Same Day Delivery Expectations

Organic bamboo-charcoal toothpaste on your doorstep in 15 minutes. That promise—and others like it—has investors clamoring for new, innovative services in the “ultra-fast” delivery space. In just the last 12 months, a bevy of new and expanding startups has made headlines for rapidly growing market valuations and geographic expansions. GoPuff. Gorillas. Fridge No More. Buyk. 1520. JOKR. If these names read like randomly pressed letters on a keyboard, you may not have been paying attention. According to Pitchbook (via Business Insider), startups in the ultra-fast delivery space have received over $7.6B in investments in the first half of 2021 alone.

But outside of dense metros like New York City, what is the market potential of these services? More established local same-day delivery providers are now beginning to pivot their business models—many becoming ad platform companies hiring new leadership with social media and/or Amazon advertising backgrounds—indicating there may be a ceiling on the value even same day delivery could have among consumers.

To understand what consumers are paying attention to, our latest BOXpoll survey asked shoppers about their familiarity with and adoption of established local delivery services compared to the unicorn ultra-fast delivery startup GoPuff, which has now attained a $15B market valuation. Overall, consumers told us:

35% have used local delivery services MORE this year than last
26% have used local delivery LESS this year than last
Only 12% are unfamiliar with of ANY local delivery services we listed
This indicates continued growth in the space—and indeed, a lot of headroom on brand awareness for services like GoPuff—but that the eye-watering acceleration seen at the height of the pandemic in 2020 has clearly tempered

Consumers are getting more familiar with local delivery

How fast is fast enough?

A recent BOXpoll survey conducted in July—compared to responses from October 2020—show that how consumers define “fast” has changed in the last year. What’s striking is that consumer expectations around speed have only gotten faster regarding groceries (including other food & beverage). In fact, consumers expectations have actually become slower since last October for all other product categories we asked about—even household supplies & essentials, one of the product mainstays for ultra-fast and same day delivery services.

Given these findings, it’s hard to see ultra-fast and same day services seeing massive adoption anytime soon—though we expect at least some temporarily acceleration as consumers come to grips with the inventory shortages and shipping delays staring down holiday shoppers this year, driving many to make impulse purchases to serve urgent needs.

To learn what kind of staying power these services might have, we asked consumers whether they felt fast delivery (in an hour, same-day, or within 2 days) was important—even if it meant paying more for the product.

Again, groceries top the list of product categories where consumers feel ultra-fast delivery is important. In fact, more than half of consumers (54%) say delivery within an hour is important to them. (We think we just heard GoPuff’s valuation increase a little more.)
No other category comes close, but a second tier of interest starts to form around other replenishment products—pet supplies, vitamins & supplements. About a quarter of consumers feel either one-hour or same-day delivery is important. Because Fido’s gotta eat.
Most other product categories sit at a third tier, where just over one in ten consumers finds fast delivery important—these include office supplies, toys & hobbies, home & garden, and sporting goods
Between the second and third, interestingly, sits apparel & footwear. One in five consumers (21%) finds ultra-fast delivery important—and that is a new trend, especially after the past year where apparel sales in most categories not named “sweatpants” have sagged. (See what we did there?)

It remains to be seen if the ultra-fast business model, however, is sustainable. With many consumers moving further away from cities, the cost to deliver within an hour (or even same day) increases exponentially, compounded by the need to position inventory in more places amid tight warehouse capacity.

BOXpoll™ by Pitney Bowes, a weekly consumer survey on current events, culture,and ecommerce logistics. Conducted by Pitney Bowes with Morning Consult //2094 US consumers surveyed September-October 2021.© Copyright Pitney Bowes Inc.