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EMERGING TRENDS Supply Chain & Logistics Tech Trends To Watch 2020 WHAT IS CB INSIGHTS? CB Insights is a tech market intelligence platform that analyzes millions of data points on venture capital, startups, patents, partnerships and news mentions to help you see tomorrow’s opportunities, today. CLICK HERE TO LEARN MORE Covid-19 has upended the global economy, causing major supply chain disruptions. Nevertheless, a rising ecosystem of technology-focused solutions is promoting supply chain resilience to address current market uncertainty, particularly for retailers and brands. The Covid-19 pandemic has caused unanticipated supply and demand volatility, bringing high levels of uncertainty to the retail and consumer product supply chains. To stay competitive, retailers and brands must find ways to accurately forecast and track inventory, efficiently fulfill orders across channels, optimize last-mile delivery to consumers, and more. Aiding in this transformation, supply chain and logistics technology solutions are emerging to help businesses introduce more visibility, automation, and coordination across their supply chains. In this report, we dig into 13 technology trends across supply chain and logistics — identified using our data-driven NExTT framework — in the context of the retail and consumer product sectors. While major retailers like Target have acquired delivery management technology — a necessary trend for satisfying rising demand for home delivery — new threatening trends like robotic fulfillment are gaining traction as solutions for faster online order fulfillment. As demand remains uncertain across many retail categories, experimental trends like on-demand warehousing could help retailers and brands manage inventory with increased flexibility. Meanwhile, transitory trends like digital freight matching, which aims to efficiently match shippers (e.g. retailers or brands) with carriers, are facing challenges in the strained trucking market. Supply Chain & Logistics Tech Trends To Watch 3 Table of Contents CONTENTS NExTT framework 5 NECESSARY Delivery management software 7 IoT fleet management 10 End-to-end visibility platforms 13 EXPERIMENTAL Autonomous trucking 16 Autonomous last-mile delivery 20 On-demand warehousing 23 Blockchain for shipping 26 TRANSITORY Crowd-sourced delivery platforms 29 Digital freight matching 32 THREATENING Robotic fulfillment 34 Predictive inventory forecasting 37 Digital freight forwarding 40 Returns optimization 43 Supply Chain & Logistics Tech Trends To Watch 4 NExTT: Supply Chain & Logistics Te The ima NExTT FRAMEWORK ge part with Emerging trends in supply chain & logistics tech rela tion ship ID HIGH rId2 was TRANSITORY NECESSARY not fou nd in Crowd-sourced IoT fleet management the delivery platforms file. INDUSTRY ADOPTION Digital freight matching End-to-end visibility platforms Delivery management software On-demand warehousing Returns optimization Predictive inventory forecasting Autonomous Autonomous last-mile delivery trucking Robotic fulfillment Digital freight forwarding LOW Blockchain for shipping EXPERIMENTAL LOW MARKET STRENGTH THREATENING HIGH Source: cbinsights.com Supply Chain & Logistics Tech Trends To Watch 5 NExTT Trends We evaluate each of these trends using the CB Insights NExTT framework. The NExTT framework educates businesses about emerging trends and guides their decisions in accordance with their comfort with risk. NExTT uses data-driven signals to evaluate technology, product, and business model trends from conception to maturity to broad adoption. The NExTT framework’s 2 dimensions: INDUSTRY ADOPTION (y-axis): Signals include momentum of startups in the space, media attention, customer adoption (partnerships, customer, licensing deals). MARKET STRENGTH (x-axis): Signals include market sizing forecasts, quality and number of investors and capital, investments in R&D, earnings transcript commentary, competitive intensity, incumbent deal making (M&A, strategic investments). Supply Chain & Logistics Tech Trends To Watch 6 Necessary DELIVERY MANAGEMENT SOFTWARE Startups and corporates are offering software-only solutions to holistically manage the delivery process, integrating with couriers to provide route optimization, order pooling, fleet management, analytics, and more. In May 2020, Target acquired the technology assets of delivery startup Deliv, with a reported interest in the startup’s ability to pool orders going in similar directions. While Deliv was a crowd-sourced delivery platform, the acquisition highlights Target’s particular interest in delivery management technology. More broadly, a number of software solutions are similarly focused on delivery management and optimization. One of these solutions, Israel-based startup Bringg, raised $30M in Series D funding in April 2020, attracting investors like Salesforce Ventures. Bringg’s SaaS platform helps enterprise clients (including retailers, grocers, and restaurants) manage delivery operations, leveraging real-time data and artificial intelligence (AI) to enable tracking, route optimization, fleet management, order pooling, and more. Bringg’s software coordinates with crowd-sourced logistics platforms like Postmates, DoorDash, and Glovo, among others. Supply Chain & Logistics Tech Trends To Watch 7 Source: Bringg Other software startups — like LogiNext, Locus.sh, and OptimoRoute — also leverage AI-analyzed data to optimize route planning, order pooling, and delivery fleet management. Beyond startups, a number of major corporates, including SAP, Infor, Oracle, and UPS, offer delivery management software. In early 2020, UPS updated its internal driver route planning platform, ORION, to feature “dynamic optimization.” The new capability will allow ORION to recalculate individual order routes throughout the day as traffic levels, pickup commitment, and other external factors change, according to UPS. Last-mile fulfillment capabilities have become a central focus during the Covid-19 crisis. As consumers stay away from stores — and retailers deal with the challenges of fulfilling more online orders — making last-mile delivery more efficient is essential. By customizing for route planning, order pooling, and more, retailers are looking to save on last-mile delivery labor cost while increasing the speed of last-mile fulfillment for shoppers — which, in turn, boosts