Image from Postmates via Facebook

Experience Exponentialized in The New Logistics (Uber, Lyft, Instacart, Postmates, etc.)

Peter Merholz
Oct 13, 2015 · 5 min read

Over the past couple years, we’ve seen the ferocious emergence of logistics “unicorns,” startups such as Uber, Lyft, Instacart, Postmates, Munchery, Caviar (owned by Square), as well as BigCo plays such as Google’s Shopping Express and Amazon’s Flex.

Judging by valuations, anecdotal evidence, and conversations I’ve had with people familiar with these companies, their uptake has been phenomenal. Once customers start using these services, they stick around. We are at the outset of a sea change in how people and stuff move around.

Traditional Logistics

Pre-internet, even pre-smartphone, logistics was pretty much a function that existed deep within businesses. If a customer ever interacted with logistics, it was at the very end of the chain, with the delivery of a package (think FedEx and UPS), or picking something off a store shelf (think supermarkets and Walmart), or configuring a computer online (Dell). The focus within logistics was to be as efficient and effective as possible, to remove waste, in order to reduce costs.

The New Logistics

In a post-smartphone world, logistics has bled out of the enterprise and into the fabric of our lives. Primarily due to smartphones, but also thanks to data science and machine learning, we’re all becoming participants in The New Logistics, either as shopper, courier/driver, or merchant.

From a perspective of user experience, this presents plenty of interesting wrinkles.

Historically, logistics is an analytical endeavor, using Tayloristic principles of scientific management, and its modern spawn such as Business Process Reengineering and Six Sigma, to seek ever greater efficiencies in the marshaling of resources. Companies like Dell or Walmart succeeded because their ability to predict demand, move components, and reduce waste were unparalleled.

The human actors were employees who understood their job within this context. With the New Logistics, analysis and efficiency are crucial, but insufficient, because there are now multiple parties that must be managed. No one wants to feel like a cog in a machine, and so the New Logistics grapples with the irony of melding extreme efficiency with humanistic concerns of autonomy and delight. Basically, how do you turn logistics into a human experience?

Perhaps the plural, “experiences,” is more appropriate, because it not about user experience, but the experiences of all the users, in this case all the actors in the New Logistics actors, such as the courier and the merchant.

These services exist because a buyer is willing to spend money to for convenience, often paired with time savings.

However, convenience and time quickly become commoditized. BPR and Six Sigma don’t command as much attention any more because they largely ran their course, as every system has a limit to its efficiency. At some point, further efforts are met with diminishing returns.

Service Experience in The New Logistics

When the core of these New Logistics offerings become commoditized, it will be in the areas of service experience where additional and specific value are created. It will be essential for each service to be clear about its specific value proposition, and to portray a distinct personality.

That personality will emerge as a product of four criteria:

1. Assortment/selection. People use services because of what they can get from it, particularly if they can’t get it from anyone else. It’s why Netflix and Amazon are investing so much in their own content. It’s why people still pay for HBO. For the New Logistics, it means exclusive access, either to certain items (e.g., you can only order from this restaurant through this service), or distinct experiences (e.g., you can only get a ride in a Tesla from this service).

2. Person-to-person interactions. Until the point we have self-driving cars or everything is delivered by drones (and this will likely persist even after that), the courier’s behavior is a huge contributor. It’s why these services are so active in getting buyers to rate things.

3. Functional design of the software or service. How much effort do I need to put in, and how much do I get out from it? Does it remember what I’ve done in the past? If collateral is necessary as part of the experiences (like with Munchery’s cooking instructions), are they effective?

4. Brand trappings of the experience. How are the brand’s characteristics communicated, and does that conveyance work? Do customers appreciate being associated with that brand? Are those brand characteristics carried out through all material, from marketing, through software product, to the box you’re given or the ride you take, to the follow-up email?

Armchair Analysis

Right now, of the major providers of which I’m aware, Uber and Lyft are the strongest across these criteria, followed by Munchery. Uber, with its “Everyone’s Private Driver” tagline, conveys an elevated, even aspirational personality, and still offers black cars, though UberX is most active. While Lyft has reined in the pink mustache and no longer states “Your Friend with a Car,” friendliness and community are still at their core, and I’ve found many riders are either “Uber people” or “Lyft people” (even though many, if not most, drivers, work with both). Munchery features quality meals, prepared by chefs each with their own story, presented in handsome boxes with easy-to-follow instructions. Caviar has truly nailed the ‘assortment’ category, so while there’s not much more to it’s person-to-person interactions, functionality, or brand trappings, the fact that they have many of the best restaurants in our neighborhood available to us in less than an hour (which means we can eat great food without worrying about how our small children will behave) makes them a winner.

The shopping services, like Instacart and Postmates, seem to still be focusing on the convenience and time aspects. That makes sense — those are the table stakes, or the lowest level on Maslow’s hierarchy, and if you don’t have that right, the rest doesn’t matter. Also, Instacart’s and Postmates’ models mean a more complicated relationship with merchants, which takes time away from realizing higher levels of actualization. But pretty soon, they’ll have to demonstrate differentiated experiences if they want to meaningfully stand out (and warrant the big investments both took the past year.)

Further Opportunity for Designers

The New Logistics opens up some fascinating new avenues for design. The personality aspect is just one. For each role, a “customer journey” needs to be drawn up, as the buyer, the courier, and the merchant are all ‘customers’ of the New Logistics provider. Those customer journeys then need to productively integrate. We’re not talking about experience * x (where x is the number of actors), but something more like experience ^ x, where the interactions between the parties leads to an emergent overall experience.

This is hairy stuff. I hope to keep exploring it. Would love y’all’s thoughts in the comments.

(Thanks to Matthew Milan who helps me think through this stuff.)

Peter Merholz

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Design and Product executive.