If the pandemic has shone a light on anything, it’s that logistics and shipping, the middle mile and the last mile, haven’t exactly kept pace with the heady rise of eCommerce.
In fact, the digital age has a last-mile problem — and a middle-mile problem, too.
Mark Lavelle, CEO of eCommerce shipping platform X Delivery, told PYMNTS’ Karen Webster that the national shipping landscape is complex. It’s also hampered by arcane and opaque processes that have not been modernized in decades.
He’s had some experience with helping overhaul rickety business verticals and ecosystems, having come to X Delivery from past roles at Magento and Bill Me Later (now part of PayPal).
We’ve gotten used to getting what we want, pretty much when we want it, Lavelle said, and delivery and the anticipation of the package have become a critical part of the brand experience. For eCommerce companies, he said, logistics is not simply a matter of dumping a package with FedEx or UPS, then sending the customer a tracking number and a link to the delivery service’s website.
“That’s a bad journey,” he said.
No doubt you’ve felt the inefficiencies firsthand — ordering something that has been promised to be delivered in two days, and the waiting for the package to arrive well beyond that time window. Maybe things have arrived in poor condition. In short, it’s hard to guarantee Prime-style delivery, especially if you’re not Amazon.
Typically a brand would mull whether to have a distribution center close to where the customer is — akin to the Amazon strategy, Lavelle said. The other tactic is the one FedEx and UPS employ, where getting items close to sorting centers means not having to fly items back and forth.
But one simple fact makes those inefficiencies glaring: You can get on a plane and fly from LA to Newark to LA in five hours and be home two hours after you left. Yet it takes five days to get a package from LA to Newark.
Building a National Carrier
Lavelle said that his firm helps eCommerce brands deliver high volumes of parcels, operating as the first new national carrier in the last 50 years.
It’s a cost-effective alternative to partnering with multiple different shipping carriers, he said, or paying zone-based pricing. And operating — or contracting — with multiple warehouses across the country also is unrealistic.
He said that X Delivery offers zoneless pricing — a flat rate for shipping that is solely based on the weight of the parcel and not determined by the distance it needs to travel to reach the customer. In terms of mechanics, X Delivery’s shipping application programming interface (API) automatically chooses the best first-, middle- and final-mile routing option from a list of high-performance partners based on the eCommerce brand’s needs.
An Uber — and More — for Logistics
You could liken X Delivery to an Uber for retail logistics, matching supply and demand, getting goods and cargo where they need to go and helping eCommerce brands find the capacity and flexible options they need to get packages to consumers in a shorter and more predictable amount of time.
“What we’re doing is taking our asset-heavy partners that already have trucks and planes and cars in transit — and we’re ‘marrying’ those with the supply from our shippers,” he said.
Key to it all is finding that undiscovered capacity, he said, which, across the platform model, reduces friction for shippers.
As Lavelle quipped, “this is probably the most unsexy part of the journey.” That’s the part that is focused on picking up eCommerce items from distribution centers at the West Coast or East Coast (whether they’re coming in Asia or Europe or being manufactured here in the U.S.). Those goods have to cross the final mile and reach the end address.
X Delivery works with shippers who ship thousands of parcels a day — and he noted the firm has trucks picking up those parcels and taking them to sorting centers.
“And then that’s where the fun begins,” he said.
X Delivery’s strategy is to get those items close to an airport and utilize the spare capacity in passenger planes flying all over the country. That approach gets the packages closer to where they are destined to go via the thousands of flights that cross the country daily. “That’s spare capacity in motion,” he said, “and it’s now being used to deliver parcels.”
But that capacity has never been put together as a system for a national carrier and to the consumer as a predictable service.
“That’s why we’re partnering with airlines in that middle mile — to do this in a unique way,” said Lavelle.
An Idea That’s Taking Off
Thus far, to ensure predictability across routes and delivery and pricing, the company is focusing on packages that span between one to 10 pounds, which include everything from food to sweaters and all manner of smaller goods that can fit on narrow- and wide-body jets. Predictable weights and boxes make it easier for the airlines to handle a constant stream of parcels.
The platform, Lavelle said, has gained a deep understating of flight routes and spare volumes and becomes the intelligence point for commerce, helping shippers maximize time and transit.
He stated that while not all brands can be Amazon (the gold standard for eCommerce), firms have to set a clear expectation of when the product can be delivered, which can all be impacted by the profitability of the item, the size or whether it’s perishable.
X Delivery, for its part, can deliver most of its packages within two days across its roughly dozen shippers. In the future, it will target two-day and next-day guarantees.
“We’re really focused on this retail business and bringing up brands that are household names and can utilize this type of network at scale,” Lavelle said.
Shipping, he told Webster, is “a big P&L expense that a brand has now — and we’re looking to make it easier and more cost effective.”
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