Last-mile companies poised to shake up the market

U.S. retailers have a last-mile problem. Complex routes, failed deliveries, returned products and consumer expectations around delivery speed, flexibility and reliability have complicated the last-mile equation in recent years. 

Add to that the rising costs of fuel and labor and the last mile is now the most expensive portion of the delivery process.

In fact, according to Capgemini, last-mile delivery accounts for more than half of the total cost of shipping. And per Statista, as much as $41 of every $100 spent on supply chains is funneled into last-mile operations.

But some industry projections offer hope. 

Statista anticipates that the global last-mile delivery market will grow from $128.5 billion in 2022 to over $200 billion by 2027, buoyed by an assortment of startups and pre-IPO firms across verticals like robotics, autonomous vehicles, delivery management platforms, microfulfillment, warehousing and courier services.

There are now hundreds of companies clamoring for a seat at the table among the last mile’s elite. But there are 10 key players that are driving the future of the industry with a heavy focus on innovation and the potential to eat up market share.

That’s according to Coresight Research, which on Tuesday released its Innovator Matrix: Last-Mile Delivery report. The research — which identified the top last-mile solution providers among more than 150 private U.S. companies — highlighted the firms with the greatest odds to shake up the space, based on their level of innovation and market potential.

More specifically, Coresight evaluated how these companies use innovation to disrupt their specific industry, the benefits they provide to both retailers and consumers, the clearness of their product vision and their ESG contributions.

To assess market potential, researchers looked at metrics like brand awareness, ability to scale and competitive edge in terms of product quality, pricing power, market penetration and other factors. They also examined each firm’s momentum as measured by short-term employee growth, social media followers, unique website visitors and venture capital funding.

The players

In its research, Coresight highlighted the 10 private last-mile delivery firms best positioned to help retailers thrive — and help investors get ROI. They are:

Nuro: The autonomous delivery company builds compact, over-the-road electric robots designed to deliver a variety of local items. Funding raised to date: $2.1 billion

Locus Robotics: Warehouse robots designed to assist human workers in a variety of retail settings. Funding raised to date: $312.5 million

Starship Technologies: Cooler-sized self-driving delivery robots operate on college campuses around the country. Funding raised to date: $212 million

Bringg: The logistics operation cloud platform provides control, visibility and automation over tracking, dispatching, driver communications and more. Funding raised to date: $187.9 million

FarEye: The firm with an AI and machine learning-driven solution aggregates data and provides real-time feedback for optimized last-mile deliveries. Funding raised to date: $150.2 million

Onfleet: The company offers an all-in-one dashboard designed to scale operations and improve on-time delivery rates. Funding raised to date: $41.7 million

Veho: The crowdsourced delivery platform offers personalized next-day delivery via a network of regional sorting centers and driver partnerships. Funding raised to date: $299.3 million

Darkstore: The company uses local warehouses to enable on-demand fulfillment for direct-to-consumer e-commerce sellers within minutes. Funding raised to date: $80.2 million

Dropoff: The platform provides same-day courier delivery with customizable options, like pickup location and timing, for each individual delivery. Funding raised to date: $62.6 million

Point Pickup: The company’s dashboard dynamically matches retailers’ demand with capacity from a network of crowdsourced delivery drivers. Funding raised to date: $84.1 million

Watch: Success in last-mile delivery happens in the final 100 feet

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The playing field

Coresight broke down its 10 finalists by industry focus, like delivery management platforms, for example. But the researchers also illustrated each player’s position in the last-mile space using a matrix similar to Gartner’s Magic Quadrant format, categorizing them by future leaders, disruptors, challengers and emerging players.

The report defined future leaders as companies that are highly innovative and possess strong market share. These firms are viewed as the most likely to shape the future of the last-mile industry.

“Generally, these companies take a highly innovative and disruptive approach to a retail issue and possess a strong industry background, a competitive product/offering, growing momentum in the market and ample funding to help the company continue to penetrate the market and become a future leader (if not already) in the space,” researchers wrote.

Just four firms landed in the future leaders quadrant: robotics companies Nuro and Locus and delivery orchestration platforms Bringg and Veho. Nuro rated the highest of the 10 firms in both level of innovation and market share.

Next, lacking the market share of the future leaders but chock full of innovation are the disruptors, which according to Coresight are “some of the most innovative in the matrix and have the potential to become future leaders in the sector as they build more foundational market positions, gain resources to sustain growth and attract more funding from VC firms.”

Only two companies fell into this category, FarEye and OnFleet, which both aim to optimize last-mile delivery through comprehensive, data-driven dashboards.

Challengers, on the other hand, have the market share of future leaders but are seen as less innovative. One firm, Starship, earned that characterization because while it has strong market share, researchers felt its technology lagged behind the innovation coming from Nuro and Locus.

Finally, rounding out the field are the emerging players, companies that lack the innovative technology and market share of the top firms but have the potential for high growth. Researchers explained that these players are “innovative in their approach to their market and are gaining traction within their technological niche.”

The trio of warehousing, microfulfillment and courier delivery firms in Coresight’s top 10 — Darkstore, Dropoff and Point Pickup — landed in this quadrant.

The outlook

Solving the last-mile problem will not be easy. But researchers urged retailers to take advantage of the array of companies addressing the issue, from robotics providers to delivery management platforms.

If they don’t, they risk losing out on market share among modern consumers, who increasingly value delivery speed and satisfaction — and are likely to take their business elsewhere when they don’t get it.

“We believe that the standard for retail delivery will be raised in the coming years as consumers come to expect quicker and more convenient delivery options,” the researchers wrote. “Retailers must uphold or exceed consumer expectations and standards for delivery to maintain high customer satisfaction and loyalty in a competitive retail market.”

Heightened consumer expectations arrived when COVID spurred the rise of e-commerce and omnichannel fulfillment, and they’re not coming down anytime soon — those trends are expected to continue growing, and so too will customer standards. 

It’ll be up to retailers to find the right last-mile provider to keep them happy.

Click for more FreightWaves articles by Jack Daleo.

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Editor: Jack Daleo