‘Speed at all costs’: Amazon’s e-commerce revolution creates traffic chaos and business opportunities

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One overcast morning in November, Waleed Essa shook off a head cold and headed to an Amazon.com Inc. warehouse outside Toronto where part of his fleet of vans was gearing up for a day of deliveries.

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“This is actually kind of light,” Essa said while eyeing the workers load the packages into one van. “What I mean by that is as we get closer to true peak (shopping) season, you’ll actually start to see more boxes … and they tend to be larger than your basic envelope.”

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The warehouse operates on a schedule that appears separate from the rest of the work world. Long after the evening commute, when most people are home, trucks arrive with packages that workers then spend hours sorting.

The next morning, before rush hour begins, some of the packages are loaded into the vans using a last-in, first-out system, with the ones slated for earliest delivery being the easiest for drivers to reach. After rush hour has waned, a second wave of packages is loaded into the vans for the next delivery cycle, which starts mid-morning.

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Essa’s company, Burlington, Ont.-based Flite Transport Inc., is one of dozens that have sprouted up to serve an e-commerce industry projected to account for 11.9 per cent of all retail sales in Canada this year, more than $112 billion in total, according to researcher eMarketer.

It’s a revolution that has changed not only the ways we shop and work, but also the fabric of our cities and communities, where thousands of delivery vehicles now jockey for space on already crowded streets.

Essa estimated that Flite Transport, which he founded in 2021 after spending years in the logistics industry, is likely to have more than 90 vans on the road during the peak of holiday shopping, up from five when he started the business, and much of that growth has been tied to one company: Amazon.

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“We leverage rentals quite a bit,” he said, “and the reason for that is there are peaks and valleys to our business.”

As year-end approaches, Flite Transport may double the amount of vans it sends out every day to meet the shopping rush, but things soon settle down and by February, people start worrying about their credit card spending and start thinking about how to “pay that sucker down,” Essa said with a laugh.

“It’s funny; everyone thinks, ‘Oh, I can just get a van and start delivering,’” he said.

It’s funny; everyone thinks, ‘Oh, I can just get a van and start delivering’

Waleed Essa, founder of Flite Transport

But it’s not that easy, he said, because if you want to meet the standards of the industry — tracking packages, having reliable delivery times, placing packages in specific spots, being consistent through every type of weather and being affordable — there’s a lot of software needed.

At Amazon, Essa said, an algorithm helps inform the whole process, from the sorting of boxes and the sequence of the delivery route to where the driver should park and how many packages should be delivered at each stop.

“They take constant data on a daily basis: every stop, every route, every experience,” he said. “When we do deliveries to businesses, (they tell us) here are the patterns that we see. They take all that information to create open, constant feedback mechanisms.”

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That’s helped Essa’s company grow, but replicating that level of technology is not always easy for small companies looking to strike out in the business.

“There’s a big, massive gap when it comes to technology, for you having a solution that you can actually present to a customer, for them to be intrigued — forget being impressed — intrigued enough … that it’s really going to help them,” he said.

The e-revolution

Technology enhancements, of course, come in different forms, and for Ivan Waissbluth, a few trips to Europe convinced him that electric bikes were being overlooked as a technology solution for the delivery industry.

Initially, he was thinking about the small independent shops in downtown Toronto that had perhaps two or three deliveries to make per day, which is not enough to justify a full-time employee or the cost of buying a delivery vehicle, but still too important to ignore.

As a consultant to a local butcher shop, Waissbluth saw firsthand just how much operating a large truck costs, including paying for insurance and a driver. Plus, he was fed up with the noise from delivery vans and the way they contributed to already existing traffic woes. They clogged up the streets and rolled down sidewalks whenever drivers had to stop and jump out to make a delivery.

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As a result, he co-founded his own delivery company, Nrbi (pronounced nearby), in 2019, with electric-assisted bikes. He bought two electric cargo bikes, thinking they could cruise Toronto’s major business arteries, stopping at every mom-and-pop store to collect a few deliveries.

We thought at first when we got into this whole bike company, ‘Oh, this is going to be great. People are going to love us. We’re doing everything green,’

Ivan Waissbluth, founder of delivery company Nrbi

“We thought at first when we got into this whole bike company, ‘Oh, this is going to be great. People are going to love us. We’re doing everything green,’” he said.

That turned out to be only partially correct.

At first, things didn’t go that well. Nrbi’s first client was a local butcher, but hauling heavy loads of meat around required a climate-controlled cargo container and it was hard work.

Signing up and managing new independent businesses was also a lot of work, but there was demand for “green” delivery, he said.

“The last missing piece was whether somebody would pay more for it,” Waissbluth said. “And I think the answer is no.”

The “saving grace,” he said, was that others also believed electric cargo bikes are better suited than vans to navigate dense urban areas such as the downtown Toronto core. Eventually, one “high-volume shipper” — a company that contracts with Amazon and other major retailers — reached out to Nrbi via its Instagram page about using its services.

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The last missing piece was whether somebody would pay more for it. And I think the answer is no

Ivan Waissbluth

Soon, a different business emerged as other high-volume shippers started feeding Nrbi orders. The company bought an electric van so it could consolidate orders at a warehouse just on the border of Toronto’s downtown core — a “micro hub,” as Waissbluth calls it — where its cargo bikes can load up and head out to make deliveries.

Consumers may not want to pay more for green delivery, he said, but they’re asking for it. And in dense urban areas, an electric cargo bike can outperform a van by making more deliveries in a single day, at least when it comes to lighter items such as clothes.