consumer loyalty and satisfaction. Supply Chain & Logistics Tech Trends To Watch 8 Going forward, anticipate that platforms will expand their capabilities across new fulfillment channels beyond courier delivery. In May 2020, Bringg launched a new service that will allow its customers to manage different forms of fulfillment — including click-and-collect, curbside pickup, drive-through, returns, dark kitchens, lockers, and more — within a single platform. Many of these alternative fulfillment models are gaining traction during Covid-19. Additionally, expect to see like-minded M&A, investment, and partnership interest as retailers, like Target, attempt to bring delivery capabilities in-house. For more information, clients can read up on the details of Target’s acquisition of Deliv, as well as 50+ startups transforming last-mile delivery. Supply Chain & Logistics Tech Trends To Watch 9 IOT FLEET MANAGEMENT While IoT-enabled fleet management startups have faced major layoffs, they continue to facilitate driver safety, fuel savings, and cost reductions for trucking fleet owners. These fleet owners often comprise some of the world’s largest retailers and consumer brands. Earlier this year, it was reported that Walmart plans to hire 500 additional truck drivers, adding to the 9,000 already employed by the company, highlighting the continued necessity for fleet management solutions for big fleet owners. As online sales rise amid the pandemic, and the driver shortage continues to worsen, this demand will remain strong. Despite this market need, some companies in the space have taken a hit. In May 2020, fleet management startup Samsara raised $400M in a downround and simultaneously laid off 18% of its workforce. This came after competitor KeepTruckin also laid off 18% of its workforce. The layoffs demonstrate how sensitive fleet management startups can be to the volatile trucking market, which has seen an overall reduction in vehicle activity due to worldwide lockdowns, despite an increase in demand for some retailers. Source: KeepTruckin Supply Chain & Logistics Tech Trends To Watch 10 Nevertheless, IoT-enabled fleet management, which includes telematics and electronic logging devices (ELDs), remain a firmly entrenched component of the trucking industry. These solutions incorporate GPS, Wi-Fi, cameras, sensors, and more to track vehicles in real time, improve driver communication and safety, monitor fuel consumption, and optimize route planning. Further, the ELD Final Rule, a US federal mandate which went into effect in late 2017, requires that operators of commercial motor vehicles use ELDs. Despite the short-term challenges that IoT fleet management players may face, expect increased demand for their solutions going forward. This will be particularly true among essential goods retailers (e.g. Walmart) that own their own trucks, and among third-party fleet owners serving the essential goods space. Source: Walmart Technology-wise, anticipate further integration with other technologies like AI to improve predictive maintenance capabilities, real-time risk and safety monitoring, and fleeting integration. Supply Chain & Logistics Tech Trends To Watch 11 Emerging players in the predictive maintenance space have gained investor traction. For example, Tennessee-based early-stage startup Preteckt, which helps fleet owners predict maintenance issues up to 2 weeks before they occur, raised a Series A round of funding in March 2020. For more information, clients can read up on 60+ companies working in trucking tech, as well as our survey of trucking tech in the retail supply chain. Supply Chain & Logistics Tech Trends To Watch 12 END-TO-END VISIBILITY PLATFORMS Platforms that compile and analyze real-time data from players upand downstream along the supply chain are providing retailers and brands with end-to-end shipment visibility and increased supply chain resilience. Corporate discussion of supply chain visibility has increased dramatically in 2020. Well-known brands and retailers, including Levi Strauss, Walgreens Boots Alliance, and La-z-boy, have all recently emphasized the importance of visibility into inventory, particularly during the Covid-19 pandemic. This trend can be seen in earnings calls, with mentions of “supply chain” and “visibility” trending sharply upward in recent months, according to the CB Insights earnings mentions analysis tool. Source: CB Insights Supply Chain & Logistics Tech Trends To Watch 13 Given global supply and demand shocks, end-to-end visibility is becoming an increasingly important tool to ensure a smooth flow of inventory and prevent a breakdown of communication with supply chain partners. Illinois-based project44, a major name in supply chain visibility, provides API (application programming interface)-based integrations for shippers that enable real-time inventory tracking across air, ocean, rail, truck, and last-mile delivery. To provide these capabilities, project44 offers a “Collaborative Visibility” feature that enables shippers to form data-sharing relationships with upstream and downstream supply chain players. In addition, to combat concerns surrounding data privacy and sharing, project44 claims GDPR compliance and allows network participants to customize data sharing. Source: G2, project44 Companies like project44 address a long-standing obstacle in the global supply chain: siloed data. Supply Chain & Logistics Tech Trends To Watch 14 While individual players along the supply chain (e.g. carriers, manufacturers, wholesalers, and retailers) may have the ability to manage data within their own operations, they often remain blind to critical information further up- or downstream — meaning that they can miss insights that directly impacts business. project44 is one of a number of players tackling this problem, in addition to startups like Shippeo, FourKites, and Overhaul. In a global environment where supply chain resilience and flexibility is key, real-time supply chain visibility will become critical for brands and retailers to better monitor inventory, reduce late fees, maintain partner relationships, and ultimately deliver more positive shopper experiences. Along with technologies like blockchain (a trend discussed later in this report), anticipate that supply chain visibility platforms will stay centerstage for retailers, brands, carriers, manufacturers, and more. Going forward, expect these platforms