Unmanned delivery is a relatively slow track; it will arrive sooner or later, but how long we must wait before the dividends come remains unknown.
On April 19, Meituan announced that its new generation of self-developed unmanned delivery vehicles had officially begun operations in Shunyi, Beijing. This is also Meituan's latest solution for low-speed instant delivery in outdoor full scenarios, based on the needs of its delivery business.
Meituan initiated its unmanned delivery project as early as 2016. After five years of continuous iteration, the latest unmanned vehicle has a loading capacity of 150kg, a volume of nearly 540L, and a top delivery speed of 20km/h.
In recent years, with the growth of food delivery orders, Meituan's demand for unmanned delivery has become increasingly strong. In the first half of 2020, Meituan's platform added 1.386 million riders, for which Meituan paid an additional 3 billion yuan in rider wages.
In the long run, under a huge business scale, machines are clearly more cost-effective than people.
Meituan's chief scientist Xia Huaxia stated that the launch of the new vehicle marks that Meituan's self-developed unmanned delivery products have begun to possess standardized mass production capabilities. In the future, the company will continue to increase technology investment and accelerate the exploration of unmanned delivery implementation.
Technology investment requires funds. On April 20, Meituan announced that it plans to raise nearly $10 billion through issuing new shares and selling convertible bonds for technological innovation, including research and development in areas such as unmanned vehicles and drone delivery.
Internet giants are not the only ones focusing on terminal unmanned delivery.
In September 2020, Alibaba Cloud released its first logistics robot, "Xiaomanlv" (Little Donkey). According to reports, Xiaomanlv can deliver up to 500 packages per day, and its performance is unaffected by extreme conditions such as thunderstorms, lightning, high temperatures, rain, snow, garages, and tunnels.
Zhang Jianfeng, head of Alibaba DAMO Academy, introduced that this robot will soon be used on a large scale in communities, schools, and office parks. At the same time, Alibaba also registered and established Xiaomanlv Intelligent Technology Co., Ltd. to promote the development and mass production of robots.
JD Logistics began developing and deploying unmanned delivery vehicles in 2016. Currently, JD's unmanned delivery vehicles have been deployed in about 20 cities including Changsha, Guiyang, Hohhot, and Beijing. Suning also has its self-developed 5G Wolong unmanned delivery vehicle, which frequently appeared on the front lines during the 818 shopping festival.
To prepare for more uncertainties in the future, internet giants have begun to initiate changes at the logistics terminal.
-01- Why are giants continuously increasing investment in unmanned delivery?
The pandemic in 2020 allowed consumers to truly experience unmanned delivery services. During the pandemic, to prevent the spread of the virus, companies launched contactless delivery services, and various terminal robots were continuously applied in practical work.
Taking JD Logistics as an example, during the pandemic in Wuhan, in the delivery process, JD's unmanned vehicles first screened orders, couriers loaded the vehicles according to orders, and finally the vehicles delivered autonomously.
A JD unmanned vehicle has 24 compartments, can hold 24 orders at a time, and each delivery is set for 20-30 minutes. Users are notified via SMS or the JD app to pick up their orders, and the vehicle returns automatically after 30 minutes.
Not only JD Logistics, but SF Express's drones and Suning's 5G Wolong unmanned vehicles also played roles in different scenarios.
However, with the control of the pandemic, topics such as couriers not delivering to the door and pickup stations collecting packages have become hot again.
Unmanned delivery seems to have completed its mission; when not needed in daily life, it disappears. But on the contrary, companies continue to increase investment in technology. What is the reason behind this?
On February 8, the State Post Bureau released data showing that China's 10 billionth express delivery item was created in 2021, achieving this milestone in just 38 days. In 2011, the annual express delivery volume in China was only 3.67 billion items.
In contrast, the unit price of express delivery has been declining. Recently, YTO, Yunda, and Shentong released their March performance briefs, with single-ticket revenues of 2.25 yuan, 2.19 yuan, and 2.25 yuan respectively, down 11.03%, 27.65%, and 13.44% year-on-year.
The culprit behind the decline in single-ticket revenue is the price war, which directly leads to a decrease in the income of terminal couriers.
According to the "2020 National Survey Report on the Current Status and Satisfaction of Grassroots Couriers" released by China Post and Express Newspaper, more than 50% of couriers have a monthly income of no more than 5,000 yuan, making recruitment difficult.
Another reason comes from the reduction in the working-age population.
If we look at national labor force data over the past few years, we will find that the labor force scale is indeed declining. According to data from the National Bureau of Statistics, China's working-age population (16-59 years old) was 919.54 million in 2013 and 896.4 million in 2019, a decrease of 23 million in seven years.
Therefore, many large platforms and numerous startups have begun to explore how to use unmanned vehicles and drones to improve the efficiency of "last-mile delivery." According to McKinsey's forecast, in the next 10 years, 80% of package deliveries will be automated.
The 80% figure may be somewhat exaggerated, but it also reflects the current pressure on the industry. Li Da, head of Meituan's unmanned delivery product, said in an interview with China Entrepreneur that compared to reducing costs, Meituan's layout of unmanned delivery is to prepare for possible labor shortages.
