January 8, 2020 (RISC-WP-20-002)

  • The same-day delivery of merchandise and groceries in the U.S. accounted for only 249 million packages in 2018, making it a niche market with uncertain financial and growth prospects.
  • The next-day delivery of parcels may well become a more critical segment than same-day — which bodes well for the Postal Service’s leading role in this market.

Although it is a rapidly growing market, same-day delivery of merchandise and groceries to consumers represented 249 million packages in 2018 — only 2 percent of the total domestic parcels market. Additionally, the business model used by some major same-day providers is unsustainable because it loses money with each delivery. The OIG found that many consumers are unwilling to pay for same-delivery at any price. If they are interested at all, it is mostly for urgent needs like medications or groceries.

Should same-day delivery remain a niche product mostly appealing to urban Millennials, next-day delivery could instead become the “new normal” for many online orders. As it keeps one eye on the future of same-day delivery, the Postal Service should also continue to focus on next-day delivery through flagship offerings such as Parcel Select Destination Delivery Unit (DDU). Failing to do so could jeopardize the long-term viability of its unmatched last-mile network.

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Contributors

  • Jean Philippe Ducasse, Jeffrey Colvin, Jake Soffronoff and Richard Schadelbauer contributed to this report.

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