The Last Half-Mile

One evening last week, I came home to find two separate deliveries waiting on my doorstep. Both had been delivered in error. The first was a bunch of flowers, but the named recipient, the street address and the suburb were all incorrect – it was for someone else in another postcode. The second was a packet of coffee beans (part of my monthly subscription), but I had already received the same delivery the day before – so this was clearly a duplicate. Welcome to the perennial logistics challenge of the “last half-mile”.

Delivery-on-Demand: 5 years ago, Auspost was experimenting with drone deliveries (image sourced from IT News)

It seems that despite the increased demand for on-line shopping and home deliveries during lock-down, supply chain logistics are still struggling to find a consistent and reliable solution. Coincidentally, in recent weeks I have been pitched two different start-up ideas that aim to address the last half-mile challenge for e-commerce. Although they are each taking slightly different approaches, both start-ups are trying to address the “recipient not at home” dilemma – what to do with parcels and deliveries when there is no-one at home? Their respective solutions revolve around a “localised point of collection/delivery” – either using a more convenient network of click & collect facilities, or a network of trusted neighbours to receive deliveries on your behalf. I have previously covered another Melbourne start-up called Passel based on a network of trusted local couriers – but it doesn’t seem to have progressed very far.*

So if this is a recurring theme, why can’t it be fixed – or are the solutions out of step with the actual problem? Or is the problem not that big of an issue to warrant over-engineered answers? In attempting to provide constructive feedback to both the recent pitches, I gave similar responses in each case, which can be summarised as follows:

Using a proxy recipient still does not solve the problem of items being delivered to the wrong address (or wrong items delivered to the correct address). In particular, it doesn’t address the issue of Australia Post personnel carding an item as “not at home” when in fact they simply can’t be bothered to attempt delivery and prefer drop it off at the local Post Office for collection – believe me, I have had more than my fair share of those.

Localised click & collect services already exist – usually in convenient locations, and often accessible outside Australia Post’s normal hours. Plus more parcel locker and similar services are appearing – so is the demand really there for another delivery solution?

Who is responsible for insurance claims on lost or damaged packages, where the named recipient (who has the sales contract with the seller) does not match some of the relevant transaction details associated with the proxy recipient?

Likewise, if you are using proxy delivery or collection services, who is responsible for managing returns and/or unclaimed items? Some retailers will take items back and offer refunds as a matter of policy – but others won’t or can’t process returned stock, and end up re-selling into secondary supply chains at a discount.

How do you recruit and screen proxy recipients and deliverers, and build trust into the network? How do you avoid an under/over-supply of proxy providers – too few and the system gets choked; too many and it’s not worth their time and effort to sign up.

How do you recruit and service multiple retailers and/or their point of sale and fulfillment providers to make it a viable service for customers who wish to shop from multiple shops and brands?

Who (and how) do you charge for the additional convenience you are trying to offer – retailer, customer, or both? Suggested options include a per transaction fee and/or an annual subscription fee, or a check-out fee which can be rebated based on loyalty or other frequent buyer rewards. But the “convenience premium” cannot be disproportionate to the value of the transaction.

Even with more customised delivery options such as trusted neighbours, the issue of having to be at home during quite wide delivery hours (e..g, 8am to 1pm, or 9am to 5pm) still applies.

Confirming proof of delivery is still a pre-requisite – even more so if using proxy delivery addresses – and potentially adds another layer of complexity.

Finally, the need for immediate “Delivery-on-demand” may be overstated, at least on non-perishable goods, so a constant stream of delivery drones down every suburban street is probably some way off….. but maybe don’t rule it out if we have further pandemic-related lock-downs or continuing challenges in the COVID vaccine rollout.

* Similarly, I also blogged about other customer experience with the final step in fulfillment across a number of sectors, including e-commerce.

Next week: Notes from Blockchain Week

Synchronicity

I’m not sure I fully subscribe to Jung’s theory of Synchronicity, where causally unrelated events occur at the same time, and seemingly take on a significant meaning; in many cases, a coincidence is just that. But recently I have been forced to consider the possibility that maybe Jung was right.

Over the past few months, I have been reading the 12 novels that comprise Anthony Powell’s “A Dance to the Music of Time”. Although I had never read them before, the books were familiar to me through a BBC Radio adaptation broadcast between 1979 and 1982, and a UK television mini-series from 1997.

Last weekend, and quite unrelated, a friend posted some music on-line – recordings made by the band we were in during the early 1980s. One of the tracks was a song I had written at that time, and whose title had been inspired by Powell’s magnum opus. But I hadn’t listened to or thought about this song for nearly 40 years.

