By Jonty Bloom
With December now upon us, bear a thought for just how busy Santa Claus will be on the night of Christmas Eve, and in the early hours of Christmas Day.
Every year he faces a logistics puzzle – how to deliver all the presents to all the children around the world who celebrate Christmas.
A study from a few years ago puts some figures on just how frantic his night is. Researchers at the University of Leicester calculated that there are some 715 million Christian boys and girls across the globe.
They then assumed an average of three children per household, which means that Father Christmas has to deliver to 238 million homes. This, in turn, requires Rudolf and the other reindeer to pull Santa’s sleigh at half the speed of light. That’s 336 billion mph (540 billion km/ph).
While Father Christmas is no doubt continuing his final preparations and limbering up, Christmas is, of course, also the busiest time of the year for retailers – none of us can sadly rely solely upon presents that are magically delivered via our chimneys.
And with online orders now accounting for more than a third of all Christmas season sales, retailers have to focus intently on their delivery systems.
That was more than double its 1.9 billion total in 2019, as coronavirus fuelled a vast surge in online orders. So much so, that last year Amazon delivered one in five parcels in the US.
Such is the convenience of Amazon that many of us now automatically expect things like next-day delivery, and being able to track orders.
For other retailers, large and small, this poses a problem – how can they make their delivery systems as efficient and user friendly as possible?
One option is to become a third-party seller on Amazon, but that comes with a number of fees that reportedly can equate to 45% of the price of some items.
Alternatively, retailers can stay independent of Amazon, and instead use the services of a number of tech firms who can help them best get their products to customers.
One such business is UK firm Diamond Logistics, run by founder Kate Lester.
Via its Despatch Lab digital platform it allows retailers to book, track and manage deliveries using the company’s own fleet of vans, but also via the Royal Mail, and delivery firms such as DPD and Hermes. Retailers can also arrange to store their products at Diamond Logistics’ warehouses, from where they are then directly sent out.
Ms Lester says its revenues have soared by 50% this year, as more and more shops ramp up their online presence.
“We have 30 local fulfilment centre,” she says. “So we can store it, pick it, pack it and despatch it.
“Retailers have got a pretty stark choice – really you either put your stuff into Amazon, and it becomes a cost-comparison thing. That is really what Amazon is all about…or you retain control of your logistics, and outsource it to someone [like us].”
An alternative for retailers is for them to use their own fleet of delivery vans. To enable firms to keep tabs on their delivery drivers and plan routes, US firm HyperTrack offers an app and GPS-based tracking system.
The company’s vice president of sales, Francois Martel, says the system allows both retailers and wholesalers to give customers more accurate delivery times.
“Imagine you are a retailer, and are ordering from a wholesaler,” he says. “Wholesalers don’t have that same Amazon-like technology, and yet they want it to provide a reliable delivery time window that is not 8-4.
“The windows can be so large at the moment they are laughable, so using us to provide tighter windows, and holding to that time, is changing the experience in a significant way.”
For Norwegian firm, Gelato (despite the name it has nothing to do with ice cream), its big idea is to help firms take the distance out of deliveries.
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Its software allows e-commerce sellers of physical products such as clothing, posters and books to connect with manufacturers around the world.
For example, if a British designer of patterned t-shirts gets an order from Australia, rather than posting the item from the UK, it can get the item of clothing printed and delivered by an Australian firm.
Henrik Müller-Hansen, the founder and chief executive of Gelato, says that there are not just huge environmental benefits. “What local production and on demand production allows you to do is to reduce the distribution distances, but also to match supply and demand,” he says.
“You no longer have to guess. In the old days, in order to reach economies of scale, you sat there as a big global manufacturing company and tried to assess demand. Now, with on-demand local production, you produce when you receive the order.”
Mr Müller-Hansen expects his business to grow alongside developments in 3D printing, which will enable more products to be easily manufactured remotely.
However, perhaps the most exciting development in delivery technology – and especially for Santa Claus – is cargo-carrying drones. (Tens of millions of them would really help him out on Christmas Eve.)
Yet, while the technology already exists, it is still waiting for regulatory approval by governments to start national commercial use.
Instead, there are currently a number of pilot schemes around the world. Naturally Amazon has its own project – Prime Air – but a number of smaller firms have also developed their own drones.
One such company is Israeli-company Flytrex, which is already enabling restaurants in the North Carolina town of Holy Springs to deliver their food via its drones. It is part of a trial authorised by the US Federal Aviation Administration.
In the future drones may mean that you can order all your Christmas presents on 24 December, and get them delivered that afternoon.
But in the meantime, Kate Lester says it is best to order your presents early. “Get your orders in soon, because it will be fatal to leave it until 21 December to do it this year. Because I think this December is going to be chaos [busy].”
Unless of course you leave it all for Father Christmas to handle.
Additional reporting by New Tech Economy series editor Will Smale.