Watching the clock: Factors to consider for same-day delivery

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Same-day delivery may not have lived up to its full potential.1 Back in 2016, it looked as if fast delivery was ready to take off: same-day and instant delivery options were projected to reach a combined share of 20 to 25 percent of the market by 2025, and automated guided vehicles or drones would likely play a large role in parcel delivery.2How customer demands are reshaping last-mile delivery,” McKinsey, October 19, 2016. By the end of 2023, the world had taken a different path after the capacity constraints experienced during COVID-19 and the slowing down of funding for new same-day delivery business models.

Does this mean speed is no longer important? Not at all. It’s likely to grow sales and ensure repeat orders. But there are other factors at play, most notably customers’ growing preference for reliability over speed. In fact, the variety of delivery options, and the perceived quality of the delivery service, are major decision-making criteria for online customers.

Same-day delivery, where a customer places an e-commerce order and takes delivery of it within the same calendar day, is a small segment of the market. Our analysis suggests that in most countries, same-day accounts for less than 5 percent of the courier, express, and parcel (CEP) market. For instance, in France and Germany, approximately 1 percent of the CEP market offers same-day delivery. In Japan, the United Kingdom, and the United States, the proportion is somewhat higher at around 2 to 3 percent. In China, we estimate that the share is no higher than 4 percent overall, with 10 to 15 percent in intracity deliveries within major cities.

This article examines six variables that drive the potential for same-day delivery services. Combined, these conditions define the pace at which same-day delivery adoption may be approaching. However, retail, e-commerce, and parcel companies needn’t wait for variables to align before exploring faster delivery options. While companies keep an eye on market conditions, they might consider “24-hour delivery” as an alternative value proposition that resonates with customers’ desire for a variety of options that offer speed, reliability, and reasonable cost.3

1. Urban density: Same-day delivery is an urban pursuit

The potential for same-day delivery is higher in countries where the population is concentrated within two or three cities.

2. Willingness to invest: Few retailers are large enough to build same-day networks

Non-grocery retailers with sizable same-day offerings tend to have a relatively high shipment volume compared to their closest counterparts.

3. Logistics enablers: Different models for different needs

Same-day enablers vary across logistics models.

4. Willingness to pay: Consumers prefer reliability over speed

Consumer preferences are shifting toward reliable delivery services, with higher willingness to pay for time-window delivery.

5. Order time: Most consumers miss the same-day cutoff, but delivery within 24 hours is achievable

Currently, around 45 percent of orders are placed before 2 p.m.

6. Urban regulations might play a role in same-day potential

Regulations may reshape the same-day delivery ecosystem.

Same-day delivery in the future: Keep an eye on market shifts

Retailers, tech start-ups, e-commerce, and CEP companies looking to enter the same-day market could consider the following steps:

  1. Shift focus from same-day to within-24-hour delivery services. If customers demonstrate genuine excitement for 24-hour delivery times over same-day delivery, retailers can explore faster delivery offerings. Parcel delivery companies can use this as a basis to offer differentiated pricing, and present a convincing value proposition.
  2. Be selective and carve your own path. Carefully select the cities, product niches, shippers, and SKUs for which you offer same-day, bearing enabling factors in mind. Also, be mindful of following in the footsteps of leading e-tailers that have already established loyal customers.
  3. Extend your logistics networks through partnerships. One way forward could be to leverage partnerships with start-ups or established logistics providers to offer same-day for selected segments and customers.
  4. Keep an eye on indicators. Set up systematic monitoring of KPIs such as urban density and consumer willingness to pay, and look out for changes such as logistics companies moving their infrastructure closer to the consumer. Tracking these indicators could allow you to define the optimal moment to enter the same-day market, or—if you do not intend to offer same-day services—the right time to defend the value of your traditional delivery speed.
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