Today, Waissbluth said his company has around 50 bikes on the street and is growing almost exponentially, making around 2,000 deliveries per day.

Other companies are also experiencing growth as e-commerce sales increase and that is changing the way cities are designed and built, said Jennifer Keesmaat, a former chief city planner for Toronto and now a private consultant at the Keesmaat Group.

Storage space to accommodate the seemingly non-stop flow of packages that arrive daily has become a priority in many new condominiums in dense urban cores, but also in new buildings in suburbs, where the same problems exist.

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A golden age

The ongoing growth of e-commerce has helped launch many a company that provides delivery and logistics services to businesses of all sizes, from Amazon and Ikea Systems BV to small independent shops and companies that do not even have a physical presence.

Companies other than Nrbi are also tinkering with the use of electric bikes to expedite deliveries in traffic-congested areas, but it isn’t all smooth sailing.

One bike courier who delivers for a major carrier, but wasn’t authorized to speak said traffic during the past 30 years has only grown worse while a courier’s pay and working conditions have largely declined.

“The golden age of bicycle messengering was in the 1990s/2000s,” he said. “Bicycle messengers actually made quite a few pennies.”

I’ll be honest with you, if the pandemic didn’t happen, we’d be having a very different conversation

Marty Weintraub, national retail leader for Canada, Deloitte Touche Tohmatsu

At that time, much of the work was carrying legal documents. Clients typically paid by the delivery — sometimes as much as $20 — and most of the deliveries occurred in the financial and business districts located downtown. Eventually, however, the rise of fax machines initially and then email eroded most of that work.

During the pandemic, though, bike deliveries as well as van deliveries spiked as consumers stuck at home began ordering more and more things online.

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“I’ll be honest with you, if the pandemic didn’t happen, we’d be having a very different conversation,” Marty Weintraub, national retail leader for Canada at Deloitte Touche Tohmatsu Ltd. in Toronto, said.

He said many retail categories during the pandemic suddenly had a spike in online sales as consumer preferences shifted and large retailers quickly moved to adapt to marketplace demands.

Weintraub said grocery sales were one category that spiked for delivery, and that trend stuck around after the pandemic.

“Getting food and feeding yourself and your family was actually one of the top stressors. If you remember, you couldn’t go to the store for a lot of that time,” he said. “And it was only four or five years ago, but the last mile that was being run by the retailers themselves was not very developed.”

That created a multitude of opportunities for entrepreneurs.

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‘Speed at all costs’

It was just around this time that Mark Ang co-founded Bolt Technologies Inc. (a.k.a. GoBolt), which grew out of a self-storage company he’d founded a few years earlier. The original idea was that people needed storage and he was offering to quickly turn around pickups and returns.

But walking around his warehouse one day in 2019 and seeing box after box covered in shrink wrap and dust, he concluded that his business was actually helping people hoard their belongings more efficiently.

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He and his co-founder decided to pivot. The network of warehouses and trucks — many of which were electric — that he’d amassed for his previous business made logistics a natural fit, and software was at the centre of it all.

“Back then, it was like, ‘How do we compete with (Amazon) Prime shipping?’” Ang said. “And so it was like speed at all costs because people wanted things there quickly.”

GoBolt has since picked up customers such as Ikea, Holt Renfrew & Co. Ltd. and hundreds of others while operating in 10 markets across North America, including Canada’s largest cities, and has a new warehouse in New York.

The way his business works now is that brands send products to GoBolt’s warehouses and then companies drop orders into his software system. Sometimes it is for deliveries to their retail operations, while other times it is for deliveries directly to consumers.

When COVID hit, a lot of (venture capital) dollars went into anything that looked like and resembled a logistics tech company

Mark Ang, co-founder, Bolt Technologies

“When COVID hit, a lot of (venture capital) dollars went into anything that looked like and resembled a logistics tech company,” Ang said.

GoBolt has raised more than $225 million in financing from a variety of investors. But Ang said the space remains crowded since the barriers to entry are low, given that vans can be rented and many of the largest retailers outsource delivery to third parties.

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Clarence Woudsma, an associate professor of planning at the University of Waterloo who researches how the flow of goods and people underpins economic interactions, said consumer expectations for quick deliveries have contributed to some of the economic “gig work” models in the sector.

Many delivery companies classify their drivers as contractors rather than employees, which means they are not always entitled to the protections afforded to other low-wage workers — for example, sick days and breaks.

“From a public policy standpoint, there might be bigger questions around what the long-term implications are for this kind of employment and sort of general standards of public safety and well-being,” Woudsma said. “And I don’t say that to be alarmist, but I just think it’s one of the things that is perhaps overlooked in this conversation.”

But he said many of the predictions about e-commerce have been wrong. Just a few years ago, people thought online sales would slowly destroy brick-and-mortar shopping, but that hasn’t panned out.

E-commerce is expected to grow by 6.8 per cent this year and account for 12 per cent of all retail sales, but analysts at eMarketer believe that annual growth will begin to level off to less than five per cent per year before the end of the decade.

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Woudsma also cast doubt on whether e-commerce would ever reach 50 per cent or 60 per cent of all retail sales.

“Part of it is maybe that psychological, little endorphin hit that people get when they’re browsing in a store and they can touch and see the products,” he said, “and they get that immediate gratification.”

But like most, he believes we are a long way from peak e-commerce. And that means we should expect to see more delivery vehicles on the road in the years to come.

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