A new take on last mile delivery

Back in the fall, I interviewed Ali Ahmed, the co-founder of a “store hailing” retail start up called Robomart. Think of it as a convenience or drug store on wheels. You order and pay online, as with any other e-tailer, and then hail the store to your doorstep like Uber.

Your order doesn’t come to your house; the whole Robomart store pulls up to the curb. You need density to make this work, so for now Robomart is operating in a couple of neighborhoods in LA, with plans to expand to New York.

Now, I don’t usually write about solution providers. However, when I read the press release about Robomart, I was reminded of something MIT’s Yossi Sheffi told me a year ago. In the future, we’re going to need to rethink traditional business models and their traditional supply chains. This was, well, different.

More recently, I had a chance to talk to Charles Jolley, the CEO of a last mile delivery startup, URB-E, which is, in the same vein as Robomart, a completely different take on the status quo for direct-to-consumer delivery.

Here’s the idea. If you spend any time at all in an urban neighborhood in New York or Chicago, you’re used to a literal caravan of trucks and vans from UPS, FedEx, USPS and Amazon Prime double-parked on the street to make deliveries. And that doesn’t count the on-demand delivery folks from Uber, Grubhub, DoorDash and the rest. What if there’s a better, simpler way that will take some of those vehicles off the street, reduce the carbon emissions associated with all those vehicles and still get all of us our stuff when we want it?

That’s the idea behind URB-E, which is just operating in New York for now. The final mile start up is utilizing electric bikes – hence no carbon emissions – and specially designed cargo trailers that can haul up to 800 lbs of product to make deliveries.

But they’re about more than just the bikes and riders. They’ve designed an entire supply chain. Think ecosystem to load inventory into containers in a small storage space; deliver those to a “hub” no bigger than your average parking space where bikes and charging stations await, and then make deliveries along pre-determined routes in a zone – a neighborhood. You can watch a YouTube video of the URB-E solution by clicking on the link. It’s a great visual on how the whole ecosystem works.

Here’s the way Jolley describes it: “Our idea is to build out a scalable all-electric last mile delivery system that can replace the trucks and vans that choke up city streets to meet the demand for last mile delivery,” he says.

“To do it, we combine two innovations: One is electric vehicles - small trucks to deliver the containers to a hub and e-bikes for final mile delivery; the other is containerization to optimize the amount of cargo we deliver. Our whole system is built on the idea that instead of having a truck you fill at a distribution hub that then spends the whole day on the road. We break a city into neighborhoods or delivery zones.”

The containers can be packed out in a DC, a store or a micro-fulfillment center and then delivered to a hub in a delivery zone. From there, bikes are deployed that never leave that zone and can make multiple deliveries in a day. The infrastructure was designed to include charging and maintenance. The density of city neighborhoods combined with the fuel savings makes the business model work.

A few facts and figures. A bike can pull one container at a time with a load of up to 800 lbs – essentially what fits on the typical UPS truck, according to Jolley. The container system is modular. There is a smaller one for groceries and a bigger one for parcels.

In a typical setup, like its partnership with AxleHire, the containers are packed out in a sort center and then delivered to a dropoff point in the city. A sort center can be a few thousand square feet. A bike picks it up, and off goes the rider. At the end of that route, the rider picks up another container.

Today, URB-E is primarily delivering groceries and parcels, working through AxleHire along with some other large e-commerce companies. They have also built a niche for the delivery of subscription-based orders, which are predictable for e-comm companies. There are currently 100 bikes on the road following the launch in New York, and are also operating in Long Beach. Further expansion is in the works. “We’re on track to expand into three more cities by the end of 2022,” he says.

Assuming the company takes off according to the business plan, Jolley estimates they could use up to 250,000 riders in a few years. “It’s a lot of jobs to create,” he says. Given the incredible shortage among logistics workers, and truck drivers, where are all those riders going to come from? And, will they all be gig workers like Uber and Lyft, or will they be employees?

To the latter, Jolley says they currently use a mix of W-2 and 1099 employees. Most come through existing delivery services like AxleHire. Every rider, no matter how they’re brought into the system, is put through a safety course and is certified on the equipment. “We think we’re tapping into an entirely different market than truck drivers because you don’t need a driver’s license,” he says.

I have no idea if this is a solution with legs, but during our conversation, I thought it was a great example of some of the innovative ideas going into supply chain, and illustrated Yossi Sheffi’s call for new business models and supply chains. Jolley is optimistic. “We think the big innovation is the containerization and not the bikes,” he says. “We can deploy the container into any city because it works the same everywhere. And, we can do it in a way that meets demand and is green all at the same time.”

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