How AI and data analytics are driving instant commerce [Q&A]

The internet has changed the way that most people shop and increasingly we want to get the things we've ordered fast.

This has given rise to on-demand commerce, with deliveries supported by armies of gig workers. But it's also driven rapid technological innovation in the logistics sector. We spoke to Kashyap Deorah, founder and CEO of logistics app specialist HyperTrack, to learn more about the new the phenomenon of 'instant commerce' and what it means for both enterprises and consumers.

BN: What is instant commerce and what are some of the drivers for it in both consumer and commercial markets?

KD: Instance commerce is the next step in the evolution of on-demand commerce. Like on-demand, instant commerce is about providing consumers and businesses with goods and services at the touch of a button, to be delivered exactly when they want it. Instant commerce takes on-demand one step further to reduce friction and fulfill in a matter of minutes, typically within 10-minutes. Instant commerce taps into two major trends -- consumption categories that demand immediate fulfillment and high-density clusters that justify a micro-fulfillment ecosystem of stores and flex workers.

The success of on-demand commerce over the last decade has accelerated the instant commerce experiment. The primary drivers remain the same -- customers want things faster, and supply chain and workforce innovations can help deliver.

BN: What's happening with the global supply chain and have any of the issues from earlier this year eased or are they the same?

KD: Global supply chain challenges fall into multiple categories -- health-related (e.g. continued COVID-19 lockdowns in China), geo-political (e.g. Russia-Ukraine war) and demand-supply mismatch (e.g. chip shortage). Challenges related to health and geo-political will continue to weigh on the global supply chain to inflate costs, although companies and governments will find alternate sources leading into the new year. Demand-supply mismatch will ease over the remainder of the year, as manufacturers catch up and re-purpose capacity to match supply of goods with their demand. Companies will be sourcing from Vietnam and other countries instead of China where it's possible to do so and European nations will look for other suppliers of natural gas if Russia can't reliably supply the natural gas during the on-going war with Ukraine. The middle mile and last mile will see more automation as faster fulfillment permeates as a primary competitive advantage.

BN: How is technology -- specifically AI and analytics -- helping to enable instant commerce?

KD: Instant commerce requires matching customer demand with supply, both in terms of inventory and supply chain. This requires a lot of AI and analytics merging different types of data sets. For instance, finding nearby, eligible and available workers to pick from a store, servers to run a hot dog stand at a stadium or drivers for a taxi service to assign them to customer orders. This matching requires factoring in the location and mapping data of customers, merchants and drivers and merging them with business data to make decisions.

With a promise of delivering goods in 10-minutes or less, AI and analytics become crucial on three aspects of the supply chain for instance commerce. First one is about placing the dark stores at the right locations (a dark store being a fulfillment center and not open to the public). The second one is about provisioning the right inventory, which involves accurately forecasting demand for each dark store and lastly, having the most efficient analytics to create pick schedules at the dark store and match up drivers with the orders to deliver in time to the customer.

In the last mile, AI is used to measure deviations in address, routes and service times, and loopback learnings from these errors to plan and assign the next order better so customers, drivers and merchants experience predictable fulfillment times. For example, if delivery to a particular address always requires the worker to walk 50 feet to the right and to the back of the building to the service entrance, the address book is updated through AI to reflect that, so future deliveries can be made to the service entrance directly instead of stopping at the main entrance. AI also contributes to improving the forecasting accuracy on historical data related to demand on specific day and time of the week (example -- demand for meat on Friday and Saturday), specific dates in the year (example -- festivals such as Christmas, Hanukkah and Diwali and specific religious observance periods such as Ramzaan and Passover, to name a few) and seasonal activities for a geography including football, soccer and cricket seasons.

BN: Can you compare how AI is innovating logistics and 'last mile delivery' to how it's used with Google Maps or other GPS technology?

KD: Google Maps, Mapbox, and other GPS technologies did a wonderful job at mapping out the world up to the last 50-100 feet. AI has factored in real-time traffic data along with the maps to optimize routes and improve accuracy of prediction for the estimated time of arrival or ETA. These technologies are directly leveraged into planning the route for workers picking up goods (example -- food, beverages, pharmaceuticals) and delivering those to customer locations.

Last mile delivery of goods and fulfillment of on-demand services require the next level of optimization for planning, assigning and tracking orders to completion. Shaving off a minute or two in service time for each delivery in a day adds up quickly. Drivers make more money, customers get a better experience, and the business orchestrating this fulfillment does more business. It's a win-win-win.

BN: How has the gig economy affected the growth and complexity of last mile delivery?

KD: The gig economy has affected last mile delivery of goods and services in multiple ways. Every order for goods or services requires finding a nearby, eligible, and available gig worker, and assigning the order to the worker and tracking them all the way through fulfillment of the order. Traditional last mile logistics technology for planning, assigning, routing, and tracking orders was built for managing the scheduled orders with full-time and permanent workers who are assigned their routes the previous day. That technology is unable to deal with the two new variables that play out on the day of -- on-demand orders placed by the customer during the day and gig workers whose location and availability changes throughout the day.

As a result, last mile logistics technology and operations require an overhaul: they must combine mobile, maps and cloud effectively to match up scheduled and on-demand orders with gig workers, route the workers to the customer location and track them through the fulfillment of goods and services. Operations teams must have a last mile logistics control tower, dashboards, and workflows where they can track workers and orders in real-time, identify from a variety of risks in real-time, and then proactively address them to remedy the situation.

BN: What is coming next with logistics and why should consumers care?

KD: Logistics as we know it will change more in the next four years in terms of technology and operations than the changes seen in the last four decades. This means that the older batch-oriented processes and tools for logistics planning, assignment, routing, and tracking will be replaced by real-time operations and technologies. This is wonderful news for consumers, as they will have Amazon, Uber and DoorDash-like efficiency available to all of their goods delivery and fulfillment of at-home services from plumbers, electricians and locksmiths to masseuse and aestheticians.

Uber-it or DoorDash-it will no longer be a novelty, it will become the norm, as all companies deliver identical last mile fulfillment of goods and services. This will lead to more competition, better choices, and lower prices with more streamlined fulfillment. Customers are king and they want their goods and services now, which will be the de-facto standard across all industries, not just for ride sharing, taxis and food delivery.

Image credit: [email protected]/depositphotos.com