Guest Op-Ed: The Rise of Delivery as a Service
Everyday life entirely changed for most when the World Health Organization declared COVID-19 to be a global pandemic on March 11, 2020. Out of concern for health and safety, people stayed at home as much as possible. When the COVID-19 pandemic forced people to stay at home, more people used delivery to get the items they needed. As delivery rapidly became a necessary service, the demand for delivery services grew at an unprecedented rate.
The COVID-19 pandemic made new service-based delivery solutions the norm. Uber Eats became the new “night out” and groceries were delivered to your doorstep. Several delivery companies met this new increase in demand with technology innovation. Nuro’s autonomous vehicles (AVs) provided contactless grocery and pizza delivery. Drone delivery company Wing delivered necessities like coffee and toilet paper in minutes. Altogether, the COVID-19 pandemic increased the prominence of a new breed of on-demand delivery called Delivery as a Service (DaaS).
DaaS is “a delivery system that involves multiple actors who work collectively to provide a user-centric and technology-enabled delivery service accessible on-demand.”
DaaS systems are integrated on-demand delivery services, such as Uber Eats or Amazon Prime, where delivery from multiple retailers is available via a single online platform. DaaS enhances the accessibility, convenience, and efficiency of delivery by utilizing service integration, a concept which means that multiple delivery options can be accessed by consumers through a single online platform and several delivery transportation modes (e.g., trucks, cars, drones) are available to deliver the goods. The pandemic made it clear that DaaS business models are here to stay. The rise of technologically advanced delivery models raises the question of how can delivery integration and technology be leveraged to improve existing DaaS systems?
DaaS fosters economic vitality through improved efficiency. DaaS improves the efficiency of delivery services by integrating delivery into one platform that is accessible by every actor in the supply chain (the user, deliverer, and producer). The online platform is a central feature of a DaaS system that makes ordering and fulfilling delivery easier. The COVID-19 pandemic highlighted that economic vitality through agility, adaptability, resiliency, and, especially, innovation is imperative to success. DaaS can be optimized by leveraging technology and can easily be scaled by adding more delivery options to a platform. A DaaS system can also help to reduce the cost of delivery through innovative delivery methods, such as crowdsourcing, that help to fill gaps in last-mile delivery. Integrating innovative delivery modes, such as AV and drone delivery, can also reduce the cost of delivery by increasing efficiency.
Current DaaS systems, such as Instacart and DoorDash, are urban-focused, but DaaS is not only an urban delivery solution. Many people who live in rural areas do not have good access to delivery—an inequity that is compounded by the lack of rural transportation accessibility. The proportion of people who live in rural areas and cannot drive due to old age or disability is significantly higher than in urban locations. DaaS can advance social equity and improve the quality of life in rural areas by increasing delivery accessibility. For example, AVs can increase the speed of rural delivery because they will not tire over long-distance travel. Drones can deliver to places that may be difficult for delivery trucks to access.
Though a fully-integrated DaaS ecosystem would be the ideal scenario for consumers, there are several challenges and obstacles that must be considered. Cooperation and communication among stakeholders are necessary to promote collaboration. A primary first step involves delivery technology standardization to support interoperability. DoorDash was able to rapidly adapt during the pandemic by expanding their services because they developed a platform that was easily integrated with and accessible to restaurants and convenience stores.
As delivery business models evolve, industry professionals must have a willingness to continuously change and adapt. The need for on-demand delivery innovation grew exponentially during the COVID-19 pandemic. If delivery companies do not constantly improve their practices to ensure consumer demand is being adequately met, they risk being left behind. Amazon hired 100,000 new workers to accommodate for the demand increase caused by the pandemic. DaaS systems that provided delivery during the COVID-19 pandemic allowed people to stay safe at home and still get the goods they needed. Ensuring that business models have a strong foundation that will encourage scalability can help mitigate inability to keep up with consumer demand for DaaS.
The growth of DaaS systems has resulted in delivery policy and regulation initiatives. Currently, crowdsourcing is becoming an important topic in policy-making, but creates a discussion around environmental and economic sustainability as the number of last-mile deliveries increases fuel use and therefore, delivery cost. DaaS leverages technology to promote sustainability and reduce delivery cost, but regulatory challenges, such as meeting the requirements to commercially use AVs and drones for delivery, must first be overcome.
However, several innovative delivery companies are already paving the way to policies and regulations that will promote DaaS ecosystems. Nuro received California’s first autonomous vehicle deployment permit which allowed them to provide contactless delivery. Zipline, a drone delivery company, was granted an emergency waiver from the FAA to deliver personal protective equipment in North Carolina during the pandemic. The introduction of sidewalk delivery robots into the delivery space is encouraging discussions and new regulations regarding their deployment.
As DaaS systems continue to grow and take shape in industry, delivery companies can work together to foster a path towards a fully-integrated DaaS ecosystem. Imagine a DaaS ecosystem where you could order anything you need from any store or restaurant via a single online platform. You could, for example, purchase dinner from McDonalds, clothes from Macy’s, and groceries from Wegmans in one platform through a single transaction. Yielding regulation that allows innovative transportation modes to be used for delivery and promotes sustainable delivery practices will enable a DaaS ecosystem. DaaS modernizes the traditional delivery model by leveraging technology to improve delivery accessibility, convenience, and efficiency.
The views expressed above are those of the author and do not necessarily reflect the views of the Eno Center for Transportation.