Amazon and Postmates pilot two autonomous delivery trials in California (AMZN)

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Two new automated delivery trials by Postmates and Amazon have been greenlit in California. The separate trials speak to different automation efforts in last-mile delivery — food delivery and package delivery, respectively. Here’s how the two companies are developing the future of last-mile delivery:

Postmates was granted conditional approval to test its delivery robot, called Serve, in San Francisco, according to TechCrunch. Postmates is set to become the first company granted a permit for operating sidewalk robotics in San Francisco, after the city banned the tech in December 2017. The permit enables Postmates to test up to three of its robots for 180 days. Serve is remotely monitored by a human pilot and comes equipped with a touchscreen and video chat display to interact with customers. Tests in San Francisco will come with particular landscape and logistical challenges, but if Postmates hopes to scale the solution, it will need to bring tests to more markets, something the company said it plans to do. Successfully scaling the delivery robots could position Postmates for significant cost savings by reducing the number of paid drivers on its platform. That could in turn boost profits, which have been depressed by restaurants seeking a larger portion of order revenue.
Amazon announced its Scout delivery robots are now making deliveries in Irvine, California. Scout is a six-wheeled, cooler-sized, ground-based package delivery robot that is accompanied by a human minder, called an Amazon Scout Ambassador. The robot was first trialed in Snohomish County, Washington, near Amazon’s headquarters, in January 2019. Autonomous delivery robots can help the e-commerce titan meet its increasingly tight delivery windows — Scout handles same-day, one-day, and two-day packages for Prime members. Automated robots will enable Amazon to deliver small orders quickly, leaving its growing fleet of vans to handle larger packages. Additionally, the automation of last-mile delivery will enable Amazon to cut its overall shipping costs, which grew 36% year-over-year (YoY) in Q2 2019 to reach $8.1 billion.

The bigger picture: Both Postmates and Amazon are developing and implementing their own delivery solutions, instead of turning to autonomous delivery robotics companies.

Delivery companies should consider developing their own robots to ensure they are best tailored for their specific needs. By designing their own delivery robots, Postmates and Amazon can better control the customer experience around their products and services.

To ensure its solution best met its needs, Postmates hired an ex-Apple engineer specifically to improve its robots’ interactions with pedestrians. Notably, Postmates didn’t set out to build its own robot as it first trialed other companies’ robotics, signaling that it didn’t find what it needed when dealing with outside firms.

If more delivery companies embrace in-house development, it could hurt companies like Starship Technologies or Nuro, which develop their own technology to sell to delivery companies. The delivery robots market is expected to grow to $34 million by 2024, at a compound annual growth rate of 19% from $11.9 million in 2018.

However, if more companies develop their own solutions, delivery robotics companies will find themselves without clients. To counter this possibility, firms should look to forge partnerships with delivery companies to develop company-specific solutions. Partnerships would not only allow delivery companies to speed up the development of their own solutions, but enable robotics companies to still capture income from their efforts.

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