Disrupting the disruptors: How tech leaders are altering route-based business models.

Historically, investors haven’t always considered the Commercial Services sector to be at the forefront of technological advancements. But the tide turned — and fast. Today’s delivery-oriented world has resulted in an industry awash with tech-led disruptors.

This is a sector that continues to scale at pace. As route-based delivery models become ever-vital and ever-ubiquitous, investors may be interested in the tech focused distribution companies sustaining above industry growth rates and a deepened competitive advantage.

So, how will the sector’s digital transformation continue to advance? And what will the outcomes be for investors in the distribution and services space?

Deliveries: on the cusp of a revolution?

Solving the complex processes involved in delivery and distribution is not straightforward. However, companies embracing technological advancements are finding solutions to an array of logistical challenges. Intelligent routing is leading to schedule optimization — and drastically improving route density. The ability to strategically acquire and deliver to customers in close proximity to one another can have an immense impact on windshield time; lowering fuel and labor costs as a result.

Machine learning algorithms can also provide companies with data-led deep learning models which respond to common last-mile logistical challenges such as traffic, congestion, closed roads, and customer availability. Plus, the use of the IoTs such as sensors and smart truck tech can offer real-time visibility and live updates. Meanwhile, many are embracing electric vehicles as a tech solution to high energy prices.

Tech-savvy commercial services companies can therefore benefit from huge improvements in productivity and efficiency. The result? Overall optimization in the near term, which can generate higher margins, reduced costs, and increased adaptability.

But looking further ahead, investors may be keen to keep abreast of movements in the autonomous vehicle (AV) space. From self-driving cars to drones, route-based delivery models could be set for widespread disruption in the longer term. Is the industry on the cusp of a delivery revolution?

Keeping the customers happy

An improvement in the customer experience is another significant benefit enjoyed by tech leading distribution companies. In the first instance, digital transformation more generally is offering customers a streamlined, accessible, and more efficient service through the use of digital tools and platforms such as portals, mobile phone applications and onboarding processes.

Secondarily, the use of AI and subsequent natural language processing abilities, are allowing businesses to solve customer issues in real-time without the high labor costs and time-inefficiency of the past. Through chatbots and smart home devices, customers can interact with the company instantaneously, whilst the business benefits from data collection and subsequent insights powered by AI technology.

Higher customer satisfaction throughout the lifecycle can lead to a deepening competitive advantage, something of particular importance in a fiercely competitive sector.

Analytics and actionable insights

Machine learning algorithms are leveraging data to provide companies with actionable insights into their customer’s preferences, potential customer personas and product/service offerings. And, cloud-based digital solutions can generate predictive insights and analytics based on customer behavior from the use of IoT devices. Plus, the use of advanced CRM systems is transforming the sector’s approach to digital marketing by enhancing the relationship between business and customer.

Businesses can expect improvements in customer targeting, conversion, and retention — alongside more effective cross-selling, bundled services, and an improved product offering. Smaller or regional competitors may struggle with the disruption this could cause to customer bases as distribution companies become better equipped with the data, analytics, and digital tools to refine their marketing strategies and gain a larger market share as a result.

Streamlining business operations

Finally, the implementation of advanced enterprise resource planning, and cloud-based software such as SAP, alongside other improvements in efficiency and productivity, can help to streamline business operations overall. These softwares offer tools and digital solutions to operational challenges. Plus a reduction in labor intensity can lead to big operational cost savings and improve systems more generally.

Furthermore, the creation of optimal geographic locations, from software generated branch locations to real-time route optimization, should also positively impact operations by minimizing wasted time and system inefficiencies.

Wrapping up

Tech leaders can expect optimized route-based delivery models in the near term. Looking ahead, companies in this space are likely to play a more disruptive role as technology will maintain paramount importance within the commercial services’ ecosystem.

Using AI and machine learning capabilities to improve route density and optimize scheduling is likely to provide a longer and more sustained tailwind, as the potential for increased efficiency is expected to drive both scale and margin expansion.

Meanwhile, combining a digitized customer experience with improved conversion and sales should generate organic growth and help companies gain market share overall.

Any commercial services distribution business able to leverage AI, machine learning, and the IoTs will likely sustain above-industry growth rates, navigate challenging market cycles, and expand margins. Route-based business models are being disrupted, and that’s before we’ve seen autonomous vehicles hit the mainstream.