to develop solutions increasingly focused on precise tracking. For example, FourKites launched a new service in June 2020 that provides dynamic tracking of less-thantruckload (LTL) shipments within 2-hour delivery windows. This has been notoriously challenging to track given that LTL carriers experience multiple pick-ups and drop-offs. For more information, clients can explore 125+ startups disrupting supply chain & logistics. Supply Chain & Logistics Tech Trends To Watch 15 Experimental AUTONOMOUS TRUCKING Despite recent shutdowns of major autonomous vehicle initiatives, driverless trucking technology for transportation on public roads and major highways is continuing to gain traction. Trucking accounts for more than 70% of freight transport within the US, according to the American Trucking Associations, and thus plays a critical role for retailer and brand operations. However, the National Retail Federation estimates that the US will need to add 1.1M truck drivers over the next decade to combat the current driver shortage, which has been caused by an aging labor force and a lack of younger recruits. Accordingly, major retailers are exploring autonomous trucking solutions that can reduce reliance on physical drivers and improve efficiency. Amazon partnered with autonomous trucking startup Embark in 2019 to transport goods along an interstate highway. The same year, Walmart partnered with self-driving startup Gatik to automate middlemile grocery deliveries between warehouses and stores via driverless delivery vans. In May 2020, Gatik announced a new autonomous delivery box truck for transporting ambient, frozen, and cold goods — capabilities that could further streamline Walmart’s grocery supply chain. Though some startups have struggled — such as Starsky Robotics, which shut down in March 2020 — emerging autonomous trucking players like Embark and Gatik are part of a growing technology ecosystem. These technologies could enable trucks to move beyond Level 2 autonomy — partial automation that still requires drivers — to Level 4 autonomy, in which vehicles are capable of performing all driving functions under certain conditions. At the moment, though, current pilot schemes for Level 4 require safety drivers to be present. Supply Chain & Logistics Tech Trends To Watch 16 Source: National Highway Traffic Safety Administration, Society of Automotive Engineers One prominent startup in the space is California-based TuSimple, which provides Level 4 autonomous trucking technology. TuSimple expanded its partnership with UPS in March 2020. As part of the collaboration, the startup is transporting freight for UPS between Phoenix and Tucson, and Phoenix and El Paso. Beyond UPS, TuSimple has more than a dozen clients and operates a fleet of 40+ autonomous trucks (with safety drivers) that operate 20+ weekly trips in the American Southwest. Source: FreightWaves, TuSimple Supply Chain & Logistics Tech Trends To Watch 17 Other startups, like Peloton Technology, are focused on autonomous platooning systems, which digitally tether groups of trucks together, led by a principal driver. Platooning can help bring down associated CO2 emissions by positioning trucks closely together to reduce air drag. In addition, platooning at-scale could reduce traffic congestion by enabling coordinated acceleration and braking between vehicles. Peloton, which has commercially launched a Level 1 autonomous platooning system, unveiled an upgraded Level 4 version in 2019. Under the Level 4 system, a full driverless truck can follow a lead truck within the platoon without the need for a second driver. Autonomous trucking technology can also reduce fuel consumption. For example, tech provider Locomation claims to cut overall fuel expense by 8%. By reducing reliance on human drivers and eliminating human error, driverless trucks can increase throughput and overall efficiency. Brands and logistics providers could harness this advantage to better satisfy stringent OTIF (on-time, in-full) requirements by retailers. OTIF programs (enforced by retailers like Walmart and Target to satisfy customer demand) often penalize suppliers for late shipments. Despite the promise of autonomous trucking, the space still faces myriad challenges. From a regulatory perspective, development in the US is subject to a patchwork of rules and regulations that vary significantly by state. In China, another major autonomous trucking market, providers also face a nascent regulatory landscape. Looking at the technology side, autonomous trucking remains difficult to perfect and scale at an affordable cost. Supply Chain & Logistics Tech Trends To Watch 18 For signs of advancement, watch for established startups to shed requirements for safety drivers. TuSimple, for example, hopes to eliminate the need for safety drivers next year. In the US, watch for activity across major states like California, where the Department of Motor Vehicles announced it would permit testing of autonomous small- and mid-size trucks on public roads in late 2019. Globally, anticipate increased activity across countries including Sweden and China, where autonomous trucking startups like Einride and Inceptio are gaining investor traction, respectively. Lastly, anticipate that self-driving technology startups may become lucrative investment or acquisition targets for major truck owners like Walmart that aim to automate their fleets. Amazon, for one, acquired self-driving technology startup Zoox for $1.2B in June 2020. For more information, clients can discover 60+ companies working in trucking tech, how trucking tech is tackling challenges in the retail supply chain, and where Smart Money VCs are making bets in the sector. Supply Chain & Logistics Tech Trends To Watch 19 AUTONOMOUS LAST-MILE DELIVERY While still nascent, autonomous last-mile delivery is seeing accelerated adoption during the Covid-19 crisis. From driverless vehicles to ground robots and drones, we examine how autonomous delivery solutions can help retailers streamline the last mile. Amid the Covid-19 pandemic, CVS and UPS announced they would partner to deliver prescription medication to residents of The Villages, a retirement community in Florida. The pilot, which has received approval from the Federal Aviation Administration, will use drones from startup Matternet, a direct partner of UPS. This is just one of several commercial autonomous drone delivery operations