In a recently released report, Fairfield Market Research says the US market for last mile delivery is growing strong with greater reliance on eCommerce. Same day/instant delivery models are shaping newer trends. Drone delivery is capturing the buzz, of late. The report uncovers the key growth indicators, restraints, opportunities and trends, regional and segmental analysis in addition to the detailed competitive assessment.
Impressive eCommerce Expansion Lays the Building Blocks
The North American consumer is spending a sizeable proportion of their income on retail purchases. In the US alone, the total expenditure of consumers on retail purchases reached nearly US$500 Bn in 2019, reports the US Commerce Department. The US eCommerce market today stands as the world’s second largest after China. The eCommerce space has been exploding and the US eCommerce sales crossed the trillion-dollar valuation for the first time, in the end of 2022.
In the light of online retail shopping shaping an exceptionally lucrative world of business in the country, another industry that is building up in tandem with it, is delivery services. The progression of delivery service providers has been phenomenal, over the recent past, and has set an extremely competitive stage for those involved in the final mile delivery.
As the last mile delivery represents the final and most critical step of the online delivery staircase, it becomes imperative to closely look at the existing and emerging opportunities in the US last mile delivery market.
North American market that stood at around US$40 Bn in 2019 before it took a leapfrog beyond US$61 Bn in 2022. The year 2020 has clearly been a gamechanger that accounted for an average year-over-year growth of more than 15% each year post-2020. The US last mile delivery market size is all set to hit the US$50 Bn mark by 2030-end.
FMCG Makes the Most of Last Mile Delivery Providers
Last mile delivery service providers are most in demand across FMCG that currently accounts for over 41% share of the US market. This category receives a major thrust from normalization of online shopping as more consumers seek the convenience, bypassing lengthy travelling times through traffic congestions.
While companies are yet to explore full potential in food delivery, it will be more than 16% by 2025-end, remarks the report. Demand for delivery of dry goods will continue to surge ahead with more than 50% share, show the findings of the US last mile delivery market report.
Drone Delivery Holds the Future
When it comes to examining market performance based on the choice of delivery vehicle, light commercial vehicles remain preferred and continue to hold the lion’s share of 50% in the market. On the other hand, drone delivery that has impressively appeared on the horizon is most likely to experience growing preference from last mile delivery companies. The growth is anticipated to be extraordinary and thus, drone delivery looks like the future of the final mile delivery in the US.
Same Day/Instant Delivery Will Soon be a Standard Practice
While preference for regular delivery has been higher among the US consumers, making up for over 50% of the market share, a noticeable inclination toward the same day delivery has been observed recently. This will shape the dynamics of the same day last mile delivery trend in the US. The study clearly attributes this to visibly soaring demand for same day or instant delivery services, especially among the young demographic in the country.
With more consumers showing willingness to pay a premium as an additional surcharge for instant delivery, the faster delivery model is likely to soon take over the regular counterpart. Bigger players like Amazon, and even the USPS are leveraging this evolving consumer tendency to capitalise on the instant delivery model. This will however build pressure over the smaller players, as well as ambitious start-ups budding in the country, to sustain amidst the changing dynamics of the US last mile delivery market.
It All Boils Down to Creating Faster Delivery Experiences
The significance of final mile deliveries rose exceptionally during the pandemic in 2020 that dramatically boosted eCommerce sales. The home delivery trend took off. So much so that the US eCommerce retail sales jumped by 10% in Q3 2022, up from Q3 2021. Now that eCommerce drives nearly 90% of the last mile delivery in the US, addressing the challenges facing last mile delivery companies is of paramount importance.
Here is when the shipping carriers, and fulfilment companies serve a vital role. The most frequently arising concerns include missed deliveries, and inefficiency of routes.
Carriers typically leverage the economic and efficiency benefit of the United States Postal Service (USPS) to overcome these impediments and accomplish the final leg of delivery. Given the critical necessity of shorter delivery times, larger eCommerce brands in the US are now keener on their association with solid carrier and fulfilment companies.
Both eCommerce and delivery companies are now emphasizing their relationships with local and regional shipping carriers, as well as fulfilment centers to alleviate the overall pressure of tackling faster delivery expectations and creating a positive delivery experience in the last leg.
Key Market Players
Some of the leading participants in the US last mile delivery market are FedEx, The USPS, UPS, XPO Logistics, Amazon, Walmart, ShipHawk, Postmates, Hitch, and Narvar.