The bring-it-me economy is here – and given recent headlines, it’s here to stay. The digital shift has taken root deeply with consumers. Even now, as the vaccine allows locations to reopen, consumers are set in their newly developed eCommerce ways, as players work to enable fast deliveries to doorsteps.
From the acceleration of fulfillment center construction to the race to deliver goods to consumers’ doors ever faster, the race is on – and picking up speed every day.
Fulfillment Center Construction Binge
The spring of 2021 has been one fulfillment center construction story after another – Kohl’s, The Home Depot, Walmart, Kroger and Instacart are just a short list of name-brand retailers that all announced fulfillment projects of varying complexity.
Earlier this year, Amazon announced plans to help malls find a second life, as their convenient locations make them ideally suited to serve as fulfillment centers for that suburban last mile.
“It’s a way to be able to clean out warehouses and get through inventory without having to destroy it,” an Amazon insider noted. “It is in keeping with the value proposition of Amazon, keeping price at the forefront and allowing customers to get access to products at a low cost.”
Instacart captured headlines last week with its plans to repurpose fulfillment centers that would use robots to gather non-perishable items alongside humans handling produce and deli products. According to reports, Instacart is having some difficulty getting off the ground, as it hasn’t yet signed up a single supermarket chain.
But as UPS demonstrated this week, fulfillment isn’t the only race in the emerging economy.
UPS Joins the Delivery War
The United Postal Service (UPS) has announced it is pushing forward with new same-day delivery pilots. According to Wall Street Journal (WSJ) reports, the global shipping and logistics firm is exploring how a same-day delivery model could work for the company.
From there, details are sparse – the only comment UPS is offering on the pilot at this point is that it doesn’t comment on pilot programs in progress.
“We don’t have this all figured out, but we’ve got a team of people looking at it,” Chief Executive Carol Tomé said, per the WSJ, citing her response to a question on an investor-day webcast earlier this week. She added that UPS is piloting the concept, but didn’t elaborate further.
Adding same-day delivery helps UPS catch up to a delivery and logistics market where same-day services are becoming an increasingly common offering. Its largest rival, FedEx, already offers same-day delivery in some locations, and has been testing the use of robots to beef up its local delivery offerings.
And the competitive story is much larger than UPS and FedEx. In some segments – grocery in particular – the race isn’t just about same-day deliveries, but about same-day or even next-hour deliveries.
Instacart announced Priority Delivery two weeks ago, which promises 30-minute delivery in 15 U.S. cities. The announcement roughly coincided with Berlin-based unicorn e-grocery startup Gorillas’ announcement that it would bring 10-minute grocery delivery services to New York City. Earlier this year, Walmart dropped the $35 minimum order for its express, two-hour delivery service, and same-day delivery has been a standard part of the Amazon Prime offering since Q1 2020, though users still have a $35 order requirement.
It seems that UPS comes into the market somewhat behind the trend, as players have spent the last 15 months working overtime to speed up the pace of getting packages to consumers’ doors.