that have gone into effect since the beginning of the pandemic. Source: PCMag Supply Chain & Logistics Tech Trends To Watch 20 On the ground, autonomous delivery startups also are seeing accelerated adoption. With a surge in demand for contactless delivery, UK-based Starship Technologies expanded autonomous delivery service in the US to Arizona, California, and Washington DC. Starship’s delivery robots can carry up to 20 pounds and travel via sidewalks. From a regulatory perspective, autonomous delivery startup Nuro became the first company to gain approval from the US Department of Transportation and the National Highway Traffic Safety Administration to operate its driverless last-mile delivery vehicle on public roads. Specifically, Nuro will be able to launch up to 5,000 of its vehicles across the US, the first batch of which it plans to deploy in Houston. Nuro has partnered with a number of major retailers including Walmart, Kroger, and most recently CVS. Source: Forbes As regulatory barriers come down, autonomous last-mile delivery may become an increasingly important tool for all types of retailers. From convenience to apparel, autonomous last-mile delivery can improve speed and efficiency, while providing a method of contactless delivery during the Covid-19 pandemic. Supply Chain & Logistics Tech Trends To Watch 21 In addition, retailers are constrained by the cost of paying humans to deliver goods, often causing the price of delivery — especially for groceries — to become prohibitively expensive. While autonomous lastmile technology could warrant higher upfront investment costs, they can mitigate labor costs in the long run. While adoption may accelerate due to the pandemic, regulatory hurdles remain. It is also unclear how well consumers will acclimate to the new technology en masse. There is the potential for theft and vandalism, as many of the robots could make easy targets. Should autonomous last-mile delivery fleets scale in size, there could be widespread concern about job losses for delivery drivers, or even political pushback. Looking ahead, anticipate a rise in autonomous last-mile experimentation. While driverless delivery vehicles like Nuro may ultimately be most suitable for delivery on surface roads in cities or suburbs, drone delivery will continue to play a bigger part for rural and isolated communities. In China, drone delivery has already expanded beyond essential items to other categories like electronics and apparel. Expect similar proliferation across countries with more dispersed populations, such as Australia and Canada. Additionally, anticipate autonomous last-mile delivery vehicles to work in conjunction with robotic fulfillment technology (a trend detailed later in this report). As no human drivers are needed, delivery service hours can expand, offering 24/7 shipping. This could cater to late-night impulse buys and immediate-need purchases. Amazon is exploring this intersection: One of the technology giant’s patents, for “mobile fulfillment centers with intermodal carriers and unmanned aerial vehicles,” describes a system for combining drone delivery and automated fulfillment. For more information, clients can read about the store of the future, UPS and CVS’ drone delivery partnership, and our market map of 50+ startups transforming the last mile. Supply Chain & Logistics Tech Trends To Watch 22 ON-DEMAND WAREHOUSING On-demand warehousing solutions are attracting early-stage investor and corporate interest. These solutions harness networks of dedicated and repurposed real estate to provide warehousing — offering retailers, brands, and real estate owners more flexibility. On-demand warehousing solutions use networks of distributed facilities to offer short-term and flexible storage to retailers, brands, and more. These solutions can streamline last-mile delivery by storing items closer to consumers (e.g. near residential neighborhoods). Most providers in this space offer adjoining technology platforms that help shippers optimize warehousing and fulfillment processes. While some of these providers rely on dedicated warehouses, startups like Bond, Darkstore, and Ohi leverage unused real estate inside storefronts, malls, and other underutilized facilities. In doing so, they not only benefit businesses looking to deliver, but also commercial real estate owners and renters seeking to recoup lost revenue from closures. This remains of particular importance as, amid the pandemic, US retailers paid only 58% of their billed rent in April 2020, compared to 96% in April 2019, according to Datex Property Solutions. Early-stage providers in the space have attracted investor attention. Bond raised $15M in a Series A round from Lightspeed Venture Partners and other investors in early 2020. The startup offers urban storage, same-day delivery, and returns services to direct-to-consumer brands via hyperlocal “nano-distribution centers” in New York City. Bond builds out its warehousing network by tapping into unused storefronts, basements, or office buildings. Supply Chain & Logistics Tech Trends To Watch 23 Source: VentureBeat Other startups that leverage on-demand warehousing networks, albeit via dedicated warehousing real estate, include Flowspace and Flexe, which have raised $16M and $64M in equity funding, respectively. Some of these startups have worked with household names like Nike and Walmart. From a corporate angle, UPS unveiled its own on-demand warehousing service, dubbed Ware2Go, in 2018. The service aims to help small- and medium-sized businesses compete on fulfillment speed and efficiency by leveraging a network of warehousing facilities from which they can cheaply store and quickly deliver products. In addition to the benefits discussed above, on-demand warehousing makes real estate more accessible for retailers and brands that cannot afford longer-term leases, helping them to compete against logistically powerful threats like Amazon. It also lowers the risk of a full shutdown by building operational resilience — during a pandemic, for example, should an employee fall ill at one warehouse, others could remain open. Finally, on-demand warehousing provides store replenishment and inventory overflow flexibility to retailers struggling with excess or unpredictable inventory levels. Supply Chain & Logistics Tech Trends To Watch 24 Going forward, anticipate that on-demand warehousing providers will