Next big thing: faster delivery
Waiting is so yesterday.
Shoppers increasingly want their orders to arrive at their doorsteps as soon as they click a button, whether it’s a hot meal, groceries or a sofa. In response, retailers are betting big on delivery services to drop off packages faster.
In the latest development, online leader Amazon, which played a crucial role in raising shoppers’ expectations for near-instant gratification in recent years, announced plans Thursday to assemble its own fleet of delivery vans that would be operated by independent contractors.
Other companies are also thinking of radical new initiatives to get their products into customers’ hands more easily, helping to transform shopping as we know it.
Here’s a look at the shifting environment for deliveries:
Q. What are retailers doing to deliver products faster to shoppers’ homes?
A. Many have been expanding services that let online shoppers pick up their orders at the store. But the latest strategy? Delivering products to customers’ homes on the same day.
Walmart plans to expand same-day grocery delivery to more than 40 percent of U.S. households, or 100 metro areas by year’s end.
With its $550 million acquisition of logistics startup Shipt, Target plans to roll out same-day delivery nationwide this year.
Meanwhile, startups like Deliv are working with retailers such as Best Buy and Macy’s to deliver products to homes on the same day.
Q. What kind of a challenge does this pose to the likes of FedEx and UPS?
A. Amazon uses the big parcel delivery services, along with smaller firms and the post office. But it also has started its own air fleet of 40 planes, rolled out a convoy of trucks and built its own distribution centers.
UPS and FedEx leaders have long scoffed at the idea that Amazon could turn from a customer to a competitor, and most analysts have agreed — and still do so.
Losing more of Amazon’s business would hurt the delivery giants but not crush them. Analysts estimate UPS gets up to 6 percent of its revenue from Amazon deliveries, and FedEx about 3 percent.
Q. Will this hurt the post office?
A. It’s unclear if Amazon will cut back on its postal deliveries in favor of its own and how quickly that could happen. But it’s no secret that the U.S. Postal Service is struggling financially because of high pension and health care costs and a slump in revenue from first-class letters and other mail, and that one bright spot has been packages.
The post office’s revenue from shipping and package services, which includes boxes from Amazon and other e-commerce companies, rose 12 percent to $19.5 billion in fiscal year 2017 from the year before.
Q. Are there enough delivery drivers out there to meet the demand?
A. Courier and delivery jobs in the U.S. have jumped by one-third in the past two decades, to 737,300 in May. In the broader category of transportation and warehousing, which also includes trucking and other industries as well as delivery workers, more jobs were posted than were filled in April. That suggests companies can’t find the workers they need.