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The expanding same-day delivery market

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New pandemic-driven shopping behaviors and the rise of consumer expectations for a fast and easy customer experience are driving the latest developments in local and same-day ecommerce deliveries. 

Where online shoppers once expected two-day and three-day deliveries, same-day service is the latest frontier in ecommerce delivery. 

There’s no doubt same-day deliveries are highly desired by many consumers, as fast delivery is increasingly becoming equated with same-day delivery. Same-day delivery has traditionally been reserved for verticals such as restaurants, groceries, and everyday CPG essentials.¹ But non-food retailers are beginning to expand into the same-day act.

Same-day delivery—sometimes called quick-commerce or last-mile delivery—is a localized service and requires a different set of infrastructure and people to execute than those of traditional parcel carriers. Gartner research discovered that logistics leaders face a number of constraints when executing last-mile deliveries. Urban traffic congestion in densely populated areas has become the norm, often impacting service levels and driving up logistics inefficiencies and costs. 

Gartner found that top constraints to last-mile success are product and packaging suitability for last-mile delivery, access to infrastructure in urban markets, tracking and visibility of shipments, and availability of last-mile carriers and providers, such as in rural areas.²

One way that retailers are getting around the challenges of last-mile deliveries is by leveraging resources outside their in-house or 3PL resources. This type of same-day delivery allows retailers to avoid centralized distribution models where orders are shipped from DCs, which rely on the parcel carrier networks of UPS and FedEx.

Quick-commerce moves into non-essential retail

Online merchants from big-box to footwear are expanding their hybrid shopping offerings with same-day delivery through crowdsourced last-mile solutions, such as the customer-facing applications of Bringg, Instacart, Postmates, and UberEats. These services primarily tap into independent “gig economy” drivers who use their own vehicles to make deliveries to the consumer’s doorstep.  

Crowdsourcing, when applied to the last mile, is a method of fulfillment that uses a network of local delivery nodes or fleets in densely-populated areas to deliver orders directly to customers, whether shipments from warehouses, DCs, micro-fulfillment centers, or stores.³ As crowdsourced services grow in popularity into new verticals, the consumer wins, and providers reap more revenue and increased last-mile efficiencies.⁴

Competitors aplenty 

Rivalling these types of delivery services are solution providers that don’t work on behalf of retailers, but instead act as their own retailers and distributors. These services are springing up, especially for groceries and convenience items: Gopuff is one such vertically integrated instant-needs provider. Vertically integrated providers like Gopuff own their own stocks of popular groceries and supplies and operate their own micro-fulfillment centers.⁵ 

Large retailers are also getting into the quick-commerce act with their own B2B delivery services and offering them as “white-label” applications that other retailers can brand and make their own. One such example is Walmart’s GoLocal delivery service being rolled out by the likes of Home Depot and Chico’s, among other retailers.⁶

Another example is Target’s same-day delivery business that it acquired in 2017 called Shipt. Target shoppers use Shipt to receive orders in as little as one hour, while Shipt members can also shop via same-day delivery with other participating stores in their area which tend to be larger retailers, such as CVS, Bed Bath & Beyond, and Petco.⁷

Complicating this competitive landscape further, crowdsourced providers are also launching their own white-label services such as DoorDash’s Drive and Instacart’s Connect.⁸ 

The same-day delivery market will take off 

Last-mile delivery services are highly local: the availability of same-day service depends on the retailer and the market. Recent Gartner analysis reviewed the fulfillment offerings of 50 U.S. fashion, apparel, and footwear retailers and found that only 8% offer same-day delivery services.⁹ 

Coresight Research estimates that the U.S. quick-commerce market in 2021 generated between $20 billion and $25 billion in retail sales.¹⁰ This is a drop in the bucket of total U.S. retail sales in 2021 that reached $4.55 trillion, according to DigitalCommerce360 analysis of U.S. Department of Commerce data.¹¹ 

While same-day delivery isn’t everywhere yet, this market is growing rapidly. The World Economic Forum projects that by 2030, demand for urban last-mile delivery will grow by 78%, based on research conducted in the pre-COVID-19 environment—before consumers’ cravings for speed and convenience really took hold.¹²

There is plenty of room for crowdsourced providers and other last-mile solutions to co-exist alongside more traditional 3PLs and fulfillment providers. This is where healthy competition can take root to provide even more options and choices for the consumer.

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