double down on their underlying technology platforms. By improving predictive capabilities surrounding inventory management, warehousing configurations, and more, these providers may increasingly commoditize valuable fulfillment and delivery data for retailers and brands. For more information, clients can take a look at 85+ early-stage startups transforming supply chain & logistics, as well as 6 early-stage startups driving efficiency in last-mile delivery. Supply Chain & Logistics Tech Trends To Watch 25 BLOCKCHAIN FOR SHIPPING While blockchain has the potential to bring more transparency to supply chains globally, the technology continues to face hurdles surrounding standardization and interoperability. For several years, blockchain has attracted attention for its potential to increase transparency across supply chains. A blockchain-based approach would connect supply chain partners on a secure digital ledger where all players can communicate. These systems aim to facilitate trust between independent parties by storing immutable data in a decentralized manner, so it cannot be easily tampered with by any single party without verification from other stakeholders. Through such a system, inventory can be tracked and monitored as it passes through a supply chain. Proponents say that this could mitigate opportunities for fraud, decrease overhead costs related to paperwork, and reduce instances of unexpected delays from better tracking. Accordingly, retailers and brands across grocery, apparel, and more are experimenting with blockchain tech to harness these advantages. In February 2020, Walmart Canada partnered with Toronto-based blockchain solutions provider DLT Labs to complete the launch of a blockchain-based freight network. Designed to directly improve lead times with partner carriers and improve in-stock availability, the initiative aims to facilitate transparent and secure communication between Walmart Canada and around 70 third-party trucking carriers. Specifically, the platform will track deliveries, verify transactions, and streamline payments processes between Walmart and its partner carriers. Supply Chain & Logistics Tech Trends To Watch 26 In the grocery space, retailers and brands are looking to improve food safety and shelf life via blockchain-enabled food traceability. Dole Food Company recently announced a 5-year plan to incorporate blockchain into its operations and add blockchain-enabled tags across its fruit and vegetables products. Other major initiatives in this space include IBM’s Food Trust. IBM has partnered with Walmart and others since 2017 with the aim of reducing the time it takes to track the source of food from days to seconds via blockchain and distributed ledger technology. Source: IBM Beyond grocery, many apparel and consumer products retailers have taken interest in blockchain for sustainability purposes. In April 2020, for example, H&M partnered with blockchain platform VeChain to provide supply chain tracing data to shoppers. This type of data could appeal to environmentally minded consumers and increase confidence in brands’ sustainability credentials. On a broader scale, the World Economic Forum (WEF) launched a “selfservice” blockchain platform earlier this year that can visualize supply chain data from multiple companies and sources. The WEF aims to make this platform a neutral space for competing companies, which could help boost trust and transparency. Supply Chain & Logistics Tech Trends To Watch 27 As a point of comparison, TradeLens, an initiative recruiting global supply chain players onto a unified blockchain platform, received criticism over fears that its co-founder, logistics giant Maersk, could use the platform to gain an edge over participating rivals. Despite some initial caution from global supply chain players that compete against Maersk, TradeLens has attracted dozens of major partners. Ultimately, blockchain’s success in this sphere is dependent on adoption and interoperability — without partners cooperating on a standardized platform, many of the benefits of using blockchain tech are lost. Looking ahead, expect accelerated, though fragmented, experimentation in the space as retailers and brands seek to gain a better understanding of blockchain’s efficacy. An indicator of wider traction and viability will be an increase in standardized platforms. For more information, clients can read up on TradeLens and the retail apocalypse. Supply Chain & Logistics Tech Trends To Watch 28 Transitory CROWD-SOURCED DELIVERY PLATFORMS While major crowd-sourced on-demand delivery startups are seeing a surge in demand amid the Covid-19 pandemic, the business model may lose out in the long term to fulfillment and delivery automation. Crowd-sourced delivery platforms are nothing new. For the better part of the last decade, on-demand delivery services like DoorDash, Delivery Hero, Rappi, and Instacart have recruited thousands of nonprofessional couriers — using privately owned vehicles — to make deliveries on behalf of retailers, grocers, restaurants, and more. Many of these household names have received billions in investor funding, and some have seen IPOs, acquisitions, and mergers along the way. In Asia, similarly modeled platforms are seeing major traction from investors. Indonesia-based Gojek, which provides crowd-sourced delivery services, has received $4.6B in disclosed funding, recently raising a $1.2B round in March 2020. Amid the Covid-19 crisis, many of these services have seen a major surge in demand. Instacart, for example, hired 300,000 people in April alone as demand shot up 300% year-over-year. Going forward, Instacart plans to bring on an additional 250,000 workers. Others in the space have expanded their reach during the Covid-19 pandemic. For example, Postmates added 2 new categories to its app — “Essentials” and “Convenience.” The categories allow shoppers to order over-the-counter medications, toothpaste, toilet paper, and other items. To facilitate the delivery of these orders, Postmates expanded its partnerships with both Walgreens and 7-Eleven in April 2020. Supply Chain & Logistics Tech Trends To Watch 29 Source: Postmates Crowd-sourced delivery platforms offer a high level of flexibility as demand fluctuates. Retailers can benefit from a large number of drivers with less risk of being over-committed should demand decrease. In addition, some platforms in the space provide