The ingredients for a successful last mile partnership

Date : 26 March 2019

There has been a lot of activity concerning retailers and their last mile delivery partners recently. Several retailers have cut ties with existing partners or cut schemes altogether, while others have decided now is the time to commit. So, what’s going on? Why are some retailers pulling back, while others are investing?

Let’s start by looking at what’s expected of a delivery scheme. Each is different, with most currently operating at a local scale, with a specific offer designed to meet local conditions. Sometimes the offer is complex, often with minimum order sizes, fixed product ranges, additional costs based on when the order is needed, and a specific catchment area to which the offer applies. These are not simple for customers to navigate.

Added to that, many, including some I’ll explore in this piece, are trials. They have been developed to test consumer appetite as well as the ability of the businesses involved to deliver the required level of service at the right price. This gives us a clue as to why some partnerships reach their natural conclusion – the right balance could not be found.

All change for Tesco and Walmart

In the UK, Tesco recently announced it is ending its Tesco Now service, which offered customers in London a one-hour delivery option. Shoppers were able to order up to 20 items from a range of 1,000 products, which were delivered by its courier partner Quiqup. However, Tesco ended the service in November saying it will now focus on scheduled same-day delivery instead.

How well the businesses involved work together is all important. Can the two business’ operations dovetail? This is more difficult to achieve under trial conditions, where investment in systems integration and processes is light. There’s a Goldilocks aspect to this. There needs to be enough orders to make the service viable, but not so many that the quality of service is negatively impacted.

Take Walmart, it’s recently re-shuffled it pack, cutting ties with Deliv, one of earliest delivery partners. Initially, Deliv was key to supporting efforts to offer the same day service in 100 US cities.

The Deliv platform uses “gig” drivers to deliver orders to Walmart customers. This made minimising the time taken to hand-off deliveries to drivers and getting those deliveries to customers homes all important. The process doesn’t appear to have been optimised, with delivery drivers and store customers competing for a share of store associate time. Delivery drivers often waited for long periods, eroding the profitability of the model.

Despite this, Walmart continues to partner with other businesses offering a similar service, agreeing contracts with four new businesses in January – Point Pickup, Skipcart, AxleHire and Roadie.

While these two retail giants have recently ended relationships with third-party delivery providers, plenty of others have announced new ones. Some of these emphasise different aspects of the offer, aside from cost and delivery times. The way in which the goods are being moved is a good example and reflects retailers’ attempts to cater to evolving customer priorities – namely the desire for “greener” transport.

Investment from Ocado and Co-op

Ocado’s new “Zoom” service is being tested in West London. It allows customers to place orders with Ocado for delivery within an hour. Its partner company, Stuart, uses a variety of methods to deliver goods, including bikes and cars. Stuart has a specific proposition, focusing on moving goods around urban locations in environmentally friendly ways. What’s unique about this partnership is the integration of the partner into the retailer’s process. This allows Ocado to match orders to delivery methods, making the process as smooth as possible.

Co-op has several trials in place, demonstrating how diverse an online, rapid delivery offer needs to be at a national level. It has partnered with to deliver orders using zero-emission electric cargo bikes. This is the same service provider that Sainsbury’s partnered with last year for its own grocery delivery service. It has also been trialling Starship Technologies’ robots. The autonomous robots are used to make delivery from a local Co-op store. It also announced a free grocery delivery service by taxi at eight stores across the UK, as well as its home delivery scheme with Deliveroo.


Getting orders to customers quicker and in ways that meet shifting priorities is a key battleground. We’re seeing a huge amount of experimentation with retailers of all sizes trying to find the right formula. Across the mix, it’s inevitable that some schemes will prove to be viable, while others ultimately fail.

It’s also clear that those waiting for a cookie-cutter model to emulate will be waiting a long time! There is no one-size-fits-all model because too many variables influence success. While time from order to delivery is a clear unique selling point, and the way goods are transported an increasingly important differentiator, retailers and their service provider partners must be capable of consistently meeting the service guarantee. This means attracting just the right number of customers – the Goldilocks zone – enough to make it viable, but not so many that the customer experience suffers.

Chris Irish

Chris Irish

Supply Chain Insight Manager

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