By Jackson Lewis
ALEXANDRIA, Va.—Last mile delivery was a $31.2 billion market in 2018 and is projected to grow to $50 billion in 2022—not including products sold. Lori Buss Stillman, NACS vice president of research, outlined projections for the future growth of last mile fulfillment and how the COVID-19 pandemic might affect it during the NACS State of the Industry (SOI) Virtual Experience.
Same-day delivery is projected to reach a 25% market share by 2025 and is expected to grow as more consumers become used to placing online orders from home, Stillman said.
Here are five highlights from Stillman’s virtual presentation, The Future of Last Mile Fulfillment in Convenience Retail:
- Instacart is king
“Instacart is by far the No. 1 last mile fulfillment partner for most retailers,” said Stillman, with more than 70% of U.S. households in 5,500 cities with access to Instacart services. About 350 retailers use Instacart.
Shipt, which was purchased by Target in 2017, is the second-most available delivery partner at more than 260 cities. Shipt is strongest where there are already Target and CVS locations. DoorDash is No. 3 and Postmates is No. 4.
- Room for legacy retailers
“We’re going to see this market continue to evolve and grow as more and more retailers bring solutions to their shoppers through last mile,” said Stillman.
Stillman cited Costco’s recent purchase of the logistics firm Innovel Solutions for $1 billion. Innovel was originally the delivery company for Sears and Kmart. Costco has plenty of bulky items, some of which require installation. Stillman described this as a logical union and encouraged c-store retailers to look for channel-appropriate delivery partners.
- Generation gap
A full 67% of millennials prefer to shop online rather than in-store, followed by 56% of Gen X consumers, according to Stillman. Among those who use online shopping, 88% want to be able to check the status of their order in real-time and 23% are comfortable with paying extra for home deliveries.
- Evolving delivery needs
A few years ago, consumers’ biggest delivery concerns were speed and transparency, but expectations have already changed. “We’re becoming much more judicious about the price that we’re going to pay, and we’ll navigate between multiple sites to ensure that we are indeed paying a fair and reasonable price. We also have different expectations about customer service in the process,” said Stillman. She suggested consumers may want a chat bot, dialogue box or some other way to ask questions during any point in the delivery process.
- Delivery after coronavirus
While 31% of U.S. households ordered food online in recent months, 43% say they will continue or are extremely likely to continue shopping online after the coronavirus pandemic subsides. That comes out to about 17 million households who will be new users to last mile fulfillment.
“Right now, there are a lot of people trying and learning new behaviors, and not all of them are simply going to go back to the way that it was,” said Stillman.
(View this session and the complete NACS SOI Summit Virtual Experience on demand by clicking here. Video presentation viewing is available for download until September 1, 2020.)
NACS is fielding a survey to better understand the pressure that “anytime, anyplace convenience” is putting on convenience and fuel retailers to find last-mile fulfillment solutions. NACS will share the results in a white paper that will detail the evolution of last-mile fulfillment in the convenience channel.
Click here to take the NACS Last Mile Survey now.
Jackson Lewis is the technology and services editor for CSP Magazine.