software that optimizes the last-mile delivery process. This includes startups like Roadie, which provides real-time delivery tracking, text updates, proof of delivery, and live customer support in addition to its crowdsourced last-mile delivery network. (For more information on last-mile optimization technology, see the “Delivery management software” section of this report.) Source: Roadie Supply Chain & Logistics Tech Trends To Watch 30 Despite their popularity, pick-from-store models like Instacart are hard to scale if demand for online grocery stays elevated or grows postCovid-19. In the face of new automated solutions, like micro-fulfillment and autonomous last-mile delivery, crowd-sourced delivery networks may fall out of favor in the years to come. In an adjacent scenario, retailers may leverage increasing delivery order volume to launch store employee delivery programs. By bringing lastmile logistics in-house, retailers can have greater control over their shopper delivery experience as well as the associated delivery, cost, and order data. Additionally, retailers could benefit from incremental brand visibility by advertising on uniforms, packaging, and delivery vehicles. Despite the increase in demand, profitability in crowd-sourced delivery remains challenging. While publicly traded Meituan Dianping reported an adjusted profit in late 2019, others including DoorDash and Postmates have yet to offer similar results. Monitor future reports or claims of profitability as a signal of operational sustainability. Pressure to achieve profitability may force future consolidation. Investor SoftBank pushed portfolio companies DoorDash and Uber Eats to discuss a possible merger in 2019. In mid-June 2020, Europe-based Just Eat Takeaway announced its purchase of Grubhub in a $7.3B stock-only deal. Then, in late June, Uber reportedly offered to acquire Postmates for $2.6B. Longer-term, expect a shift away from the crowd-sourced delivery model as automated fulfillment, autonomous delivery, and in-house delivery solutions become more established. Supply Chain & Logistics Tech Trends To Watch 31 DIGITAL FREIGHT MATCHING Freight matching marketplaces continue to gain investor traction and media attention for acting as a digital intermediary for truckers and shippers — yet significant barriers to success remain. Freight matching platforms have risen to prominence for efficiently matching shippers with available carriers, facilitating partnerships between verified players, and providing pricing transparency. For shippers (e.g. retailers or brands), this can guarantee carrier reliability, increase overall shipment speed, and reduce costs — all critical considerations, particularly during Covid-19. In May 2020, Amazon launched its new digital freight matching platform across the continental US. The announcement is significant because it may allow Amazon to use its scale to gain greater control over the midmile freight market, strengthening its position as a major shipper. But Amazon is not alone. The digital freight matching ecosystem includes well-funded players like Uber Freight, Convoy (with $675M in funding), BlackBuck ($264M), and Loadsmart ($54M), among many others. Source: Amazon Supply Chain & Logistics Tech Trends To Watch 32 Despite advantages in speed compared to traditional booking services, freight matching platforms have struggled to gain widespread traction among shippers for several reasons. Firstly, many of these services lack differentiation — leading to routine switching by shippers and carriers between service providers. Secondly, these platforms do not ensure profitable loads for truckers, a routine challenge in a thin-margin industry that greatly reduces platform loyalty, according to Freight Waves. Lastly, many incumbent brokers in the space are beginning to introduce their own digital capabilities. For instance, established broker GlobalTranz launched a digital freight matching platform called GTZamp in 2019. Going forward, watch for freight matching startups that offer differentiated business models. This includes startups like Flock Freight, which focuses on pooling multiple less-than-truckload shipments to fill unused space, saving costs for shippers. As Amazon establishes its freight matching capabilities for thirdparty shippers, it may leverage its scale to offer below-market rates to shippers and competitive rates to truckers — drawing business away from competing platforms. Anticipate additional threats from existing technology giants. For example, Alibaba launched a new digital freight matching platform in North America in June 2020. For more information, clients can take a look at 60+ companies driving innovation and efficiency in the commercial trucking space. Supply Chain & Logistics Tech Trends To Watch 33 Threatening ROBOTIC FULFILLMENT Robotic technology is providing next-generation solutions for fast and efficient online order fulfillment. In the future, the tech could be a game changer for retailers. In February 2020, Nike introduced same-day delivery in Japan by partnering with robotic fulfillment provider Geek+. The provider uses autonomous mobile robots to streamline the transportation, picking, and fulfillment of goods, ultimately enabling faster fulfillment and delivery speeds. Most recently, Geek+ raised $50M in the second tranche of its Series C round in June 2020. Other providers in the space, like Massachusetts-based startup Berkshire Grey, have attracted investor attention. In January 2020, Berkshire Grey raised a $263M Series B round from Smart Money investors New Enterprise Associates and Khosla Ventures, among others. The startup provides AI-enabled robotics that automate warehouse processes. Specifically, its software and robotic hardware streamline fulfillment by autonomously transporting, picking, and sorting inventory for online orders. Source: VentureBeat Supply Chain & Logistics Tech Trends To Watch 34 Adjacent solutions are also seeing traction. New York-based startup Fabric, which operates small, urban robotic warehouses known as micro-fulfillment centers (MFCs), is planning to open its first US operation in Brooklyn in 2020. Fabric’s MFCs house goods-toperson automated systems that also automate online order fulfillment. As MFCs can be housed in floor areas as small as 5,000 square feet, the centers can be placed in stores or cities — close to end consumers — reducing the cost and