Nov 19, 20187 min read

AI delivery is here: “Your order will arrive in 1 hour and 11 min”

Klarna pink logo

by Vijay Subramanian

AI technology now makes it possible for customers to know exactly when their orders will arrive at their doorstep. Instead of wondering when the delivery guy will show up, they get a clarifying SMS a few hours before arrival telling them precisely when – timed to the minute.

“We are trying to create the optimal delivery experience,” says Simon Strindberg, CCO at tech startup Budbee.

Their AI-based delivery system is growing fast in Sweden with customers including H&M, Lindex and Apotea, and the company is already planning its expansion into other European markets.

More relevant than same-day delivery, according to the company

There’s a growing same-day delivery trend in larger cities where customers can order something online and have it delivered in a matter of hours.

That’s awesome.

But is that really what they want? Usually not, according to Budbee.

“Of course there are occasions when the answer would be yes. Let’s say you are going on a trip tomorrow, or you are ill and need medicine, or you just don’t enjoy waiting, same-day delivery is a great option.”

And yes, Budbee offer that as well, says Simon. But same-day delivery has its downsides.

“One downside is the associated costs, which must be absorbed by either the customer or the merchant. And, if the delivery address is too far away from where the goods are located, it’s not an option at all. The only way merchants can expand their service area in that case is to hold stock in more places.”

What annoys customers about online shopping?

About 61 percent of private shopping takes place after 2 pm, according to Klarna analysis of shopping patterns in Europe.

“Almost all customers are fine with getting the order delivered the next day. But what annoys them is not knowing exactly when their order will arrive. A two-hour delivery slot might sound fine when they place the order, but the next day they want more precise information. Two hours is a long time to keep someone hanging around at home when they have other things to do.”

Budbee’s AI solution takes care of that. However, precisely timed deliveries are just one part of the equation.

“Another frustration for many customers is not being able to communicate with their delivery guy, for example, to ask him or her to knock quietly if their baby is sleeping. We see ourselves as a tech company that buys delivery services from sub-contractors, rather than a delivery company, so we want to develop solutions that eliminate all annoyances from the process.”

What does the AI-based delivery technology do?

A Budbee-contracted delivery guy makes 60-70 stops during a route; about 15 per hour. Every route, optimized automatically for speed and efficiency, adds 10,000 new data points into the company’s AI system.

“Our AI gets smarter each day. It makes accurate calculations based on weather conditions, traffic patterns, individual differences between drivers – some move faster than others in stairways, for example – and so on”.

All of this means that deliveries can be made to end customers with extreme time accuracy.

“As soon as the delivery vehicle is loaded at about 4 pm, we let customers know when we expect their order to show up. We don’t just mention there are 38 addresses to deliver to before we arrive, but we also add that it will happen in 3 hours and 47 minutes. The expected delivery time updates if conditions unexpectedly change, but we pride ourselves on delivering exactly when we say we will. This gives customers the freedom to carry on with their lives instead of waiting at home for hours.”

What does this look like from the end-customer perspective?

Budbee updates customers via SMS.
“We want to remove as much hassle as possible from the delivery experience, that’s why we don’t use an app. We’ve found that it’s more convenient for customers to receive an SMS that directs them to a unique web page for their delivery.”
Once the delivery vehicle leaves the terminal, the customer receives a message like this:
“Marius (the delivery guy) at Budbee: I’ve just loaded your order into my vehicle and I’m now starting tonight’s deliveries”

“Marius (the delivery guy) at Budbee: I’m on my way with your order from Delitea and will arrive in about 1h 7m. There are 9 stops before you.”

It’s easy for customers to adjust their personal delivery preferences up to the very minute the delivery guy shows up at their doorstep.

“Ring the doorbell or knock on the door?”

The service costs about 1-2 Euros

In most cases, the AI service comes with an extra cost of about 1-2 Euros.

“It’s up to the merchant whether to automatically include that fee in their price or give customers the option to pay for the premium service,” Simon says. “In addition, for an extra 2-3 Euros, end customers can choose a more specific delivery time slot (for example between 8 pm and 9 pm) at the time of purchase. Then, as for all orders, at about 4 pm the next day we let them know exactly when in that time slot the delivery will arrive.”

What’s happening behind the scenes?

The overnight, time-precise delivery is only available for end customers in the largest cities in Sweden – Stockholm, Göteborg and Malmö – but merchants can be located in more rural areas.

Let’s say 32-year-old Sophie from Malmö buys a dress before going to bed at 10 pm. She buys it from one of the Budbee-connected web stores – a merchant in Växjö, one of the smaller cities in the south of Sweden.

So what happens next?

Well, at about midnight her package is loaded and leaves the merchant’s warehouse in Växjö on its way to Budbee’s terminal in Jönköping – strategically located between the three big cities. At the terminal, packages are sorted and goods are sent to the terminals in Malmö, Göteborg and Stockholm.

The next day the AI-driven algorithms kick in, and during the afternoon Sophie receives a message notifying her of the exact time of her delivery. She gets her dress within 24 hours of placing the order.