The Future of Delivery: UVA Darden Professor Co-Authors Article on Coming Disruption
By Jay Hodgkins
University of Virginia Darden School of Business Professor Tim Laseter, a professor of practice who is also a managing director at PwC, co-authored an article with a fascinating proposal for the future of package delivery in strategy+business.
The article, “The Rise of the Last-Mile Exchange,” details the growing challenges for incumbent delivery giants like the U.S. Postal Service, FedEx and UPS, new disruptors such as Amazon, and a range of local and regional startups as e-commerce drives a tsunami of deliveries and changing consumer expectations about how quickly packages should be delivered.
To meet the rising demand, consumer expectations and overcome inefficiencies tied to old models of delivery, Laseter and his co-authors suggest a new model for the “last mile” of package delivery.
The solution to this problem is a last-mile delivery exchange that connects consumers, retailers, and transportation companies via a digital platform. It could solve many of the difficulties challenging the e-commerce ecosystem today and produce benefits for consumers, retailers, and the package delivery providers, yielding improved convenience, transparency, efficiency, and cost savings. Such an exchange would create a path forward through the disruption caused by increasing consumer expectations, advances in technology, the emergence of new entrants, and the rise of the sharing economy.
The exchange would effectively flip the script. Rather than react to demand and respond to others’ decisions, transportation companies and retailers could engineer demand earlier in the sales process and dynamically balance supply and demand, much as Uber uses surge pricing to encourage more drivers to work during times of peak needs in peak locations.
To achieve such an exchange, the industry would need to disrupt itself, according to Laseter and his co-authors.
The current e-commerce trajectory is pointing toward a future in which FedEx, UPS, and other transportation companies become commoditized players in a game whose odds favor other players. But acting now would enable companies to alter this trajectory. Creating a last-mile exchange would fundamentally disrupt the last-mile delivery business by addressing demand in a more sophisticated way. FedEx and UPS, as noted earlier, are best positioned to be the disruptors. Their significant shares of overall transactions, as well as their huge resource bases and highly evolved delivery capabilities, give them the stakes they would need to place such a large bet. It’s also possible that a consortium of retailers and transportation providers could band together to create an exchange.
The University of Virginia Darden School of Business delivers the world’s best business education experience to prepare entrepreneurial, global and responsible leaders through its MBA, Ph.D., MSBA and Executive Education programs. Darden’s top-ranked faculty is renowned for teaching excellence and advances practical business knowledge through research. Darden was established in 1955 at the University of Virginia, a top public university founded by Thomas Jefferson in 1819 in Charlottesville, Virginia.
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