complexity of last-mile delivery. Fabric services both grocery and general merchandise retailers, including Israel-based drug store chain Super-Pharm and grocery retailer Rami Levy. The startup currently has 2 operational MFCs in Israel. Source: ZDNet, Fabric With the accelerated growth of online retail in 2020, efficient fulfillment strategies will become vital for competitive and successful retailers. Supply Chain & Logistics Tech Trends To Watch 35 Robotic fulfillment solutions can increase the speed and accuracy of online order fulfillment, leading to improved customer satisfaction and thus loyalty. This process promises to be far more effective, scalable, and efficient than legacy models (e.g. crowd-sourced delivery, which relies on hired shoppers to roam stores and pick items for individual orders). To that end, robotic automation can lower labor costs, increase delivery speed, and expand fulfillment capacity. While robotic fulfillment solutions can be costly to implement, anticipate new pricing and service models like Robots-as-a-Service (RaaS), which allows retailers and other customers to access the robotic technology through subscriptions — avoiding large upfront implementation fees. Driven to compete against tech-enabled giants like Amazon, which has already employed 200,000 robots across its warehousing network, major brands and retailers will continue to leverage robotic fulfillment solutions. These include Walmart, Nike, Nordstrom, and more. With applicability across apparel, grocery, consumables, and many other areas, anticipate that implementation will expand in the coming months and years to traditional distribution centers, supercenters, larger drug stores, and unused real estate (e.g. parking lots and malls). Accelerated by lockdown-induced demand, expect that grocery retailers, in particular, will leverage MFCs to improve margins and increase shopper affordability in the challenging online grocery space. Look for continued expansion of existing partnerships between major grocers like Albertsons and startups like TakeOff Technologies as a signal of success. For more information, clients can read up on 14 retail tech trends to watch in 2020. Supply Chain & Logistics Tech Trends To Watch 36 PREDICTIVE INVENTORY FORECASTING Predictive inventory forecasting tools are helping retailers respond to real-time shifts in demand. This tech could become more important given pandemic-induced volatile consumer behavior and as many historical models become increasingly obsolete. Covid-19 has sent inventory and demand forecasting into a tailspin. For retailers selling essential items like food, demand is through the roof. But for those selling “non-essential” items like cosmetics, demand has plummeted. Under normal circumstances, it can be difficult to properly manage inventory across online and offline channels, but this has become a higher priority during the pandemic-induced economic shock. Startups working on predictive inventory forecasting solutions — which aim to account for real-time consumer spending changes — may offer retailers a way to better match inventory levels with fluctuating demand. These concerns have been reflected in the media, with discussion of the intersection of inventory and retail skyrocketing in recent months. Source: CB Insights Supply Chain & Logistics Tech Trends To Watch 37 One company targeting the space is Finland-based RELEX Solutions, which offers AI-powered inventory planning software for retailers to optimize inventory purchasing across physical and online retail. RELEX’s software uses artificial intelligence to recommend purchase orders based on continuously updated inventory and shopper order data. The company claims it can reduce stock-outs by 85%. The company serves clients across convenience and pharmacy, mass merchandise, food & grocery, and specialty retail. It raised a $200M growth equity round in Q1’19. New York-based Unioncrate provides sales forecasting solutions for consumer packaged goods (CPG) brands. The startup’s software helps brands analyze SKU-level data (i.e. inventory data at the item level) to predict SKU-level sales based on store-level consumer demand, among other capabilities. Alongside working with major brands like Kraft Heinz, Unioncrate raised a $9M Series A in Q4’19 from Founders Fund, Susa Ventures, and Bay Grove Capital, among other investors. Improvements to inventory forecasting can help increase profits, free up cash, and avoid lost sales. Predictive inventory forecasting that leverages AI could be better equipped to accurately track inventory during volatile fluctuations in consumer demand, sensing real-time changes or inputs to adjust forecasting as necessary. Nevertheless, this application of AI may have its limits. Some businesses are suffering from broken inventory forecasting algorithms during the pandemic. While many predictive models can adjust based on changing behavior, some have been unable to appropriately adapt to the extremes of recent input data. Despite these challenges, the potential benefits are compelling. As more inventory data is accrued, AI could be used to better understand consumer behavior, which in turn can inform marketing and help improve margins. This data can also give more detailed predictions at the store and category levels. Supply Chain & Logistics Tech Trends To Watch 38 For retailers and brands, miscalculated inventory forecasting can cause items to go out of stock, disappointing shoppers and reducing customer loyalty. Watch for predictive inventory forecasting technology to become a top priority for retailers and brands — particularly grocers and CPG brands — as they look to facilitate increased availability and faster fulfillment. By integrating with other technologies covered in this report (e.g. microfulfillment centers), predictive inventory forecasting could also help support shopping across multiple channels, both in-store and online. For more information, clients can dive into 5 startups transforming inventory management. Supply Chain & Logistics Tech Trends To Watch 39 DIGITAL FREIGHT FORWARDING Digital freight forwarding startups have gained investor and media attention in recent years. Nevertheless, they face stiff competition from major incumbent forwarders that are quickly building rival digital capabilities. Last year, San Francisco-based digital freight forwarding startup Flexport raised $1B in a Series