United States Same Day Delivery Market - Growth, Trends, COVID-19 Impact and Forecast (2021 - 2026)

The United States same-day delivery market is expected to exhibit a CAGR of over 10% during the forecast period. The growth of the e-commerce sector (B2C) in the country is one of the major drives of the sector. Other factors including increasing demand for necessities like groceries, food and medical and healthcare products, an increasing number of internet users and penetrating the online shopping industry, an added benefit of the integration of the convenience of online retail shopping with the immediacy of physical retail stores. The ease of ordering through online platforms, coupled with reduced shipping time, is creating growth opportunities for the market.

Despite being a rapidly growing market, same-day delivery of merchandise and groceries to consumers remains relatively small. However, as of May 2020, there was a 202% increase in online grocery delivery web searches in the wake of the COVID-19 outbreak.

Although, with the increasing popularity of the same-day delivery market, the cost of providing these last-mile services is increasing. A major part of the costs incurred for last-mile delivery is variable, meaning that as the delivery volumes increase, so will the costs for last-mile services, thereby increasing the proportion of supply chain costs going toward last-mile delivery. According to a survey, the cost of providing last-mile services accounts for about 41% of overall supply chain costs for the logistics companies.

Key Market Trends

Increasing disposable income and expectations of the consumers surging the growth of the market

Consumer expectations for fast shipping are generally within the same-day or next-day delivery categories, however, business owners can seize this opportunity by considering that consumers are willing to pay more for faster delivery options. It’s also important to note that consumers greatly value more delivery options when choosing a company or purchasing a product. Same-day delivery services are aided by the critical mass of consumers with sufficient financial resources to pay for such a premium service. The rising GDP per capita is one of the major indicators of such efficiency of the consumers, especially when it applies to large metropolitan areas.

The mere existence of densely populated areas with no extensive buying power is not enough. The speed at which the deliveries are made necessitates a more sophisticated asset and capability base that inevitably results in a higher price point for the logistics service. The ability and willingness to pay this price are crucial that comes from the stable financials of the consumers supported by the growing GDP of the country.

According to a survey, 64% of millennial shoppers were more likely to make purchases online when retailers offered same-day delivery. Millennials were followed by Generation Xers, 56% of whom were more likely to make online purchases due to same-day delivery, and baby boomers, of which only 40% would place orders because of express delivery options.

Rapid E-commerce Adoption

The ongoing substitution of stationary retail sales by online sales is leading to a significant increase in B2C shipments. The availability of same-day delivery is expected to further support e-commerce adoption and drive the online sale of product categories not yet bought online on a large scale that includes essentials such as groceries and medical supplements.

Online retailers are expected to benefit from the reduced delivery time as almost immediate product access improves their position versus stationary retailers, and makes the greater choice, higher convenience and often discounts of online shopping even more appealing. A multichannel slant could enable them to win back customers who are becoming increasingly focused on online shopping.

The e-commerce market in the region is anticipated to create avenues for the market via the same day delivery facility. With the growing e-commerce market, the consumer’s expectation with respect to the additional facilities like single-day delivery and bundled products; is also increasing. There is a significant demand for regular same-day delivery service from the clothing and consumer electronic goods sectors. Moreover, as apparel retailers are improving omnichannel sales to boost their revenues, many clothing retailers are focusing on adopting the delivery method as a tool for service differentiation. There is a significant demand for regular same-day delivery service from the clothing and consumer goods and electronic goods sectors. The e-retailers are also offering reduced lead time to sustain competitively in the same-day grocery delivery market. Also, consumers demand same-day delivery for products such as food and luxury items such as jewellery, along with the high delivery cost.

Competitive Landscape

The same-day delivery market in the United States is fairly fragmented with companies like CEVA Logistics, USPS, FedEx and UPS are some of the major players in the market.

With technological advancements like artificial intelligence (AI), machine learning and retail automation could make same-day delivery a viable option. With the increasing number of delivery start-ups in the market, it is expected to experience intense competition in terms of market share acquisitions. Crowdsourced delivery - Uber-like platforms coordinating independent drivers - has radically transformed this landscape. Amazon, Walmart, Target, and crowdsourced delivery startups now offer same-day delivery of groceries and merchandise in an increasing number of metropolitan areas. Retail companies like Amazon and Walmart are also trying to successfully introduce their own delivery wings to facilitate the expected demands of the consumers and at the same time implement some cost-cutting on logistics hiring in the long run.

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