In its latest white paper, Autonomy delivers: An oncoming revolution in the movement of goods, KPMG’s automotive practice explores the impact of autonomous technology and artificial intelligence on the last-mile delivery of retail merchandise. With that theme in mind, moderator Tom Mayor kicked off this session, saying “We're hitting an inflection point that is creating a new service proposition for retail today.”
Next-day delivery? Same-day? That’s great, but we’re looking at same hour, just like your pizza order. And it’s closer to real than you might think.
Need an HDMI cord for your new flat screen TV and don’t want to fight the traffic? It’s going to happen, but the vehicles aren't going to be running optimized routes with multiple stops. They're going to be bringing you, just you, your HDMI cord. No multiple stops on the way. It's going to be a small cube truck and it's going to be running in and out from pickup location to your location. And, according to Mayor, there are going to be millions of them.
As the team was writing Autonomy delivers, modeling it with a little bit of consumer research and a lot of hypothesis, they concluded that there could be an incremental potential for 90 billion deliveries a year between now and 2040.
“There's a lot of stuff we really don't need in an hour, but for that premium level of same hour service we're projecting maybe 2 billion deliveries,” said Mayor. “And that is a small portion of the total autonomous deliveries, but it's a huge part of the miles because they're not going to run optimized long routes with 300 stops. They're going to be back and forth from the local warehouse depot to somebody's house or office. Someone is going to have one heck of a market selling a million little delivery bots because we want our HDMI cord and we want it now.”
For now, the majority of shopping still happens in stores. But there was a mid-20 percent increase in online shopping in 2018 from Thanksgiving through Cyber Monday. “The shift is absolutely happening,” said Black, who focuses on retail and consumer strategy. “It's been happening for a few years and is continuing to accelerate. The U.S. market is really lagging the rest of the world in terms of online delivery, but is starting to catch up. And the reason is Amazon, particularly in the food space with the acquisition of Whole Foods.”
One market that's going much further at the moment than the U.S. in terms of e-commerce is China. Companies like JD.com and Alibaba have already pioneered autonomous delivery models across much of the country. They're running fairly successful pilots. In Lakshman’s opinion, it’s one area where the U.S. can actually learn from China.
Much of the market is exploring both “move me” and “move stuff” from an autonomous perspective. But what comes first? Will the autonomous movement of goods lead autonomous mobility, will it lag the movement of people?
“I saw a statistic that 90 percent of the U.S. population is within a 10-mile radius of a Walmart,” said Lakshman. “But Walmart has poured billions of dollars into last-mile delivery. So, clearly, you need very deep pockets to master the last-mile.”
“Many people we work with think moving goods will be first,” said Dubner. “This camp thinks if you don't have to deal with protecting the passenger and providing a ride that feels like a human is actually driving, it's easier. There's others that say the economic value of moving people is so high and that will come first. And then there are others who believe that a multipurpose vehicle moving people and goods will happen at the same time. I would place my bet on simultaneous, but I can see the logic in each one of those arguments.”
A big question that doesn’t yet have an answer is who is likely to win in the smaller autonomous vehicle space, the bots that are expected to make those last-mile deliveries? Who has the right set of capabilities?
Clearly, the panel agreed, the OEMs have an inherent advantage in terms of scale and the ability to manufacture highly reliable vehicles. They understand the lifespan, the distribution model, parts delivery, etc. They have the dealerships to back it up, and a lot of the necessary infrastructure that will need to be put into place.
It seems, said Lakshman, to come down to a question of who thinks they can make money on these vehicles, who moves first into the autonomous space and seriously builds. “Who would have thought 20 years ago that Amazon would be the big player in this space they are today?” said Lakshman. “So there is an opening. It is a disruption and I think it's up for grabs right now.”