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Aug. 22 2018 08:13 AM

This article originally appeared in the July/August, 2018 issue of PARCEL.

E-commerce is driving parcel shipping growth at a rate of 10% per year, and rates are increasing at twice the rate of inflation. And it’s just the beginning: e-commerce currently represents only eight percent of the $5 trillion US retail market ($23 trillion globally). This growth means that everyone with access to a vehicle is competing to meet the demand for last-mile delivery. Regional carriers are seeing more residential shipping volumes. Amazon, Target, and Walmart are building out their own parcel delivery networks. Even the ocean carrier Maersk recently announced a five-year plan to move inland and compete with UPS and FedEx. Now, same-day delivery networks are emerging that use mobile technology to group source part-time drivers.

The mention of same-day delivery elicited eye rolls among industry experts just a few years ago. But today, the “Amazon Effect” is shifting free and fast shipping from locations ever closer to the end consumer. Amazon continues to raise the bar, opening over 140 fulfillment centers nationwide to service 100 million Prime customers in an apparent attempt to match Walmart’s ubiquitous proximity to consumers. According to The Economist, 90% of Americans live within 10 miles of Walmart stores.

Lest they go the way of Toys R Us, brick-and-mortar retailers are scrambling to implement omnichannel shipping strategies like ship-from-store and ship-from-suppliers. Ultimately, it seems as if the goal is to ensure companies can ship from anywhere that will reduce the cost of delivery and meet the increasingly narrow delivery windows demanded by customers — and this goal is driving the new generation of same-day service providers.

Same-Day Isn’t the Same Ol’ Carriers

Who are these service providers, how do they work, and how will they take on the UPS/FedEx duopoly? Generally, they are technology-savvy businesses that use web platforms and mobile apps to quote, schedule pickups, track shipments, send notifications, and confirm deliveries within specified delivery windows. One size doesn’t fit all. The diversity of innovative models ranges from pure technology providers to asset-based carriers.

  • Deliv: With financial backing from UPS, Deliv was an early entrant into the same-day, crowdsourced delivery market. It services more than 4,000 retailers and businesses in 35 markets. Recently, it expanded from retail into prescription deliveries with its Deliv Rx service.
  • Roadie: A newcomer to the industry, Roadie views the universe of non-commercial cars and trucks as a potential delivery infrastructure. As long as a passenger car has the capacity, and the destination is “on the way,” there is the potential for booking a “gig” with the driver of that car.
  • Bringg: Israeli tech startup Bringg has introduced a “delivery platform” that provides businesses with the ability to develop their own internal network of carriers. GameStop relies on Bringg to manage employee drivers, using GPS and mapping capabilities to assign routes to ensure efficient, on-time deliveries. Point Pickup and e-Courier also offer similar delivery platforms that enable businesses to maintain more control over their customers’ delivery experience.
  • Farm Fresh: Recognizing that meal planning is often a same-day event (especially on “no-cook Wednesdays,” according to its spokesman), Farm Fresh delivers ultra fresh meals on demand to Manhattan residents. It is now planning expansion into the Brooklyn area. Instacart also provides grocery delivery services, offering personal shoppers to improve selection.
  • Grand Junction: Last year, Target acquired startup delivery network Grand Junction for over $100 million. Grand Junction had been gaining traction with many retailers, helping them optimize same-day delivery routes with independent contractor drivers. Now, it is exclusively a Target delivery network that will enable Target to differentiate itself and counter Amazon’s same-day shipping fleet. It is inevitable that other retailers will need to respond if they expect to keep up with the competition.
  • AxleHire: Combining cutting edge, on-demand delivery software development with its own fleet of carriers, AxleHire is an almost-four-year-old business that now makes over 200,000 same-day deliveries within selected regions. Working with Amazon, DeliverOL also provides transportation assets to achieve last-mile delivery.

Success Isn’t Guaranteed

Not all same-day delivery startups have been successful. While the parcel industry might be Uberizing, that trend will not include Uber itself. In March 2018, Uber announced that it will wind down its UberRush delivery service by the end of June. It will, however, continue its UberEats meal delivery service. After raising $50 million in 2015, Shyp also recently announced that it is shutting its doors, having failed to make its fixed-price delivery model work. Background checks, training, and customer safety will continue to present challenges as well.

The traditional carriers are sitting up and taking notice. UPS and FedEx have each launched same-day services. UPS Express Critical deliveries range from lightweight to heavyweight shipments. FedEx SameDay operates 365 days a year. DHL Same Day offers worldwide services for emergency deliveries.

Who will the winners be in the new same-day delivery market? Hard to tell, but if they expect to have any chance of success, they will need to step up to the challenge of absolutely, positively following through on shippers’ delivery promises to customers in the way that UPS and FedEx reliably have for so many years. According to Bringg, 76% of consumers view the delivery experience as an indication of how much a brand values its business.

All of this suggests that the future of last-mile delivery won’t be all about free and fast. It will increasingly be about the quality of the customer’s delivery experience, no matter what the product is that is delivered.

Bob Malley is CEO of Pierbridge, Inc. In this role, he has built a global organization that developed Transtream, the only multi-carrier management software that has earned both FedEx Diamond and UPS/ConnectShip Platinum level status for excellence and customer adoption. He can be reached at bob.malley@pierbridge.com.

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