This story was delivered to BI Intelligence “E-Commerce Briefing” subscribers. To learn more and subscribe, please click here.
The United Parcel Service (UPS) will be testing delivery of standard ground packages on Saturday in select markets in the US, reports Bloomberg.
The company is testing the service in response to the increasingly high volumes of e-commerce orders that the shipping company receives. UPS expects that by 2019, home deliveries of e-commerce shipments will account for more than half of its total volume.
Offering deliveries on Saturday also makes UPS more competitive with FedEx, which already delivers packages to homes on that day. Beginning later this summer, UPS customers in Atlanta, Philadelphia, and Los Angeles will start receiving packages on Saturday.
In addition to Saturday deliveries, UPS has decided to install 300 new locker pickup locations in the US after a successful test run in Chicago, according to the Wall Street Journal. The lockers are used by UPS drivers as drop-off points for packages ordered online and give customers 24/7 access to retrieve their orders via a personalized PIN code. The locker installations will be rolled out in Illinois, New York, Pennsylvania, Virginia, and Washington, before expanding to other states.
Pickup lockers, coupled with Saturday deliveries, will likely allow the shipping company to accommodate more online shopping orders. This is especially important during high-volume shopping times, like the holiday season. Peak shipping volume was so extensive during the 2015 holiday season that in the week leading up to Christmas Day 2015, UPS could only deliver 91% of packages on time, according to ShipMatrix. Offering multiple fulfillment options will help drive up the number of completed, on-time package deliveries.
Overall, delivery logistics companies are trying to stay on top of the quickly growing e-commerce market. The Census Bureau of the US Department of Commerce announced that retail e-commerce sales experienced YoY growth of 15% in Q1 2016. This means that parcel delivery firms, like UPS, are shipping more goods directly to the consumer, as opposed to through their traditional business-to-business (B2B) operations.
Furthermore, consumer expectations about what constitutes “fast shipping” are shifting. In fact, 96% of US consumers consider same- or next-day delivery to be fast, according to Deloitte. However, just 63% of consumers consider 3-4 day shipping to be fast. Expanding the options available for fulfillment not only helps the company stay ahead of volume, but it may also appease impatient customers.
Cooper Smith, senior research analyst for BI Intelligence, Business Insider’s premium research service, has compiled a detailed report on same-day delivery that takes an exhaustive look at this market and sizes the percentage of people who will purchase goods to be delivered the same day.
The report uncovers the demographics of same-day delivery customers, the markets where these services have the best chance of taking off, and assesses how each of the many new same-day delivery entrants compares to the others. It also looks at the technology that really could make getting a package delivered to your door hours after you order it a common phenomenon.
Here are some of the key points from the report:
USE: BI Intelligence estimates that 2% of shoppers living in cities where same-day delivery is offered have used such services. In dollar terms, we estimate that roughly $100 million worth of merchandise will be delivered via same-day fulfillment this year in 20 US cities.
CONSUMER EXPECTATIONS: Consumer interest in same-day delivery is already fairly high. Four in 10 US shoppers said they would use same-day delivery if they didn’t have time to go to the store, and one in four shoppers said they would considering abandoning an online shopping cart if same-day delivery was not an option.
DEMOGRAPHICS: The most common same-day delivery shopper fits a very specific profile — millennial, highly likely to be male, urban-dwelling, and young. The products people want delivered same-day are also fairly niche.
BARRIERS: Despite all the competition in the same-day delivery market, it still won’t be easy to get people to pay for these services. 92% of consumers say they are willing to wait four days or longer for their e-commerce packages to arrive.
In full, the report:
Estimates the market for same-day delivery from 2013-2018, including the percentage of people who will use these services and the total sales volume
Looks at the most likely same-day delivery customers and the cities where these individuals are concentrated
Unpacks the kinds of goods people are likeliest to order for same-day delivery
Lays out how the different same-day delivery services stack up against each other in terms of prices, location, and selection
Considers the barriers that could keep same-day delivery from ever becoming a mainstream preference among consumers
Identifies the technology that could make same-day delivery cost-effective and commonplace
To get your copy of this invaluable guide, choose one of these options:
Subscribe to an ALL-ACCESS Membership with BI Intelligence and gain immediate access to this report AND over 100 other expertly researched deep-dive reports, subscriptions to all of our daily newsletters, and much more. >> START A MEMBERSHIP
Purchase the report and download it immediately from our research store. >> BUY THE REPORT
The choice is yours. But however you decide to acquire this report, you’ve given yourself a powerful advantage in your understanding of the shift toward same-day delivery.