FedEx and Amazon Have Yet to Crack the Sidewalk Delivery Robot Challenge; When Will Large-Scale Adoption Arrive?

Once upon a time, FedEx's prototype robot made last-mile delivery compelling enough to land on late-night television. In 2019, Jimmy Fallon marveled, "This is the future," as he accepted a pizza delivered by the company's autonomous robot, later named Roxo. However, after the hype faded, the path to widespread adoption of sidewalk delivery robots in the U.S. has been far from smooth. According to an October statement, FedEx discontinued Roxo less than four years after its high-profile debut; Amazon also ended field tests of its delivery robot after it failed to meet customer needs.

If logistics giants struggle to find a successful operating model, can this field achieve a long-term sustainable business model? Several executives, researchers, and regulators interviewed by Supply Chain Dive answered affirmatively, believing that current labor shortages and inflationary challenges could accelerate this process. But they also noted that to achieve true success, the industry still needs to confront major obstacles such as funding and market segment expansion.

Why delivery robots may gain momentum after the pandemic

Despite FedEx and Amazon exiting, the delivery robot field still has mature and growing players. Executives at these tech companies say that using robots for delivery, compared to human couriers driving vehicles, has shown more distinct advantages in recent years. The most critical is reducing last-mile delivery costs—the most expensive part of the shipping process. With autonomous or remote operation capabilities, delivery robots are not affected by rising courier wages and are less impacted by surging oil prices, which weighed heavily on carriers and their customers last year.

"After the pandemic, labor challenges emerged," said Ali Kashani, co-founder and CEO of Serve Robotics. "Then inflation drove up labor costs, and oil prices also rose. These changes all became tailwinds for us." Although robots have limited range and cargo capacity compared to fuel-powered vehicles, they are well-suited for quick-response, small-item on-demand deliveries from nearby merchants.

Therefore, many robot companies are expanding their business by focusing on food and convenience delivery. Serve's robots have already completed orders for the Uber Eats platform in Los Angeles, and 7-Eleven recently partnered with the company for a test in West Hollywood, California. University campuses have also seen a surge in food delivery operations, with Grubhub partnering with tech companies like Kiwibot and Cartken to serve on-campus on-demand needs.

The question is whether this market is large enough for these companies to grow into self-sustaining businesses. Zach Rush, co-founder and CEO of Coco, said food is the most logical initial order category—high frequency, strong local demand, and high delivery time sensitivity. But he also noted that in the long run, to maximize robot utilization, expansion into other categories is needed. "You need massive scale and density," Rush said. "Food is the best way for us to build that foundation while ensuring profitability along the way."

Although robots will not be a one-size-fits-all solution for last-mile delivery, executives believe other areas may also see increased applications. For example, Starship Technologies' robots primarily deliver spare parts, test supplies, and samples in German industrial parks. In the future, industry players may directly collaborate with parcel vans and trucks for deliveries. "We are adding a new mode to delivery, not taking over the entire delivery world," said Alastair Westgarth, CEO of Starship.

Complex challenges clash with immediate demand

Cartken CEO Christian Bersch acknowledged that the volume of deliveries completed by autonomous vehicles is still "almost negligible." To capture share from traditional transportation methods, robot companies need capital to expand service areas, improve technology, and ultimately offer lower costs than competitors. But executives say economic uncertainty has tightened venture capital and private equity funding pools. Starship, a major player in the robot field, cut staff and service areas last year amid a difficult funding environment.

"We want to ensure we adapt to this dynamic and focus on the long-term survival of the company," Westgarth said, adding that Starship prioritized improving its unit economics. Although large diversified companies may have the financial resources to expand their own robot programs, success requires patience because barriers in adoption, infrastructure, and regulation remain significant. This includes the current battery life limitations of robots, meaning covering new customers in suburbs and exurbs will be difficult. Westgarth said cities and universities account for 90% of Starship's business.

Long-term challenges may conflict with near-term demand, as seen with FedEx. In its October statement, the company said it discontinued Roxo to "prioritize several nearer-term opportunities" due to slowing demand for overall services. Companies focused on robot delivery cannot easily "cut off an arm," and still need to grow at a pace that meets investor expectations. Many executives say they are cautious about overly aggressive expansion lacking community support, wary of repeating the backlash that electric scooters once faced.

Bern Grush, executive director of the Urban Robotics Foundation, disagrees. "Do you want to tell investors, 'We don't want to have 20,000 robots'?" Grush said, whose foundation aims to help member cities coordinate robot-related policies. "Do you want to tell investors, 'We're satisfied with 12 robots'? ... The entire industry needs to deliver a million items per hour."