June 6, 2016 (RARC-WP-16-012)
- Technology is driving a heightened level of innovation in product and service offerings in the current last mile parcel delivery market and is transforming the way delivery providers interact with their customers.
- It has empowered customers with tools like real-time tracking, and has raised their expectations. Consumers now expect delivery to be flexible, visible, and fast — all at a low price.
- It is also democratizing the last mile, which is witnessing an invasion by a variety of new entrants able to enter the market without the need for considerable investment in labor or capital, from large ecommerce platforms, to brick and mortar retailers and even small startups.
In addition to advanced algorithms and data analytics, which have been the major enabling component of these disruptive trends, three more technologies are on the horizon that will make the landscape even more complex: drones, driverless vehicles, and delivery robots. Already established companies with considerable market power are testing these futuristic solutions for operational efficiency and fulfilling customer expectations for fast and flexible delivery.
Given the growing importance of parcels to USPS’ long-term viability, the U.S. Postal Service Office of Inspector General commissioned Stanford University's Value Chain Innovation Initiative research center to study the state of technological disruption and innovation in last mile delivery over the next five to seven years. The research surveys the four technologies believed to be the most impactful: advanced algorithms and analytics, drones, driverless vehicles, and robots. Stanford’s findings are contained in the following report.