Industry Analysis

U.S. Parcel Delivery Market

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Based on calculations derived from available figures, the estimated breakdown of B2C parcel deliveries in the U.S. for one-day or longer shipping duration was around 98% in 2018. Around 249 million B2C ecommerce parcels were shipped within the same day in 2018, accounting for less than 2% of all B2C parcel deliveries in the U.S. The rest of the findings were presented below.

B2C Parcel Breakdown

  • In 2018, 63% of same-day parcel deliveries in the United States were for business to consumer (B2C) transactions. The rest were for B2B and C2C deliveries.
  • Around 249 million B2C ecommerce parcels were shipped within the same day in 2018, accounting for less than 2% of all B2C parcel deliveries in the U.S.
  • Based on this, the estimated breakdown of B2C parcel deliveries in the U.S. for one-day or longer shipping duration was around 98% in 2018.
  • The estimated total number of B2C parcels in 2018 was calculated as follows: 249/2% = 12.45 billion
  • The same-day B2C parcel volume has increased by 50% from 2016 to 2018, an increase of 50% every two years or 25% per year.
  • Given this growth rate, the number of B2C parcels shipped via same-day method for the following years were extrapolated as follows using the formula below and the CAGR and reverse CAGR calculators:
  • 2016: 249 million X 50% = ~125 million parcels
  • 2017: 125 million + (125 million/2) = ~188 million parcels
  • 2018: 249 million
  • 2019: 311 million
  • 2020: 560.25 million
  • 2025: 1709.75 million

Total U.S. Parcel Volume

  • In 2019, there are around 14.7 billion parcels shipped in the U.S., a jump from 13.2 billion in 2018. The estimated growth rate of the parcel volume was calculated to be 11.36% based on the CAGR calculator.
  • Using the reverse CAGR calculator, the following parcel volume for 2020 and 2025 were calculated:
  • Starting value: 13.2 billion in 2018
  • CAGR: 11.36%
  • 2020: 16.37 billion
  • 2025: 28.03 billion
  • In the U.S., the parcel shipping volume was around 11.8 billion in 2015.
  • https://cagrcalculator.net/reverse-cagr-calculator/
  • At the given maximum growth rate of 7%, the estimated parcel shipping volume was around 12.63 billion in 2016 and 13.51 billion in 2017 based on the reverse CAGR calculator.
  • Based on the estimated B2C Parcel Breakdown calculations above and the total U.S. parcel volume, the estimated % of the same-day B2C parcel volume was calculated as follows:
  • 2016 Same-Day: 125 million /12.36 billion = 1.01%
  • Longer Duration: 100 – 1.01 = 98.99%
  • 2017 Same-Day: 188 million / 13.51 billion = 1.39%
  • Longer Duration: 100 – 1.39% = 98.61%
  • 2018 Same-Day: 249 million / 13.2 billion = 1.88%
  • Longer Duration: 100 – 1.88% = 98.11%
  • 2019 Same-Day: 311 million / 14.7 billion = 2.12%
  • Longer Duration: 100 – 2.12% =97.88%
  • 2020 Same-Day: 560.25 million / 16.37 billion = 3.42%
  • Longer Duration: 100 – 3.42% = 96.58%
  • 2025 Same-Day: 1709.75 million / 28.03 billion = 6.1%
  • Longer Duration: 100 – 6.1% = 93.9%

B2C Parcel Same-Day Delivery Market Size

  • Based on a Statista report, the same day delivery market in the U.S. was worth around $4.7 billion in 2018.
  • The same-day delivery market in the U.S. is expected to increase by $9.73 billion from 2020 to 2024 at a growth rate of 22% during these years.
  • Based also on another Statista report, B2C parcels account for 63% of the total same day delivery market share.
  • Given these figures, the same day delivery market size of B2C parcels in 2018 was computed as follows:
  • 63% X $4.7 billion = $2.96 billion
  • Using the reverse CAGR calculator, the market size of the same-day B2C parcel delivery segment for 2020 was determined to be $4.41 billion.

Other Helpful Statistics:

  • Around 40% of shoppers mentioned that deliveries that will take greater than two days would make them back out of a purchase.
  • Meanwhile, 63% of online consumers consider three-day delivery to be the norm.
  • Sixty-one percent of the respondents also mentioned that they prefer their purchases to arrive at their homes faster.
  • Based on a Convey survey, the percent of consumers who said that same day delivery is the top factor when considering shipping decisions rose to 59% since 2017.
  • Around 73.6% of shoppers also mentioned that delivery is the most critical aspect of their general shopping journey.
  • With regard to delivery preferences, 9.7% mentioned that same or next day delivery is the topmost factor in this aspect.
  • Around 73.2% of consumers prefer being given a delivery window. 45.1% prefer a two-hour or less window.
  • Over 47% of shoppers agreed to pay for additional costs to have their packages delivered within the day or until the next day.
  • https://www.dropoff.com/blog/retail-delivery-consumer-survey-shoptalk-2018/
  • According to a Dropoff survey, same-day delivery is the fastest rising “expedited delivery option.”
  • There were twice as many consumers who availed of this service in 2018 compared to 2017.
  • Around 1/3 of consumers mentioned that they are disappointed if a business does not have same-day delivery options.
  • Around 43% of consumers want businesses to offer shorter delivery lead times in 2018. This is a 23% year over year increase and a 35% jump versus 2017 figures.
  • Around 17% of consumers mentioned that they availed of same-day delivery options in 2017. In 2018, 31% of consumers availed of this option.
  • Around one-third of consumers mentioned that they are disappointed if a retailer does not have same-day delivery options.
  • Meanwhile, 74% of consumers said that they tend to buy again from retailers who are offering same-day delivery.
  • The following statistics also show a huge divide in delivery expectations between what shoppers want to be delivered on the same-day and the items that actually got delivered within the day:
  • “Groceries: 64% prefer same-day, 19% were delivered within the day
  • Health Care Products: 46% prefer same-day, 4% were delivered within the day
  • Specialty Snacks: 42% prefer same-day, 7% were delivered within the day
  • Alcohol: 41% prefer same-day, 5% were delivered within the day
  • Household Products: 28% prefer same-day, 5% were delivered within the day
  • As shown in the figure below, same-day delivery is transforming shoppers’ habits:

Same-Day Delivery Impact on Shopping Habits

  • Around 53% of consumers mentioned that they did not push through with a purchase due to slow delivery lead times.
  • https://clutch.co/logistics/resources/how-two-day-delivery-impacts-small-businesses
  • In 2016, online consumers typically allow around 4.8 days for the delivery of their purchased items. In 2019, 48% mentioned that they usually were able to get hold of their items within 2-3 days. Around 42% got their delivered items within 4-7 days.
  • Around 5% of consumers mentioned that they usually receive their purchases within one day.
  • As for Amazon Prime members, 31% typically allow for their items to get delivered within 3 days compared to 20% of Prime members.
  • For online shoppers in general, 48% mentioned that their items typicaly arrive within 2-3 days.
  • IMAGE
  • https://static2.clutch.co/s3fs-public/imce/2146f2ff761b10ff3b54af53556b009b.png
  • https://clutch.co/logistics/resources/how-two-day-delivery-impacts-small-businesses
  • When Do Shoppers Typically Receive Packages After Shopping Online?
  • http://f9e7d91e313f8622e557-24a29c251add4cb0f3d45e39c18c202f.r83.cf1.rackcdn.com/RTP_RT153_SURV_LastMile_March_2018_FINAL.pdf
  • Based on the 2018 AlixPartners Home-Delivery Shopping Survey, the longest number of days that consumers are amenable to wait for their purchase to be
  • delivered in “exchange for free shipping” has gone down from 5.5 days in 2012 to 4.1 in 2018.
  • https://www.uspsoig.gov/sites/default/files/document-library-files/2020/RISC-WP-20-002.pdf
  • Based on a research from Pitney Bowes, around 95% of shoppers are contented with the two-day delivery option.
  • Over 8o% of the consumers are also amenable to a 3-4 day delivery leadtime.

Same Day Delivery Market

  • Based on several studies, same-day deliveries is expected to change the shopping experience of consumers as it incorporates the ease of shopping on online stores with the almost real-time product availability from brick-and-mortar stores.
  • Lately, several firms such as DHL, DPD, FedEx, and UPS have started to launch their new “same-day delivery models.”
  • High hopes are placed that this model will increase in popularity due to the significant value that it will provide to the consumers.
  • E-commerce shops are seen to gain from shorter delivery duration as the almost real-time access to the items ordered can elevate their positions compared to stationary stores. The shorter delivery lead time can also magnify the benefits of online shopping in terms of increased selections, greater convenience, and reduced prices.
  • As for the brick and mortar stores, they will now have a rare opportunity to integrate their physical infrastructure with an online channel to provide same-day delivery services on an expanded level. Having this multi-channel strategy could help them gain back those shoppers who have turned more to online shopping.
  • Amazon and Walmart have been cultivating an ideal sccenario where same-day delivery can fully integrate the ease of buying through online channels with the almost real-time product access provided by physical stores. These retail giants are also testing out various innovations in delivery models.
  • Amazon is also in the process of building decentralized warehouses across the U.S. to make next-day delivery as the standard parcel delivery duration. The company is also working on enabling more people to have access to same-day delivery options.
  • Retailers are also expecting that same-day delivery will be the future evolution in B2C parcel logistics. The need for speed will further drive this evolution.
  • B2C parcel delivery models have been evolving from deferred delivery (3-5 days), next-day delivery (1 day), and same day delivery (1-12 hours).
  • Next-day or two-day delivery is now the “industry standard” in first-world economies. However, same-day delivery models that are cost-effective is the future evolution in this space.
  • The demand for same-day delivery is being propelled by prevailing macro-trends such as the growth of GDP per capita, accelerated e-commerce adoption, urbanization, and evolving consumer demands.
  • Based on a market research, the increasing access to the internet and the rising preference for online buying has driven the boom in the B2C e-commerce industry in the U.S.
  • These factors also contributed to the increasing need for parcel delivery services to the B2C e-commerce industry.
  • The increase in the number of players has driven many online retailers to decrease their delivery lead times to get ahead of their competitors in this space.
  • However, the massive effort behind the scenes that is needed to deliver parcels within a shortened duration is still a challenge for retailers.
  • Furthermore, a report from the USPS mentioned that the same-day delivery preference has still not resonated with the typical American consumer and the interest on this option just revolves around niche markets.
  • The USPS is seeing a shift in focus to next-day delivery options instead to provide a satisfactory combination of affordability and delivery speed.
  • The USPS has also observed that key retailers have been planning to strengthen their next-day delivery offerings.
  • Some of the challenges encountered with same-day deliveries six years ago were also not fully addressed yet. Some of these concerns include volatile business models and a lack of willingness to pay from the end of the consumers.
  • Other challenges with the same-day delivery models that need to be addressed include the cost, the increasing availability of more affordable options, and the senders’ fluctuating interest in this shipping option.
  • Based on the forecast from the USPS, next-day delivery could also turn out to be the new standard for most online orders.
GLENN TREVOR
Glenn is the Lead Operations Research Analyst at Simple Manifestation with experience in research, statistical data analysis and interview techniques. A holder of degree in Economics. A true specialist in quantitative and qualitative research.

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