E round. In its wake, an emerging system of similar startups, including Sennder, Logixboard, Zencargo, and Nuvocargo, has gained investor traction. But what is digital freight forwarding? Freight forwarding, more broadly, is the management of the end-toend shipping of goods around the world on behalf of shippers (e.g. consumer brands). Freight forwarders coordinate with manufacturers, truckers, warehouses, shipping carriers, customer brokers, importers, exporters, retailers, and more. A well-established space, incumbent freight forwarders have tended to use relatively manual processes (e.g. phones, fax machines, spreadsheets) to operate, relying heavily on partner relationships. This is where digital freight forwarders come in. Taking advantage of this technological gap, emerging startups like Flexport have added a digital layer to the freight forwarding process, establishing a software platform to aid in reliable shipment tracking, streamlined pricing, increased communication, inventory visibility, insights and analytics based on shipping data, and more. Supply Chain & Logistics Tech Trends To Watch 40 Source: Flexport As digital freight forwarding continues to gain attention, many incumbent forwards have launched their own digital solutions to stay competitive. For example, in May 2020, DHL Global Forwarding launched myDHLi, a fully integrated digital platform that will allow clients to manage shipments and freight rates, track carbon emissions, and leverage analytics. The platform will support social media-style communication between supply chain partners through an integrated mobile app. Many of these solutions mimic the advantages of digital forwarders. Source: Air Cargo News, myDHLi Supply Chain & Logistics Tech Trends To Watch 41 This digital arms race has accelerated technology adoption in an otherwise slow-changing industry. Given the Covid-19 crisis, the advantages harnessed by this technological acceleration (e.g. increased visibility, transparency, cost-savings) directly promote supply chain agility for shippers like consumer brands. Despite the hype around some of the startups, no digital freight forwarding solution has come close to dominating the space. This is because the freight forwarding market remains highly fragmented as a whole, and major incumbents still hold share by relying on wellestablished physical assets and industry relationships that digital freight forwarders may lack. While digitization in freight forwarding is here to stay, the future of digital freight forwarding startups remains to be seen. Going forward, watch for increased digitization from freight forwarding incumbents as Covid-19 necessitates more shipment visibility. In addition, expect digital forwarding startups to increasingly explore adjacent supply chain financing solutions. UK-based digital forwarder Beacon, which raised a $15M Series A round with participation from Jeff Bezos in May 2020, provides revolving credit to cash-strapped shippers that are often required to pay suppliers months in advance. Flexport, meanwhile, launched Flexport Capital in July 2019 to provide trade financing for shippers with high working capital costs. Supply Chain & Logistics Tech Trends To Watch 42 RETURNS OPTIMIZATION A number of software-driven returns optimization platforms are helping retailers and brands manage the reverse logistics process from customer experience to returns processing. In 2019 alone, returned items accounted for over $300B in lost revenue, according to retail data analytics firm Appriss Retail. As e-commerce sales surge due to the Covid-19 pandemic, retailers will need to hone their reverse logistics strategies to avoid lost sales and unnecessary processing costs. In May 2020, returns optimization startups Optoro and Returnly partnered to offer retailers and brands an end-to-end returns management solution. Optoro, known for working with major retailers including IKEA, Staples, and Best Buy, provides a platform that helps retailers process returned items and optimize for increased sales and reduced waste through analytics, tech-enabled mobile warehousing tools, and more. Returnly, on the other hand, focuses on optimizing the returns experience for shoppers by enabling instant credit on returned items, among other features. Beyond Optoro and Returnly, a number of other startups have gained traction in the returns optimization space. This includes Happy Returns, which has raised $25M in disclosed funding to date. It partners with an assortment of brick-and-mortar retailers and commercial real estate owners to provide in-store third-party returns for online brands. Beyond providing a convenient returns experience for shoppers, Happy Returns pools returned items at its warehouses, bulk-shipping them back to the original online brand to save on shipment costs. Supply Chain & Logistics Tech Trends To Watch 43 Source: ThomasNet These various approaches offer different advantages. Shopper-facing returns platforms, like Returnly, offer a streamlined customer experience that emphasizes the sale of new products at “the point of return,” potentially making up for lost revenue. Back-end-focused solutions like Optoro, which offer warehousing tools, can help increase labor efficiency. Combined front-end and back-end solutions, like Happy Returns, can increase shopper satisfaction and reduce attrition by streamlining the entire process. Nevertheless, outsourcing the returns experience reduces a retailer’s control over the shopper experience. For this reason, brands may be cautious to hand over the reins to reverse logistics providers. Supply Chain & Logistics Tech Trends To Watch 44 As the pandemic continues to accelerate the rate of online shopping globally, anticipate continued investments by retailers and brands into front-end and back-end returns optimization solutions. Though some companies may be hesitant about giving up control, such services are well-placed to help increase shopper satisfaction, decrease operating costs, and improve labor efficiency. For more information, clients can read about this trend in our analysis of 14 emerging trends in retail tech. Supply Chain & Logistics Tech Trends To Watch 45 WHERE IS ALL THIS DATA FROM? The CB Insights platform has the underlying data included in this report CLICK HERE TO SIGN UP FOR FREE Supply Chain & Logistics Tech Trends To Watch 46
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