Separately, and also by coincidence, in the last couple of days I have been listening to “The New Anatomy of Melancholy”, another BBC Radio series that draws its inspiration (and title) from Robert Burton’s 17th century tract on mood disorders. This series was first broadcast in May 2020 – no doubt prompted by the onset of the global pandemic, with its lock-downs, self-isolation and increased anxiety. And now the programme is being repeated, exactly 400 years after the publication of Burton’s original treatise – and at a time when we need his sage advice more than ever.

Until now, I hadn’t appreciated how self-absorbed (obsessed?) Powell’s narrator, Nicholas Jenkins, is by Burton – he even ends up publishing an academic text about this prescient Elizabethan writer. On one level, Jenkins is a proxy for his literary hero (as well as being Powell’s alter ego), and much of the 12-novel sequence is a response to Burton’s analysis on the causes of, and cures for, melancholia.

All of which may or may not prove Jung’s theory, but there is for me something of a personal thread between Powell, a song I wrote, and the BBC’s recent update on Burton.

Next week: The Last Half-Mile

From R&D to P&L

Last week, the leader of the Federal Opposition announced a $15bn reconstruction fund aimed at job creation if Labor wins government, saying Australia must be a country “that makes things”. With a specific focus on cars, trains and ships, this policy pledge sounded like a clarion call to the metal-bashing industries of old (and recalls either an 80s movie or a 60s pop song…). This followed the launch by the Victorian government of the $2bn “Breakthrough Fund”, aimed at enhancing the State’s R&D capabilities.

While this type of government largesse and targeted economic stimulus sounds welcome, I can’t help feeling the money could be better spent on covering some basic building blocks in the search for innovation and economic development – upgrading the primary, secondary and tertiary education for the 21st century (e.g, an integrated STEAM curriculum); funding budding entrepreneurs (e.g., job maker for the newly self-employed, especially those under 25); enhancing the SME loan market (e.g., making it easier to access working capital without first having to own real estate); and overhauling the procurement and “panel” regimes in the public and private sectors (e.g., giving more equitable access to start-ups and scale-ups).

The “reconstruction fund” talks about making equity stakes, and co-investing with the private sector and superannuation funds. This sounds great, but is it the role of government to pick winners? Surely it should be in the business of enabling innovation and facilitating the growth of SMEs (which is where much new employment is created, rather than in legacy industries and/or declining sectors). Also, because of the way their mandates are written (as well as their ROC models and fiduciary duties), traditionally, superannuation funds and other institutional investors find it very difficult to write cheques for less than, say, $200m. Such a figure is generally far beyond what most start-ups or scale-ups are seeking – so these institutional funds are often placed with external managers who can slice them up into smaller allocations, which adds to the overall investment costs.

The role model for the $15bn fund is the Clean Energy Finance Corporation, which returned a cumulative 4.75% as at June 30, 2020. Certainly a higher return than the cash rate, but hardly competitive with other asset classes or investment returns, if that is a key measure of success. The CEFC performance is currently running below its own benchmark, and while the efforts of the CEFC have no doubt led to more jobs in the renewables and sustainability sectors, hard data is not easy to come by. In its favour, the CEFC has made a large number of small scale investments, which may well provide a template for Labor’s manufacturing fund (although it’s not evident what form those investments have taken).

In speaking to a range of people over the past few weeks (civil servants, start-up founders, VCs, CEOs of listed companies, etc.), the following mixed messages emerged:

  1. Well-meaning government officials tell you that they are “here to help” founders, start-ups, entrepreneurs, SMEs etc. Problem is, these bureaucrats can’t effect necessary systemic change in the way innovation is funded – they can only operate at a transactional level. Also, many entrepreneurs would politely suggest that the government could do more by getting out of the way…
  2. One VC took issue with my suggestion that Australia needs a better manufacturing supply chain that produces more local components that are interoperable/interchangeable, and which also encourages more user-serviceable (and therefore more sustainable) devices and appliances – he was advocating in favour of sealed units and thus a continued dependance on the manufacturer/distributor service model; whereas I think self-sufficiency in manufacturing also means more consumer choice in post-sales support.
  3. An innovative Australian fintech chose to list overseas because the local capital markets did not “get” its business model, while another locally-listed fintech faced similar obstacles with its own listing.
  4. A start-up founder looking for a modest amount of money for an R&D project (in the sustainability sector) had already secured an equal amount of funding “in kind” from a government agency – but was finding it somewhat difficult to match it with the equivalent private capital.
  5. Neighbours building a passive house have had to import energy-efficient triple-glazed window units – because they are not easily available locally, and the only supplier they could find would have cost at least 50% more.

Finally, the new Labor policy (especially if it aims to support the EV sector) will need to demonstrate it has learned the lessons of Australia’s subsidised car industry, and that the proposed fund is part and parcel of an integrated approach to public transport infrastructure, encompassing high-speed inter-city trains, smart cities with self-drive vehicles, better orbital routes connecting suburbs, and regional hubs that aren’t reliant on cars.