Strategy is to see what will happen in the future. Unmanned delivery is a trend, but the complex terminal scenarios still require giants to conduct multiple experiments.
-02- Difficulties of unmanned delivery
Currently, internet giants are focusing on unmanned delivery mainly for two application levels: instant delivery, mainly by Meituan, and express delivery terminals, mainly by "Xiaomanlv."
Apart from different time requirements, the difficulty of delivery is common to both.
There are many types of items, including medicines, meals, non-standard products, and even vegetables;
The delivery process environment is complex, with limited capabilities in rainy days and at night, and goods are prone to damage or loss;
The terminal delivery scenarios are complex, including communities, office areas, hotels, etc., each with different regulations and restrictions, increasing delivery difficulty and cost.
There is also the most critical point: price.
In November 2020, the US unmanned vehicle company Nuro completed a $500 million Series C financing. After this round, Nuro has raised over $1.5 billion. Gaorong Capital, NetEase founder Ding Lei, and ZhenFund are all early shareholders of Nuro.
In February last year, Nuro also received US policy permission to deploy unmanned delivery vehicles without manual control devices such as side mirrors and steering wheels. This is equivalent to Nuro completing the biggest challenge of unmanned delivery and being able to fully sprint towards large-scale commercial use.
Nuro is racing on the unmanned delivery track, all based on high delivery fees. In Nuro's cooperation with Kroger supermarkets, local residents order online, and Nuro delivers the same day or the next day, 7 days a week. There is no minimum consumption requirement, and the delivery fee is a flat $5.95—41 yuan.
In contrast, in China's last mile, even for the fastest food delivery, Meituan pays riders only 4 yuan per order, and express delivery is even lower.
In addition, China's living environment is relatively more compact, with supermarkets and convenience stores downstairs, combined with high-quality and low-cost instant delivery services, making unmanned delivery solutions difficult to replace manual labor.
-03- Challenges of unmanned delivery
Currently, unmanned delivery mainly involves three scenarios: indoor, semi-enclosed parks, and public roads.
Indoor: mainly hotels, office buildings, shopping malls, etc., such as the food delivery robots in Haidilao.
Semi-enclosed parks: campuses, work parks, etc., with simple environments, such as Alibaba's Xiaomanlv and Meituan's unmanned vehicles, which focus on this.
During the 2020 "Double 11" shopping festival, Zhejiang University introduced 22 Alibaba "Xiaomanlv" robots, attempting unmanned delivery services for the first time. Ultimately, the robots delivered over 50,000 packages.
Public roads: Large-scale application of unmanned delivery still requires support from many supporting laws, regulations, and standards, such as: On which roads can unmanned delivery vehicles drive? Do unmanned delivery vehicles need to be registered? If a vehicle is involved in an accident or traffic violation, who is responsible?
Currently, relevant documents and guidelines for the unmanned delivery vehicle industry only cover technical standards, not yet extending to laws, regulations, and policies during driving.
During the pandemic, JD and Suning's unmanned vehicle deliveries were also completed under the background of Wuhan's lockdown.
On the other hand, the mass production capability of unmanned vehicles is also a factor; a single robot's delivery efficiency is not higher than that of humans.
At the 2020 Yunqi Conference, Alibaba stated that Xiaomanlv plans to start mass production this year. On September 8 last year, JD Logistics reached a strategic cooperation with Xiamen King Long to jointly create low-speed unmanned vehicles with commercial implementation conditions and jointly promote marketization.
Meituan also stated that the launch of the new generation of unmanned vehicles marks that Meituan's self-developed unmanned delivery products have begun to possess standardized mass production capabilities.
But after mass production, whether they can be put into use quickly seems not easy at present.
According to AI Finance and Economics, citing industry insiders, the current cost of a logistics unmanned vehicle is between 200,000 and 300,000 yuan. If applied by 2025, once large-scale procurement is adopted, the cost may drop to below 100,000 yuan.
But even 100,000 yuan is a significant investment. Cainiao Post stations are essentially entrepreneurial projects run by couples, and they will not pay this fee.
Moreover, recently, Cainiao Post launched on-demand door-to-door delivery services, with Taobao subsidizing the door-to-door fees. According to media reports, Taobao subsidizes 0.6 yuan per order for door-to-door delivery.
In terms of instant food delivery, recent news shows that "nearly 40% of new food delivery riders come from workers," and from Meituan's financial reports, the number of food delivery riders is also increasing year by year. At least at present, the demographic dividend for food delivery has not been exhausted.
In this context, the scenarios focused on by unmanned delivery are compressed to campuses or semi-enclosed parks. In fact, this is also the main track for giants at present.
In March this year, during the school season, Xiaomanlv had already entered 15 universities in 11 cities, with services covering more than 300,000 students.
Unmanned delivery is a relatively slow track; it will arrive sooner or later, but how long we must wait before the dividends come remains unknown.
Source: Logistics Insight (ID: wuliuzhiwen) Author: Xiao Wen