DEEPER DIVES: The Paradox Of Speed

Good Afternoon,

First, as always, thank you for joining.

An interesting mix of logistics and technology in this week’s edition. What a crazy diverging world.

Costs and the pressures are feeling like they are creating constraints, while the digital work is expanding in ways that feels like there are no more limits to anything.

Non-technical operators are the future. Are you ready?

Here’s what this issue brings:

• What does Notime tell us about the future of eCommerce delivery? A story of what happens when consumers are asked to pay the real price of ultra-fast delivery.
  
  TLDR - they weren’t interested
  

• I’ve been testing self-hosted AI. It has changed my whole perspective new the emerging logistics and supply chain platforms out there

A Crucial Lesson for North American Retailers Obsessed with Speed

Swiss Post announced that it’s shutting down Notime.

Most people in North America probably don’t know what Notime is (or I guess… was).

They’re a specialized (Swiss) same-day delivery service.

It offered same-day evening delivery (6 p.m. to 10 p.m.), utilized a 90% emission-free electric vehicle fleet, provided real-time tracking, and covered about 55.5% of Swiss households.

Its flagship partner, the major online retailer Digitec Galaxus, utilized the service for approximately half a million deliveries since 2020.

Sounds interesting so far, so why are they shutting down?

Swiss Post cited insufficient demand and a lack of willingness from customers to pay the premium required for the service operate profitably.

Here’s the question you should be thinking about:

How can a premium, eco-friendly, same-day service falter in a high-income, densely populated market like Switzerland while across the Atlantic, North American consumers increasingly expect ultrafast (and often "free") delivery as standard?

Let’s get into what customers truly value and how eCommerce businesses can build sustainable delivery models in the face of exploding costs.

"Fast & Free" vs. "Certain & Controlled"

North American and European eCommerce has develop down two similar but (importantly) different paths.

The North American market is heavily influenced by what many call the "Amazon Effect”. Basically that everything needs to be done as fast as possible to improve the customer experience.

And they have set the bar high. Very, very high.

Amazon delivered about 9 billion same-day or next-day packages in 2024 (globally) and offers free same-day delivery in over 140 U.S. metro areas for Prime members on orders over $25.

With Walmart and Target following Amazon in offering more same-day delivery, consumers have become conditioned to expect speed.

In most cases, this speed a "free" price tag for the consumer.

What’s interesting however is this:

Studies show that 90% of U.S. consumers are willing to wait two to three days if shipping stays free, and less than 5% prioritize the fastest option regardless of cost.

The reason free has seemed to work up to now is from

• Retailer-absorbed costs (shipping as a marketing expense)

• Subscription cross-subsidies (like Amazon Prime)

• (And up until recently) De Minimis market access which can cushion landed costs for imported goods

What adds even more to this ‘default’ shipping option is that Out-of-Home (OOH) delivery options like parcel lockers, are still immature compared to Europe.

European consumers on the other hand, show the same sensitivity regarding delivery, but they’ve never been given as many ‘free’ options.

Only about 20% are willing to pay extra for faster delivery (2024 data), and 49% expect delivery to be free.

The difference of the European market is the dominance and maturity of Out-of-Home (OOH) delivery networks.

In 2023, Europe saw a 29% year-over-year growth in automated parcel machines (to 154,900) and had 349,230 PUDO (Pick-Up Drop-Off) points.

In some markets, OOH accounts for close to 50% of deliveries, and some predict it could reach 80% of last-mile deliveries in Europe within a decade.

With that in mind, here are the two defining traits of the market:

• 71% of European customers would choose OOH if it were cheaper than home delivery
  
  The top drivers for OOH adoption are certainty of delivery, cost savings, 24/7 convenience, and sustainability
  

• Speed is still valued, but often only if the premium is less than 7-8% of the cart

What Helps Shoppers Move Towards “Smarter” (But Slower) Options

With rising costs related to tariffs, consumers are also experiencing a ton of uncertainty.

We have seen brand after brand immediately pass on price increases.

And while a lot are also being transparent as to why (i.e. showing the added tariff impact), it doesn’t change the fact that in the end, the customer is paying more.

If you want people to choose more efficient and economical delivery options, you need to make sure you can offer a blend of reliability, convenience and price.

Everyone will tell you that they are 99+ on their SLAs.

They aren’t.

EVERY company manages this number with “exceptions” (check the fine print) about what is considered a failure and what isn’t.

All kinds of crazy things get done to maintain these percentages. Even Amazon DSP services (who are some of the most effectively delivery people you can find), will confirm things delivered when they know it will be delivered the next day (I’ve personally had this happen a few times over the years).

When all you do to make sure that your delivery SLA is 99% is to drop a box in a crowded building lobby, is it really that hard?

The key here is to track your own deliveries with your own standards.

You’ll also watch that SLA % drop quite a bit when you start tracking first delivery attempt rates.

Reliability isn’t from your carrier’s version of the SLA.

Reliability comes from how you define it.

Moving past direct-to-home, Out-of-home collection points such as parcel lockers and staffed pickup counters add another layer you can look to offer.

Working with services that offer PUDO points through other retailers gives consumers alternatives to having packages go to places where they expect to be anyways.

Consumers want the ability to have package delivery fit their life, not fit their life around package delivery.

Convenience is a major driver for conversion, right after price. Whatever you can do to offer flexibility to meet the customer where they are, the better off you’ll be.

Price matters.

It will always matter.

But that doesn’t mean that the only way to sell the service is by offering as cheaply as possible.

What consumers are really looking for is the VALUE they get for the price you ask them to pay.

The challenge that most retailers and d2c brands don’t appreciate enough however, is that a low value sale doesn’t mean that the delivery gets any cheaper.

