What Might Be Different in Cities and With Delivery in a Post-Pandemic World - 7investing
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What Might Be Different in Cities and With Delivery in a Post-Pandemic World

October 21, 2021

The pandemic changed life as we know it for most Americans. A lot of people were forced to spend long periods working from home and, even those of us who went to work did so under drastically different circumstances. It was (and, in some cases, is) a period where we had to change our behaviors because the way we normally operated was no longer possible.

In the worst of it, that meant ordering a lot more delivery. That included everything from food to household items to even groceries. Some of those deliveries were to our doors while others were picked up curbside. It was a time where being able to shop digitally was important (though online ordering has largely returned to close to pre-pandemic levels).

Some things are here to stay. Curbside pickup and some types of delivery just make a lot of sense. But, while those things will continue to be offered, will they thrive? Will they take a higher percentage of business than they do now or will they top out?

Simon Erickson went to the recent Wall Street Journal Tech Conference and what the world looks like post-pandemic was a major topic of discussion. He attended panels with leaders from Lime, a leading provider of rental scooters in cities, and Instacart, which has been at the forefront of the delivery boom. Clearly, we don’t have all the answers yet, but the changing nature of work, population shifts, and much more make this a topic that will be very prominent for quite a while.

A full transcript follows the video.

 

Dan Kline  3:28  Simon COVID was a big topic, but not so much about the fallout from COVID as what happens next. Are cities going to look different, someone from Lime spoke about like sort of in Look, if you’re the CEO of Lime, you’re going to believe scooters are part of the future. But But talk about like the office and sort of some of the changes that came up because it came up through a bunch of different presentations.

Simon Erickson  3:52  So first and foremost, the world is changed from COVID. Yeah, there’s a lot of kind of thinking that we’re going to go back to the way that things were, that’s not necessarily the case. You know, this is kind of work from home and remote work, these are trends that are here to stay. And even the largest tech companies, they’ve said, Hey, we’re gonna have offices available, and maybe two days a week you can meet in person, because meetings are more effective when you’ve got a whiteboard that you can talk about things behind you on. But when the work needs to get done itself, you don’t need to be sitting in a desk in the office by yourself doing your share of that, you can do that from home, and a lot of them are adapting the 5 day/40 hour work week to maybe more of a two days in the office.

And then you know, you can work on the weekends, if you want to take the middle of the week off. It’s kind of a lot of change that’s taking place. In addition to that there’s a lot of infrastructure behind the scenes that’s trying to keep up with this new reality that we have. There are a lot more attack surfaces that bad actors are tapping into right now. So what is the future of cybersecurity going to look like? And then how do you get everybody on the same page? If you’re not sitting at a desk together, doing the work together? How do you actually get pieces from remote workers, maybe international workers, maybe workers, you speaking different languages with one another, onto the same project and tap the highest talent out there in the entire world. I mean, it’s topics like these are fascinating questions to discuss the reality is they’re very challenging, but there are companies that are rising to the occasion.

Dan Kline  5:13  So Simon, the Googles, and the bigger companies of the world seem to be facilitating this with their tech. But I want to just quickly go back to Lime because I think it touches on it. And this was a Wang Ting, the CEO of Lime, he talked about how we’re engineering cities differently, and I do sort of believe that, but I also don’t believe it’s going to be scooters that are getting us around. So is it light rail? Is it sort of facilitating better internet connections, more ability to get places? Talk about that as a theme from the show a little bit? And then we’ll certainly move to other areas.

Simon Erickson  5:45  It’s an interesting one. I mean, like city design, and urban design has always been built around the cars, right? Like, how do you get to a restaurant, how do you get to a show or a stadium or a conference, or whatever it is, you got to have giant parking lots, you’ve got to have places for people to get to those things. ride sharing is kind of the first evolution of that where you can now if you’re in a city you don’t know or you don’t live in, you know, you don’t necessarily need to rent a Hertz car and get around on your own you can have Uber drop you off and things like that. But even that maybe there’s other options, you know, is there an opportunity for light rail to replace vehicles and a lot of places it.

Scooters, you know, it’s kind of under discussed topic right now, everyone’s kind of dismissive of them, but it’s still mobility. It is a definitely a much less pollution than the 30% of pollution isproduced by transportation in urban areas is coming from cars right now. And we also got an interesting statistic that Wang pointed out that the number of driver’s licenses requests among 16 year olds has fallen 40% during the past three decades, right? We’re not going out and getting cars that’s getting cars and we turned 16 anymore. It’s kind of like a there’s other options. How is the city adapting to that? How are commercial enterprises adapting. Pretty fascinating topic.

Dan Kline  6:53  I don’t want to poo poo scooters, but I think we’re ahead of the game there. Because you need dedicated lanes. You need cities close to traffic. We’ve gone through three or four waves of scooters here in West Palm Beach and they all get destroyed. We both saw in Alexandria, there were Alexandria, Virginia had 17 different scooter companies. Alexandria has cobblestone streets, that is not great for scooter riding, but it works really well in closed tourist areas in Orlando. So I am bullish on scooters. I just think they’re not being deployed. But this is part of a bigger discussion on infrastructure and resources. And I think we’re in like inning one of a big change of how we sort of all are dealing with that.

But Simon that that touches on some other things. One of the segments you went to was one of the early ones was about the growth of e-commerce and it was the one of the executives from instacart. And he threw out a lot of numbers. What he didn’t throw out is that as the pandemic lessened, we went back to pretty normal pattern. So we had, we’ve had big growth in in curbside pickup and some growth in delivery. But for the most part, we have not seen huge increases in e commerce. Am I missing something there? I know he was very bullish. But if you’re the CEO of Instacart, again, you should be bullish about grocery delivery.

Simon Erickson  8:10  And it’s a French woman, right? Apologies if I’m mispronouncing you know she’s CEO of Instacart.

Dan Kline  8:18  I keep forgetting I wasn’t gonna try it. I shouldn’t be trying it. I

Simon Erickson  8:21  I apologize that I mispronounced it for sure. But she said that, you know, groceries right now people that are ordering groceries online is only like 10%. Right? It’s below retail as a whole, as you know, Dan, but she says that, you know, even in the bullish expectations that she has, she thinks it might possibly get to 30%. And so she knows that seven out of 10, people are still going to go in person to the grocery store. But what is the interest of those 30? Those 30% of people who might be buying groceries online? What are they buying? It’s the same thing. They’re like Whole Foods went through and they got acquired by Amazon, can you get them to buy prepared foods, which have higher margins? Can you get them to buy more expensive things or find the brands they’re interested in? I mean, you’re getting a lot more data, aside from just the transactions. When you’re ordering things online, having a delivered to your doorstep, it’s could be a good opportunity. Even if it’s not the majority of people to change your behavior.

Dan Kline  9:11  I think it’s going to be a bigger percentage. And there’s also and we don’t talk about this because it means people I don’t want to say losing their jobs, but jobs are going to shift. There’s hundreds of 1000s of people picking grocery orders that are not going to be picking grocery orders. This is one of the first areas we’re going to see widespread automation. But and I don’t want to belabor this, there is a breakdown of the delivery and I order Instacart pretty regularly. My order this week was just delivered to another house. And there’s nothing you can do there because you can’t just walk around and pick it up.

And their customer service was actually pretty excellent in terms of making a refund. That did not help that I couldn’t cook dinner.