Every company that was built around supplychain scale. How much MOQ & EOQ do we need to create economies of scale. How many trucks. How many pallets. This created a $700B logistics industry.
The long tail in every industry has created and continues to create the world’s game changing marketplace companies from Google and Alibaba to Uber and Airbnb. So what’s changed? The First Mile is the next Mile. First Mile pick up last mile delivery.
The one’s still talking LTL vs.FTL vs. Lanes vs. Transport companies, etc. are all in the last 50 years of supplychain vocabulary. Over 4% of all companies own more than 28 trucks in a highly fragment market and over 350,000 being owner operated trucks. What’s changed is that the ability to connect demand to supply and fulfill has undergone a tectonic shift and the behaviors to deliver the capacity, time windows and QOS per $$$ are now radically different due to a single factor. The box is the new scale and the mile is the new lane.
mCommerce – First Mile Next Mile and Software eats Hardware https://gerardjrego.com/2013/11/21/mcommerce-first-mile-next-mile-and-software-eats-hardware/ via @GerardJRego
So why is “Box-scale” is the new Big!
So what’s changed in the last ten years. Mobile technology has changes the way people accessibility, availability & affordability of products and services. Every product and service has a marketplace commerce model, albeit with one difference.
The new network topologies have changes. The ratios of the absolute mile to the relative mile, the node to the hub, the centralized vs. distributed and for this shift current behaviors, business models and operating economic assumptions are no longer valid.
Uber eats is intended to be box scale. https://www.wired.com/2015/12/ubereats-is-ubers-first-app-thats-not-about-rides/
This headline says what the real challenge is.
Small is the new challenge as every business on the planet is working to get small and that’s not working ver well as these companies were built around supplychain principles of MOQ & EOQ to meet fixed area of warehousing and distribution.
All that is now changed with every small retailer or business ordering small, 2 boxes of carrot or 5 boxes of jeans, etc. and not the whole truck anymore. With this model all current algorithms and models to meet business models are not relevant at the new scale, one box at a time.
An article in 2014 in BusinessWeek highlighted the challenge
Target Tries to Find Its Place in the Big City
The chain and other big retailers are opening scaled-down outposts in urban areas
“Getting small and urban, however, can be more difficult than getting big. Case in point: British big-box retailer Tesco. It spent more than a billion dollars on its 200 smaller U.S. stores before admitting defeat last year and selling or shuttering them. Finding the right locations in downtown areas is more challenging than in the wide-open suburbs. The logistics of stocking stores without massive loading docks are complicated. Merchandise has to be selected carefully to fit smaller spaces. And there’s little or no parking. For mega-retailers, “operating smaller stores is like starting a whole new business,” Davidowitz says. “They have every good reason to do it, but it’s not so simple.””
So all of a sudden venture capital seems to be looking for entrepreneurs that are “uberizing” the transportation opportunity. Everyone seems to forget that yesterday’s scale is not the same. Its one box at a time.
So what is the new opportunity?
- Behavior around distribution has changed, it’s all mobility centric around people
- Point to point delivery is multi-modal and multi-location, one box at a time (b2b & b2c)
- Centralized architectures of distribution are now networks of hubs and on demand
- Optimization is demand driven, not supply
- Economics of the small, not the big
All this adds up to whole new models and algorithms that combine network scale architectures, integrate behavior of people and drive optimization that is a scale that no business was built for. One box at a time.
Every commerce company, every retailer, every manufacturer and just about every business depends on transportation and distribution opening new opportunities for whole new thinking. The First Mile is the new mile. http://www.boxescale.com
RetailGrid! Business plan for First Mile “Commerce” disruption, is this the Next Mile! https://gerardjrego.com/2013/09/16/retailgrid-business-plan-for-first-mile-commerce-disruption-is-this-the-next-mile/ via @GerardJRego
Why “small” is the next Big? https://gerardjrego.com/2014/02/21/why-small-is-the-next-big/ via @GerardJRego
Killer App! Fragmented markets, crowdsourcing business models and Mobility https://gerardjrego.com/2013/10/15/killer-app-fragmented-markets-crowdsourcing-business-models-and-mobility/ via @GerardJRego
The best 101 I have seen thus far for anyone interested in transportation networks is
The Geography of Transportation Networks
Authors: Dr. Jean-Paul Rodrigue and Dr. Cesar Ducruet