Analysis

What does the Starship delivery robot service in Milton Keynes mean for retailers?

Starship

An unobtrusive premises in Monkton Park, Milton Keynes, hardly seems like a likely hub for a sophisticated robotics operation. But it is from here that Starship runs its fleet of delivery robots, which are currently delivering food and drink for the likes of Tesco and the Co-op.

Pictures aren’t allowed inside. The building contains robots and soon-to-be-replaced battery units (the next generation of robots can run all day and be charged at night). One employee is working from a dashboard which shows the locations of robots and helps to allocate them to deliveries.

The efficiency of the service means that a fleet servicing a neighbourhood the size of Monkton Park can be run by a single person.

Since it first opened up shop in Estonia, the company has been targeting three specific areas: neighbourhoods, university campuses and corporate campuses, explains Henry Harris-Burland, VP of Marketing.

Founded in 2014 by Skype co-founders Janus Friis and Ahti Heinla, the company announced in August it had raised $85 million in total funding. The company plans to expand its service to 100 university campuses in the next 24 months. Harris-Burland says this means there will be several further US launches by the end of the year and some in the UK.

On-site in Milton Keynes, to try out the service, I order a bottle of Coca-Cola to a nearby park. One of three stationary robots outside the Co-op suddenly comes alive and glides around to form an orderly queue of one near to the store. A few minutes later a worker comes out and places the bottle in the robot’s storage cavity and it sets off.

Starship

It moves at a fast walking pace, evading hazards with a bit of a delay. In particular it hesitates substantially before crossing a road. Harris-Burland says this is due to an emphasis on safety.

In the park, I use the app to open the robot, then close the compartment again. It begins its journey back to the Co-op. Harris-Burland says people are used to the robots, with children often sending thank you letters back via the robot. Whether Starship has fully won over everyone in the community is open to debate. As we follow the robot back to the Co-op, a pedestrian remarks to his companion: “If they had those when I was younger, we would have tipped them over.” Starship emphasises that this has never happened and that the public react positively to the robots.

What is clear from using the service is that while Starship may seem like a technology company to those involved in ecommerce logistics, to consumers it presents as a delivery service. Starship has control over its own customer journey. People who buy Co-op products via Starship are selecting the Co-op from one of many food providers on the app.

Starship also offers other related services. While the majority of the robots’ deliveries involve hot food and groceries, Starship also offers an ecommerce delivery option.

Interestingly, this model removes the retailer from the last mile. The customer simply puts the address of Starship’s premises in as their home address and the retailer’s courier delivers the parcel there. The customer then uses the app to determine when they want their parcel to be sent to them via robot.

Harris-Burland won’t share exact details on how many deliveries this adds up to, but he says it is considerable. He claims Starship offering the service is a win-win and the customer connection with Starship is not at the expense of retailers’ connection with customers. It offers another touchpoint for retailers rather than the more chaotic final hand-off from retailers for the last mile of the customer journey.

In terms of cost Starship compares favourably to competitors such as Uber Eats, with a flat delivery charge of £1, and is reasonably quick within the areas it operates.

The competition will continue to centre on choice; fundamentally, to the consumer, whether they receive a delivery via a robot, a bike or a van is moot compared to these fundamentals. Starship’s future is not so much as a retailer partner but as a consumer brand in its own right. As long as Starship can continue to sign up major retailers to offer a wide range of choices, it will be able to succeed.

For retailers, Starship offers an additional sales channel; whether they are ready to completely hand over the customer relationship to a third party remains to be seen.