involves optimizing for every step of the process, and improving efficiency with each ride.

Six time Olympic gold winning swimmer Kathleen Ledecky’s lap is a masterclass in chasing perfection (I’m determined to hold on to this theme, I apologize in advance). While she doesn’t come with any clear genetic advantages as a swimmer, her attitude of doggedly chasing perfection and improving each second of her lap has placed her squarely at the top of the sport.

Here’s what it takes.

Step 1: Leap, dive and surface

Ledecky starts off with a high strength kick and enters the water at the perfect angle and height, and then continues to build her lead under water. By gaining precious seconds in this first leg, she’s able to exert significant pressure on those trying to catch up.

The first leg of any delivery starts inside the dark store, and doesn’t involve racing through the streets. There’s 3 distinct steps here — the pick, pack and dispatch. Orders are announced with an alarm that rings through the dark store, and employees have 60 – 90 seconds within which each order has to be completed. SKUs are arranged to make picking as easy as possible — fast moving products like chips and chocolates can be picked up without even moving. These are then placed in bags at the exit point, ready for dispatch.

Riders wait outside the Whole foods-Amazon dark store as packages are brought out.

Once the bags are ready for dispatch, the nearest delivery agent needs to be allocated. This algorithm works a lot better in a dark store model that runs on a 1:n route, vs a marketplace model which would have n:n routes, adding an additional layer of complexity. As more and more customers start using the product within a region, your store catchment area can decrease without compromising store throughput (Larger catchment x low penetration vs Smaller catchment x high penetration) – making rider allocation even more efficient.

Step 2: Stroke, breath and kick

Once Ledecky surfaces and kicks into gear, she leverages her signature stroke to grab and pull more water than any of her competitors. There are no wasted movements — her arms paddle and push as much water as possible, and she breathes while barely breaking the surface. It’s taken her years to get here, and she continues to perfect it each year, always chasing better mechanics.

Once dispatched, drivers follow the most optimum route to their destination, leveraging their familiarity with the roads. Depending on the delivery TATs, these drivers may do anywhere between 2 to 4 deliveries an hour, many on the exact same route. They know exactly which lanes to avoid and what roadblocks to expect. The mode of transport is also key, with many instant delivery companies opting for mopeds/bicycles which can weave through traffic much more easily.

Companies will have to measure average speed, route elevation, traffic signals, number of turns and customer distribution before arriving at the ideal delivery fleet size for each dark store. What makes it even more challenging is that order bundling is next to impossible if you’re targeting 10 minute deliveries — the probability of two orders coming from the exact same slice of the catchment area within the same time period is minimal. For TATs above 20–30 mins, bundling may be possible but you might end up compromising on customer delight.

Step 3: Turns

Minimizing time spent on turns is critical, especially in the longer races. Ledecky attempts to align her last stroke with her flip so that there’s no wasted movement — the idea is to maintain speed coming into the wall, and leverage the turn to kick and exit at the same speed. Here, another swimmer practices the same move.

Time for doorstep delivery can often be the rate limiting factor for on demand riders. Riders need to solve for speed of entry — by having ready access to gated communities and knowing the guards; Minimize time away from the vehicle — by knowing optimal parking slots and exact home addresses; They might even need to know where a lift is out of order or which resident talks too much. Having a dedicated fleet of riders who have strong hyperlocal awareness is critical to the success of on demand delivery.

In a majority of cases, the riders would have their next ride allocated by the time the delivery is completed — which means that there’s no time to waste, and the driver has to rush back to the store and repeat the cycle once more. This is a job that puts riders at the fore, and expects them to perform every hour. Thus your rider incentives and benefits could well define the efficiencies that you can achieve — it’s no longer a simple gig.

In conclusion, winning on-demand delivery will require companies to break down and rework each and every aspect of the last mile process. It remains to be seen how this will play out in our chaotic Indian streets, and how companies innovate to keep their riders moving.

What’s certain is that there will be no overnight success — Getir and GoPuff have ‘practiced’ this process for years and continue to perfect it. As Getir’s founder Nazim Salur puts it – ‘There are at least a couple of thousand details to our business while everyone else thinks there are a couple of hundred’

References:

• www.washingtonpost.com/sports/olympics/interactive/2021/katie-ledecky-swimming-olympics/
• www.ft.com/content/3acc197c-cd81-4b3b-a19b-32e58fc687e7
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