Next week: Synchronicity

Victorian Tech Startup Week – Pitch Night

As part of the recent Victorian Tech Startup Week, Silicon Beach Melbourne and YBF Melbourne hosted the city’s first in-person pitch night for over a year (thanks to the 3 lock-downs we have had in that time). Compered by Karen Finch of Legally Yours, and supported by OVHcloud, the esteemed judges for the evening were Farley Blackman (YBF), Yian Ling Tan (OVHcloud) and David Hauser (Silicon Beach).

The usual Silicon Beach rules applied – Round One featured 90-second pitches from each founder (and no slide decks), from which the judges shortlisted 3 startups for Round Two. The Round One presentations in order of appearance were (as usual, website links are embedded in the names):

TwistedXeros.com

Using “emotional phase shifting to accelerate personal growth and transformation through Insight, Manifestation and Neuroscience”, the impetus for this startup came about from the founder’s own experience. Designed to help overcome certain mental health issues associated with anxiety, the founder claims his technique can help practitioners overcome events such as panic attacks within 6 seconds (as opposed to 600 seconds with traditional CBT methods). Had been accepted into the Founders’ Institute, then COVID came along.

The Leaf Protein Co.

There is a growing demand for plant-based foods, both as a source of sustainable protein, and in response to the increased prevalence of food-based allergies (e.g., gluten and soy). Add concerns about GMOs, unsustainable agriculture and climate change, the founder is looking to develop a scalable process for extracting specific types of leaf protein, including arid-climate plants and Australian natives such as saltbush to counter soil salination. Currently seeking funding to pay for a CSIRO pilot to scale the protein extraction.

E-Toy Library

Essentially a toy-lending app, that provides an end-to-end process (source, distribute, cleanse, circulate) via a subscription model. In trials, already secured 50 customers and over 100 subscribers. Estimates there is a $2.4bn toy market in Australia – but it wasn’t clear how much of this market the founders aim to capture.

Kido Paint

This app aims to bring childrens’ drawings to life, using AI/ML to scan a photo of the drawing, and convert it into an animated 3-D digital file that can be rendered within the app using augmented reality.

Thorium Data

Using the oft-heard tag line “data is the new oil”, this B2B solution is designed to help companies organise, manage and extract more value from their data. It does this by resolving issues of data inconsistency, privacy, risk and governance. It also derives and assigns numerical factors to to individual datasets to assess the “value” of this data, and uses indices to benchmark that value.

QuestionID

This product feels like a cross between a wiki for academic research papers, and an open text search tool to find answers within the wiki database. I know from experience that repositories of published research reports (especially refereed and peer reviewed papers) are highly structured and tagged, with the emphasis being on classification, authorship and citation. Often, you sort of need to know in advance the rough answer to the question you want to pose. Significant resources are already allocated to maintaining and commercialising these existing databases, so I’m not sure how QuestionID will deal with IP and other rights associated with these reference resources.

HiveKeepers

HiveKeepers is designed to support beekeepers by helping them to establish and maintain healthier hives, and enhance their own livelihoods at a time when the industry is facing numerous challenges. At its core is a smart phone app that monitors IoT sensors (temperature, weather, weight, motion, sound, etc.) attached to the hive itself. Over time, the data will enable predictive analytics. With the launch of its MVP, HiveKeepers has already attarcted 700 customers globally.

Round Two

The three finalists selected from Round One were KidoPaint, LeafProtein and HiveKeepers. Each founder made a longer pitch, and then answered questions from the judges:

Kido Paint – The Q&A discussion centred on the commercial model (B2B/C, gift cards, in-app vouchers), the file conversion process (turnaround time can be 24- 48 hours), options for scaling, and getting the right price pint for user prices. So it’s not an instant result (which may disappoint some impatient younger users), and the 3-D rendering and animation is somewhat limited to the imagination of the AI/ML algorithms used in the conversion process.

LeafProtein – There was a further discussion on the approach to producing sustainable and allergen free plant proteins. For example, the attraction of pereskia is two-fold – a higher protein ratio, and an arid climate plant. Also, the aim is to counter mono-culture and GMO crops. A D2C brand has been launched (using small-scale production processes), while the CSIRO project is to designed to scale protein extraction, as well as develop an emulsifier for use in the food industry.

HiveKeepers – The founder talked more about the need to address climatic and environmental impact on hives. Having benefited from support from the La Trobe University and SVG Thrive AgriFood accelerator programs, this startup is seeking funding for product development – current price point is $105 USD per smart hive per annum. While the industry is seeing a 2% growth in new hives, it is also suffering significant hive losses due to parasites and diseases.

The overall winner on the night was LeafProtein.

Next week: From R&D to P&L