Last mile delivery sparks fiery battle

In the United States, there is a fiery ongoing battle between Amazon and Walmart regarding the lowest possible shipping cost to reach the consumer. “A standardized package label is a talking point in the United States, but things are not that advanced as in Europe.”

Amazon’s role

GS1 Nederland’s innovation manager, Frits van den Bos, traveled to the United States in March and visited the Home Delivery conference in Atlanta and his colleagues from GS1 Global and GS1 USA in Princeton. His goal was to learn about the online retailers’ latest innovations and how these may impact standardization efforts (for package labels for example).

Amazon and Walmart are trying to lower shipping costs as much as possible, in the United States. Amazon Premium members can get free shipping if they order more than 25 dollars’ worth of items. Standardized package labels help lower those costs, but is that a talking point in the United States?

“No, remarkably, it is not. The United States are a pioneer when it comes to online retailer, but the “last mile” standardization, which requires identical package labels, is still in its infancy in the United States. Amazon, the leader of the pack, has its own standards, which may have its influence on any standardization attempt. Amazon clearly wants to ship to consumers entirely by itself, using its own robots, distribution centers, airplanes, airports and even drones and automated cars in the future. It already uses the SSCC (Serial Shipping Container Codes) labels, but also has its own set of shipping codes. It is superfluous, but it does show that Amazon realizes the value of standards and is not out to invent the wheel for every single thing.

Deliver more efficiently  

GS1 is well ahead with its package label standardization in Europe. Did the American industry show an interest?

“Definitely! In the end, this standardization will create a more efficient delivery and return shipping process, because every transport company can interact more easily with the shipments. Consumers will not need to use the same shipping company when they want to return an item. They can just head to the nearest location, whether that is a supermarket chain store or a post office. To summarize: it is a higher level of service at a lower cost, which definitely appeals to smaller companies, especially if they want to compete online with giants like Amazon or Walmart.”

If we look at the competition between Walmart and Amazon, shipping costs are top of mind in the United States. Is that also the case in Europe or are we still waiting for this wave to arrive?

“You can keep waiting for that wave, because US online retailers are more critical about shipping costs. They often reassess existing deals to see if it cannot be done even cheaper. European online sales still need to grow a lot and when it does, transport companies’ competition will increase. When there is more to choose from, the competition can hit you from a blind spot. Consider how Uber shook the taxi industry to its core.”

More delivery services and a larger online retail: luckily, Europe will have a standardized package label soon.

“Indeed, it will arrive in June, but it is not yet operational. We will have pilots to see how the package label functions. We are currently talking to several companies, including retailers, delivery services and suppliers. We really need to have every step in the chain to communicate about the package labels appropriately and in a standardized way.”