The biggest lie in last mile right now is that the smaller and cheaper your item, the less it costs for delivery.

This is wildly untrue.

And you should be very wary of ANY service provider that pushes this narrative.

The only reason people are chasing this tagline is because they are hoping that they can sell it to enough people that they are able to drive high levels of density for their delivery routes.

But protip … this would work with ANY packages. Density is, and always will be, the most important KPI for a service provider’s profitability.

(The risk to you as a brand, is what happens when the carrier CAN’T get enough people to buy their service? Then you open yourself up to a huge amount of risk because that carrier is now operating at a loss for what they promised you. And how long can that really continue)

When you start thinking of your delivery options as a ecosystem (and stop looking for one silver bullet that will solve all of your problems), “smarter” can start to take over from “faster”.

Work with your customers to give them transparent choices that match their habits, budgets, and values.

The Future Of Delivery

Retailers

• Understand the real cost of shipping versus your margins. Implement a tiered delivery menu offering choices that balance speed, cost, and convenience (including OOH)
  

• Invest in or partner with Out-of-Home networks. This can reduce final-mile costs, mitigate porch piracy, and offer customers sought-after certainty and flexibility

Carriers

• Develop flexible networks that combine high-density urban ultrafast capabilities (to offer as needed) with strong support for OOH (locker and/or PUDO) alternatives

Notime’s failure wasn’t because of the tech or infrastructure.

It was a result of the market and how consumer sentiment is evolving.

In North America, speed is the option because it “feels free” but it’s not (it’s just baked into some other line item). But what happens when retailers can’t keep subsidizing the service?

You can’t keep pushing up your prices on everything and expect people to buying as much stuff.

Europe is showing us that other methods of delivery provide the same (or maybe even higher) level of certainty and const control that consumers expect. And while ultra-fast feels like it might be worth doubling down on, consumers are voting with their wallet and showing that they have zero interest in paying for what it REALLY costs.

There is not one-size-fits-all easy button.

The sooner you give up on that idea, the better off your business will be.

How I Unlocked Powerful AI Workflows for Pennies 2

The work I do with retailers and service providers is always about making something better.

And if you want to start and the crest of the wave, you have to keep testing and playing with all of the new options that come into the market.

Last week I spent a ton of time playing with the “Self-Hosted AI Starter Kit”.

Untechnically speaking, this is a self-contained tool set of 4 products (n8n, qdrant, ollama and postgres) that are bundled together and have been set up to work pretty easily with very little expertise needed by a user.

To be fair, it’s not “easy button” easy, but for what this does (and how), it’s pretty good

N8N has been getting a lot of attention lately because of this feature set that has been added to the platform.

If you aren’t familiar with them, think a new flavour of make.com or zapier (but honestly, those are not super fair comparisons - but you get the idea).

In addition to the AI Agent, n8n is also supports MCP, custom code nodes, and of course all of the normal connectors that you would expect in a modern automation tool.

If you haven’t been using any of these platforms to help you manage your repetitive tasks already, this is probably one of the easiest ways you can keep your productivity super high.

While I could get into a whole article just about n8n or the AI workflows, what’s important is what I waked away understanding.

And it’s this:

In the same way that the next generation of founders will be heavily indexed towards “non-technical”, so too will the best supply chain and logistics operators.

The future of your operations is going to depend on people that can push their capability even more than where they are today.

And they’ll do this through tools like n8n’s AI Agent and accessing everything with APIs.

Here’s an example.

There’s a pretty popular workflow platform sharing a lot on LinkedIn right now.

One of their newest features was a PDF data extractor. Everyone was raving how well it worked.

They promoted the free initial use, but looking at the paid plans, it’s not exactly dirt cheap.

But with n8n and the AI agent and mistral-ocr, you can create the EXACT SAME THING for pennies per page scanned.

Mistral-OCR is one of the newest and best OCR tools out there.

It can scan images all kinds of documents and extract the text.

It costs $1 per 1,000 pages ….

Let that sink in.

When you build this with the self-hosted version of n8n (although I do think the cloud versions are better for 95%+ of people), you can recreate a robust, fast and ultra cost effective tool for your business and for your teams.

No SaaS monthly subscription required.

I made a longer video post the other day on LinkedIn as well regarding AI models.

Same inspiration.

The n8n workflow opened my eyes to the huge amount of models that you can now access via API.

That means that for your supply chain or logistics business (or any business really), you can create unlimited workflows connecting to EXACTLY THE MODELS that drive the best ROI for your business and for your use case.

Everything perfectly tuned into your needs.

Outputting exactly what your team wants.

No more conforming to your SaaS provider’s vision (who honestly has never done any of the work you’re doing).

Instead, you get all of the capability and all of the ability to change anything you want, whenever you want.

But don’t take my word for it. I’m just an operator.

But Satya Nadella also feels that the future of SaaS will dramatically change.

The reason why this is so important is because the more of your own workflows, the more of your own business logic and routing that you can take over, the better you will be to adapt (extremely fast) to any changes in the market or in backedend technology.

Imagine have a complete workflow that works for your business. It’s doing great but still leaves you wishing it was smarter.

Well, when that next AI model drops, all you have to do is change from Model A to Model B and you get an immediate brain boost without changing anything.

You don’t have to wait for your Saas provider to update anything.

You don’t pay for customization fees.

How sweet is that?

So, if you want to make sure that your teams are performing at the top of their game, you HAVE to start focusing more on working with these tools directly and stop looking to buy from the market.

A flashy GUI isn’t going to be worth the nerfed capabilities you are getting in return.

That’s it for this week. Thanks for being here.