Can robot delivery conquer the last mile's cost hurdle?

Dave Lewis was an unlikely candidate to lead Tesco’s robot revolution. Taking over from tech enthusiast Philip Clarke, he openly spoke about limiting Tesco’s online ambitions.

Yet under the watch of Lewis, Tesco has not only rolled out a trial one-hour delivery app, it has also been the first supermarket to make an express delivery by droid. Last week, The Grocer’s exclusively revealed that Tesco had used a robot for the first time to transport groceries to a London home. The idea was to make speedy delivery cheaper, faster and smarter.

So are robots the answer for retailers looking to slash those infamous last-mile costs? Or do they carry so many drawbacks, and so little food, that they will always be second to the trusty delivery driver and van?

Tesco’s use of robots is still very much in its early stages. Its Tesco Now one-hour delivery service, for which the robot completed its test run, is currently confined to a select group of Londoners in zones one and two, plus a bunch of Tesco HQ staff guinea pigs. Although the service has already made more than 1,000 deliveries, the majority have been through independent courier service Quiqup using cars, bikes and scooters.

However, there is the promise of more robot action to come. Tesco was so impressed with its pilot delivery it circulated a video of the machine in action to customers, promising a wider rollout later in the year.

And the robot’s manufacturer - Starship Technologies - is clearly taking the food market seriously. Its trials in the US, Germany and the UK include tie-ups with Domino’s in Hamburg and Just Eat in London. The latter has already made Starship’s six-wheeled creations a familiar sight on the streets of Greenwich since December, when it delivered a meal from a Turkish restaurant in under 10 minutes.

Just Eat is already planning a nationwide rollout and Starship, which is understood to be talking to retailers other than Tesco, claims robot deliveries will transform the last mile for supermarkets as well as takeaways.

Chief operating officer Allan Martinson says they could cater for today’s ever more demanding consumer.

“Carrying one delivery at a time allows us to offer very precise, three to five-minute delivery slots. The world is moving towards faster on-demand deliveries with very accurate delivery windows, and robotic deliveries will enable that”

Crucially, he says robot deliveries cost £1 to £3 each, compared with £4 to £15 for a human-powered delivery.

The trouble with robots

But there are big barriers to robots becoming mainstream, not least because they have a puny top range of three miles.

“If you have deliveries that are five or 10 miles away, then vans are still the most efficient,” admits Martinson, although he claims this is only a temporary barrier. He points to a trial Starship has already launched in Hamburg with Mercedes-Benz, in which specially developed vans known as “motherships” drive to suburban neighbourhoods and unleash up to eight of the robots at a time to deliver the last mile.

Martinson also rejects criticism that the small payload of the robots, limited to around 20 items of shopping, is a fatal drawback. “We see an increasing trend of orders becoming smaller and more frequent if the delivery is quick and affordable.” Indeed, other one-hour services such as Sainsbury’s Chop Chop only deliver a maximum of 20 items.

But will the robots become a target for thieves and vandals? After all, logistics firm ParcelHero warned they could breed a “new era of highwaymen” earlier this year.

“These robots have nine cameras, GPS and other tracking equipment so we know exactly where they are at any time,” Martinson retorts. “They are fitted with two-way audio so we can warn people if they interfere with them, and if that is not enough they have a siren like a car alarm that will go off if someone was to pick them up.”

Starship makes a compelling argument, but not everyone is convinced. At the end of last year, consultancy McKinsey claimed robot delivery was beset by both technological limitations and consumer desire for human interaction - including help lugging bags indoors.

Its report on last-mile delivery highlighted that robots had no cooling equipment - a particular issue for frozen food.

While less headline grabbing, McKinsey argued bike couriers could be a better long-term option. (This is the method currently favoured by Sainsbury’s for Chop Chop.)

“Bikes do not have any speed disadvantage over short distances in many urban areas compared to cars, but cost significantly less. Furthermore, it is easy to employ bike couriers on a part-time basis given the limited level of training and investment required.”

Robots could compete in the future, it said, but only if they raise their speed to 30 km/h rather than 5 km/h, which has obvious safety issues.

‘Landmark moment’

Yet Jason Shorrock, retail strategy director at JDA, is convinced robots will revolutionise grocery deliveries.”The first time I saw one of these operating in Greenwich it was fascinating. But it’s the economic case that makes the Tesco move such a landmark moment,” he says. “Retailers are all trying to bring down the cost of that last mile. It’s vital for them. We will begin to see this really take off in the next couple of years.”

Indeed, Tesco’s robot trial comes at a time when retailers are increasingly ripping up the logistics rulebook to make deliveries more flexible.

Amazon made its first drone delivery in Cambridge in December and this week the Daily Mail revealed Ocado was working with tech firm Oxbotica to test driverless vehicles later this year.

David Jinks, head of PR at ParcelHero, believes robots could make sense in this ever-changing environment. “There are going to be all sorts of new ways in which technology can fulfil orders in rapid fashion with fewer staff costs,” he says.

Although Jinks can’t envisage robots being used outside one-hour services, he believes they will become more prevalent in the future.

“Don’t hold your breath for robots being used in everyday grocery delivery, but for rapid turnaround in local areas you can see droids being a goer.”