• ITVI.USA
    15,489.220
    61.880
    0.4%
  • OTLT.USA
    2.882
    0.016
    0.6%
  • OTRI.USA
    20.830
    -0.090
    -0.4%
  • OTVI.USA
    15,457.420
    58.770
    0.4%
  • TSTOPVRPM.ATLPHL
    2.820
    -0.100
    -3.4%
  • TSTOPVRPM.CHIATL
    3.580
    -0.100
    -2.7%
  • TSTOPVRPM.DALLAX
    1.260
    -0.030
    -2.3%
  • TSTOPVRPM.LAXDAL
    3.650
    0.030
    0.8%
  • TSTOPVRPM.PHLCHI
    2.330
    -0.090
    -3.7%
  • TSTOPVRPM.LAXSEA
    4.020
    -0.150
    -3.6%
  • WAIT.USA
    127.000
    -1.000
    -0.8%
  • ITVI.USA
    15,489.220
    61.880
    0.4%
  • OTLT.USA
    2.882
    0.016
    0.6%
  • OTRI.USA
    20.830
    -0.090
    -0.4%
  • OTVI.USA
    15,457.420
    58.770
    0.4%
  • TSTOPVRPM.ATLPHL
    2.820
    -0.100
    -3.4%
  • TSTOPVRPM.CHIATL
    3.580
    -0.100
    -2.7%
  • TSTOPVRPM.DALLAX
    1.260
    -0.030
    -2.3%
  • TSTOPVRPM.LAXDAL
    3.650
    0.030
    0.8%
  • TSTOPVRPM.PHLCHI
    2.330
    -0.090
    -3.7%
  • TSTOPVRPM.LAXSEA
    4.020
    -0.150
    -3.6%
  • WAIT.USA
    127.000
    -1.000
    -0.8%
Last-mile deliveryModern ShipperNews

The state of same-day delivery

Big week signals steady growth

The United States is undeniably on a same-day delivery binge. The graphs of the U.S.’s e-commerce market size and Amazon’s free-delivery times are near-perfect mirror images of each other, with delivery times plummeting as e-commerce takes off. Estimates put the percentage of retailers offering same-day services anywhere between 50% and 67% as consumers are becoming increasingly impatient — according to a 2020 McKinsey report, about half of them abandoned their online shopping carts because of long or unspecified delivery times.

The role of same-day delivery is growing stronger by the day.

In the past week alone: Uber Eats (NYSE: UBER) partnered with Rite Aid (NYSE: RAD) on nationwide same-day deliveries; Amazon added same-day services in Atlanta, Miami and Minneapolis; Weis (NYSE: WMK) and Bed Bath & Beyond (NASDAQ: BBBY) joined DoorDash’s (NYSE: DASH) same-day marketplace; ShopRite (OCTUS: SRGHY) unveiled same-day delivery robots; Visa (NYSE: V) began offering free memberships with Shipt for same-day deliveries; and Target hired 100,000 temporary workers to take on same-day holiday shipping. And earlier this month, massive e-tailer Newegg (NASDAQ: NEGG) expanded same-day delivery to Southern California, the U.S. Postal Service added more than 50 new Texas sites to its same-day Connect Local service, and UPS (NYSE: UPS) acquired same-day provider Roadie.

Just about every major retailer and parcel carrier is getting in on the same-day craze, and the race is only heating up. In the latest U.S. same-day delivery market report from Research and Markets, researchers project same-day services in the U.S. to balloon at a compound annual growth rate (CAGR) north of 20% over the next five years. The company forecasts a similar CAGR for the global same-day delivery market over the next eight years.

Consumer expectations have been a big driver for same-day services. According to Invesp Conversion Rate Optimization, more than half of online shoppers aged 18-34 expect same-day delivery, and over 60 percent of them say they’d pay extra to have their packages delivered the same day. That demographic group accounted for about one-third of all digital buyers in 2020.

Consumers aren’t discriminating between same-day channels either. According to a February 2021 survey from Digital Commerce 360 and Bizrate Insights, 36 percent of online shoppers ordered same-day delivery from a web-only merchant like Amazon (NASDAQ: AMZN) in the past six months, up from around a quarter of respondents in August 2020. At the same time, another 26 percent of consumers ordered online for same-day delivery from a store-based retailer like Target (NYSE: TGT) over the six months prior, rising from 14% in August 2020. Regardless of how consumers are buying, they’re buying with speed in mind.

Different capacities for same-day

But despite the seemingly unquenchable demand, the same-day delivery market has its fair share or hurdles to overcome. For one, in case you haven’t heard, there’s a bit of a driver shortage going on – last-mile firms are calling it their main concern, and many companies trying to get into same-day services are having to offer greater pay and benefits to their drivers to incentivize them to stay. That shouldn’t be too big of an issue for larger companies, but it presents quite a barrier to staffing for same-day startups.

Smaller same-day providers are also constrained by a lack of automation technology and fulfillment locations. One of the challenges for same-day delivery is routing and dispatching for on-demand orders – without automation technology that can manage an entire fleet in real-time, it can be difficult to plan out the logistics of each delivery. 


Read: First in line: Bed Bath & Beyond joins DoorDash Marketplace

Read: Promise fulfilled: UPS buys into same-day delivery with Roadie


Another obstacle is fulfillment. One of the keys to being able to deliver on the same day is having a network of local fulfillment centers, like Amazon’s extensive labyrinth of nationwide warehouses. The problem is that it cost the online marketplace billions of dollars to create it, while most competitors simply don’t have the resources to do the same.

Driver wages and benefits, high-powered technology, nationwide networks of physical infrastructure – all of these expenses make it difficult to run a profitable same-day delivery service. So why are so many carriers turning to it, and how are they making money? The answer may lie in technology.

In 2017, Target jump started its same-day business when it acquired Grand Junction, a San Francisco-based transportation tech company. Grand Junction’s proprietary software caught the eye of the massive retailer, resulting in an acquisition and a promotion to the Target leadership team for Grand Junction CEO Rob Howard. More recently, UPS acquired Atlanta-based delivery platform Roadie to tap into its technology that connects drivers with merchants.

The unfortunate reality is that for most startups offering same-day services, the only path to profit is to sell. Clearly, there’s a market for same-day delivery, with big retailers expanding their services left and right. But it may just be that those companies are the only ones with the resources — the drivers, the technology, the fulfillment networks — to make it profitable. However, that certainly doesn’t mean there isn’t a payday in store for savvy startups developing the technology that’s making the same-day craze possible.

You may also like:

NYC legislation establishes minimum payment per trip for delivery drivers

Massive e-tailer Newegg offering same-day delivery in SoCal

Why you should do your winter holiday shopping today

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