The on-demand delivery trilemma
Commerce Startups

The on-demand delivery trilemma

In the crypto world, there’s a popular maxim called the Blockchain Trilemma, which refers to the difficulty of simultaneously achieving three desirable properties in a blockchain network: security, scalability and decentralization.

The trilemma states that it is impossible to have all three properties at their maximum level. As a blockchain network becomes more secure, it becomes less scalable; as it becomes more scalable, it becomes less secure; and as it becomes more decentralized, it becomes less secure and less scalable.

When designing a blockchain system, trade-offs must be made among the three parameters, leading to a balance that is acceptable for a specific use case.

There is a similar trilemma that exists for on-demand delivery in the convenience foods sector:

The ‘on-demand delivery trilemma’.

The “on-demand delivery trilemma.” Image Credits: Ali Ahmed

It refers to the challenge of balancing three of the most important factors in the on-demand delivery of convenience foods: speed, profitability and affordability.

With the model of delivering preordered goods, it is impossible to maximize all three factors at the same time.

This “on-demand delivery trilemma” will continue to plague industry incumbents unless they can think beyond the existing model of delivering preordered goods.

For example, to achieve low delivery costs to pass on to consumers, or in other words, achieve affordability, the delivery system has to sacrifice either profitability or speed. To be profitable, the company needs to charge high fees, making it unaffordable, or improve its cost basis by being slow. To be fast, the company either needs to be profitable, which means charging high fees, or forgo those fees and sacrifice profitability.

Below, I’ll provide examples of each of the trade-offs and why it is not possible to get around them when employing the existing model of delivering preordered goods.

Incumbents using this existing model of delivery include:

  1. Delivery robots.
  2. Route-based ice cream and food trucks.
  3. Delivery apps.
  4. Quick commerce.

Delivery robots

Image Credits: Ali Ahmed

Delivery robot companies like Starship, Nuro, Serve, Kiwi and Coco reduce costs by automating the driver. This reduction in cost helps them achieve profitability and affordability, but they sacrifice speed to do so.

It takes longer for a robot to deliver something than it would take a person, and considerably so when we’re talking about slow-moving sidewalk bots.

Route-based trucks

Image Credits: Ali Ahmed

Route-based ice cream and food trucks have existed for decades, but new companies like Scream Truck and Zing are trying to modernize them.

However, they operate on the same underlying model of preordering goods and so can achieve only profitability and affordability; not speed.

By virtue of being route based, they park in central locations and force consumers to come to them, line up and buy goods to either consume or haul back home. A considerably slow experience.

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