Last mile delivery
Our online shopping addiction is upending cities (and creating new business models)
Last updated: 3 Feb 2022
Market 101
You’d think the pandemic boom in online orders would've given retailers plenty to cheer about. But as customers embraced ecommerce, they also came to expect ever-speedier seamless delivery. Retailers were caught off guard — and are now in the unenviable position of having to sacrifice hardwon profit to stay ahead.
To make up the lost ground, companies are reimagining the urban space available to them as storage and pickup points, deploying new delivery vehicles and setting up more than one kind of warehouse instead of relying only on suburban “fulfilment centres” serviced by a fleet of uniform delivery vans. They can’t do any of this without the startups that are dreaming up new transport methods, software for smarter routing and alternative storage solutions. Together, they’re tackling the “last mile” problem — the diminishing stretch between inventory and customers’ doorsteps.
Early stage market map
Key facts
53%
of total shipping costs attributed to the last mile1
32%
increase in global carbon emissions from urban delivery by 2030 without intervention2
78%
increase in global demand for last mile delivery by 20303
Trends to watch
1. Algorithm superpower
→ Using data on who buys what where, algorithms can help optimise delivery routes.
→ The next frontier will be to use these insights not just to make routes more efficient but also shorter by choosing the most convenient areas for fulfillment centres and stocking them with the right goods for customers in the vicinity.
2. Here come the drones?
→ To meet the steep growth in instant or same-day deliveries, new transport and storage options tailored to lighter packages are emerging.
→ These run the gamut from the unglamorous but essential (parcel lockers and crowdsourced couriers) to the far-out (drones and droids — both at least five years from market readiness due to required regulatory and infrastructure changes).
3. Going green, kind of
→ While customers claim they want sustainable deliveries, this doesn’t always translate into willingness to pay a green premium.
→ It’s on startups to develop sustainable delivery methods efficient enough to compete with conventional deliveries on price, or offer other additional benefits like delivery speed.
4. We’re all in this together
→ With the whole industry on a steep learning curve, delivery companies may be better off collaborating with each other.
→ By trying out joint deliveries, companies could benefit from each other’s logistics networks, experiment with different warehouses and vehicles — and ultimately, cut inefficiencies and costs.
Startups tracked by Sifted
Sifted take
Will the last mile be a slog or a breeze? An abrupt shift in shopping patterns is slowly remaking cities. Urban planners and officials will ultimately have a critical say in how pliable cities are to ultrafast delivery startups (and their warehouse/storage locker shopping sprees). Making the last mile a smooth and profitable one for companies, then, will literally take a village.
Rising stars
Backed by Y Combinator, Glocally offers carbon-neutral same and next-day deliveries from its customers’ stores as well as its own hubs in Munich.
Round
Pre-seed
Date
Size
€125k
Backed by Eurazeo, Spacefill acts as an intermediary between warehouses with spare capacity and retailers with short-term storage needs. The startup has also developed proprietary tech that allows retailers to manage their stock in shared warehouses.
Round
Seed
Date
2020
Size
€7m
Backed by Earlybird, Ducktrain developed a small electric vehicle that can be used for partially automated delivery with human drivers. The startup ultimately plans to move towards fully automated delivery.
Round
Seed
Date
2021
Size
€1.5m
Early stage startups to watch
Dropp
Last mile delivery
€2.1m
€2.1m
-
DroppX
Last mile delivery
€500k
€250k
€1.5m
Ducktrain
Delivery systems
€4.6m
€1.5m
-
Frisbo Efulfillment SA
Alternative storage solutions
€3.8m
€1.8m
€11.8m
GetHenry
Alternative transportation
-
-
-
HIVED
Last mile delivery
€2.1m
€2.1m
€10.4m
Ingrid
Delivery aggregator
€2.5m
€1.3m
€12m
Packaly
Last mile delivery
-
-
-
Peyk
Alternative transportation
€2.8m
€1.4m
€7.2m
Sezaam
Alternative storage solutions
-
-
-
Spacefill
Alternative storage solutions
€8m
€7m
-
Zedify
Last mile delivery
€1.8m
€1.4m
€7.5m
Europe’s success stories
Who early stage startups are up against
(Pre-)Seed
Series A
Series B
Series C
Series D+
IPO/Exit
→ Delivers several million orders per month and is profitable from its operations in Spain
→ Has developed proprietary tech for warehouse automation, route optimisation and delivery customisation
(Pre-)Seed
Series A
Series B
Series C
Series D+
IPO/Exit
→ Offers same-day delivery for retailers like Amazon, H&M and Ikea through its network of parcel lockers, now present in five countries
→ Quadrupled its revenue in Sweden in 2020 to €24m
(Pre-)Seed
Series A
Series B
Series C
Series D+
IPO/Exit
→ Offers last mile deliveries, 95% of which were fossilfree in Sweden in 2020, using (electric) vans and cargo bikes
→ Recorded €39m in revenue for 2020
Sources
Research reports
The pressure is on: the true costs of last-mile delivery | September 2021 | Atos
Valuing Home Delivery Review 2021 | April 2021 | IMRG
1 Sustainable Last Mile Delivery | March 2021 | Accenture
2, 3 The Future of the Last-Mile Ecosystem | January 2020 | World Economic Forum
The last-mile delivery challenge | January 2019 | Capgemini
News articles
How can startups clean up their supply chain? Five things we learned from our panel | January 2022 | Sifted
How can startups fix the dirty 'last mile'? | October 2021 | Sifted
Efficient and sustainable last-mile logistics: Lessons from Japan | May 2021 | McKinsey
15 last-mile startups to watch in 2021, according to top VCs | April 2021 | Sifted
The new logistics challenge: e-commerce and last-mile delivery | March 2021 | ESSEC
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