In some urban and suburban areas, grocery delivery vehicles are a regular sight. Indeed, many urban dwellers get regular offers for an annual $100-subscription to a same-day delivery service.

Same-day delivery sure seems popular given the buzz. But same-day delivery of merchandise and groceries to consumers represents only 2 percent of the total domestic parcel market (249 million packages in 2018). And nearly every delivery is a money-loser, our recent white paper indicates.

So why such a buzz? For one thing, same-day delivery is a rapidly growing market. While only now 2 percent of the overall parcels market, recent annual growth has exceeded 50 percent. And many startups are competing with heavyweights, such as Amazon and Target, which intrigues investors. 

However, same-day delivery seems to interest primarily urban Millennials. Our survey of 2,500 customers across the nation indicated that about half are very price-discriminate. That is, they’re not willing to pay extra for same-day delivery, with the possible exception of urgent needs like medications or groceries.

Is there value for the U.S. Postal Service in this market? It’s not clear. The current business model for many providers doesn’t seem sustainable. Our paper indicates most providers lose money with each delivery.

However, the market could morph, and certain aspects could prove profitable. Given the uncertainty, the Postal Service must continue to monitor same-day market developments. In addition, the next-day market — where USPS is stronger — appears to be a more critical market segment.

Share your thoughts. Is same-day delivery today’s fad or tomorrow’s new normal? What do you think the standard delivery time for online deliveries will be five years from now? For your online orders, would you prefer free next-day shipping, or, say, an $8 shipping charge for instant delivery?

Comments (5)

  • anon

    As the industry continues to grow, people start being replaced by drones and other automated delivery tools, and economies of scale start kicking in there will be a lucrative spot here. However, it's going to take someone with Amazon or Walmart money to actually compete. As for the near future, I think two day delivery will become a worst-case scenario as far as expectations are concerned. Next day no longer impresses either. A lot of interesting overhauls in logistics and supply chain management are on the horizon because items have to be closer to customers for any of this to be financially feasible I hear Target has the right idea. With peoples' expectations for instant gratification these days, same-day delivery will become standard before you know it.

    Dec 14, 2020
  • anon

    Yeah, same day delivery is most important thing at present time. because if someone give order then he/she interested to get products as soon as possible in his/her hands

    Jan 24, 2020
  • anon

    Next day, two day, three day - all are more than acceptable, valuable, remarkable and preferable, particularly with the reliable tracking systems currently expected and in use. It is as much significant that the trust and mode of delivery be overseen and committed to by a federal department that stabilizes such a vital capability as communication and supply. More importantly, no such dependable sovereign service should be left to such a manic and debasing mercenary enterprise as software wildcatting.

    Jan 22, 2020
  • anon

    Reading this was like a personal journey back in time to changing attitudes of on-line e-commerce in my household of 4 millennial's. It was my older son who first adopted the convenience of shopping via Amazon. Over time he changed my attitude to shopping with hard hitting reasoning pitting the quality of life, time with family over the savings aspect of brick and mortar. I was hooked, later when Prime came forth as an option we were all in. When Prime Now rolled out, with it's same day delivery, we used it to get a component for a project we were actively working on. It was amazing, eye opening, yet I never used it again. I tried a few times but selection was limited and I am old school. I plan and try to never wait till the last minute, and therefore don't often need a same day service. I am not the future of e-commerce, my kids are. I don't know what happened to this generation, their values are different. They don't plan. Hundreds of times over the years, my children would ask "can "Jimmy" sleep over tonight? Perhaps I failed as a Parent to instill the values of planning. I tried by first refusing and encouraging them to plan, even the following day, but that just isn't how Millennials operate. So rather than see my kids happiness stymied, we relented accommodated this intrusion into our schedules when possible for the benefit of being around and enjoying the journey of their development, for if we said no, they often found another friend to share their evening with and we were the ones to miss out. The other factor is price, the OIG study showed that the adoption of next day was closely tied to price, if it was "free" than heck, why not? But if there was cost involved then that was weighed against the need. Most would choose a slower, cheaper option, but this changes by age, Millennials want what they want when they want it and cost often doesn't' resonate because they have yet to fully understand what it takes to make it on their own. They were raised in a time of abundance knowing not what it is like to be poor, to live in a depression. Those memories did not transcend to my kids, this 3rd generation. I lived with first hand stories of how life was then, I watched as some extended family and friends saved every penny, for fear of never wanting to be poor again, dying wealthy and leaving their riches to a generation that quickly forgot the sacrifices made. Our children did not get this in their DNA, and can not internalize from our words. "YOLO" (you only live once) is how they role, so don't count out this developing trend for same day. The report documents the failures of same day ventures, including the Post's "Metro Post" and then later through "Customized Delivery". Many current providers are losing money on every order, and the reports recommends a wait and watch strategy, because one more thing is certain in this world besides "death and taxes" and that is change. Looking in my own rear view mirror, having the privilege of living in my 8th decade, affords me a larger window of change than most. The future is going to change how we receive products, and this will be driven by changing attitudes of the consuming population, those that make the decision of what and how to purchase. It will also be driven by technology and our capitalistic economy. Drones, automated driver-less vehicles with robots to walk the final 100 feet, and the ability to download a CAD file and simply print the item yourself will become commonplace. This topic is one of many impacting shippers today. Every day as a consultants we help our clients navigate some very tricky waters, just this week a President of a large e-commerce giant confided to me that his business was under assault. Eroding margins due to rising transportation costs, his vendors opening up their own e-commerce sites and competing with them, while their largest channel, Amazon, strong arms them while systematically replacing them with their own sourced products. Its scary out there for those who make their living selling via e-commerce, and its tough to lower costs on their own. We know those that leverage experts and closely monitor changing attitudes and trends will fair better. For me, I had to look no further than my own household to realize it doesn't matter what I think, it is what the next generation thinks that will drive the new economy.

    Jan 21, 2020
  • anon

    Yes, unequivocally ! There has to exist cost effective incentives which will permit competitive profit margin,mean !

    Jan 21, 2020

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