UK Same Day Delivery Market Insight Report 2020
About the report
This report reviews the UK same day delivery market. It includes:
– B2B segments in industries such as healthcare, high-tech / field service, retail and logistics, and ad hoc deliveries.
– B2C segments such as online retail and takeaway food.
We do not include outsourced last mile parcel delivery from the depot to the consignee in our definition of the market
The report quantifies the market size, historical growth rates and levels of industry profitability.
It also includes an in-depth analysis of the relevant drivers of industry growth setting out historical trends and available forecasts.
It identifies and profiles the leading providers of same day delivery services in the UK.
It includes our forecast scenario for market growth which is based on analysis of market and company trends and relevant growth drivers.
What are the sources and methodology?
This report is based on
– Interviews with senior-level contacts in the delivery industry
– Extensive research into published industry sources
– In-depth analysis of the macroeconomic environment and relevant market drivers
– Financial analysis of the accounts of companies in the industry
Information from these sources has been synthesised and presented clearly and concisely with extensive use of charts, tables and insightful quotes from interviews to illuminate points and support conclusions
Market forecasts have been constructed using simple assumptions which are clearly stated. Supporting evidence is provided for our assumptions but readers can easily flex them to model alternative scenarios.
Who is it useful for?
The report is intended for:
– Providers of same day delivery services
– Companies that employ same day carriers including retaielers and takeaway restaurants
– Parcel carriers
– Investors in these businesses
– Banks, analysts, consultants and other parties with interests in the sector
– Market regulators and policy makers
Market segments and operating models
Same day delivery covers the transport of a wide range of items across many industries via a variety of business models. Our definition of the market for this report includes the following areas:
– B2B same day deliveries including specific services for customers in areas such as healthcare, field service (technical courier) and retail as well as ad hoc deliveries.
– B2C same day deliveries of online retail items, which has historically been very small but is now growing rapidly as a premium option. It includes both urgent deliveries via dedicated courier and less-urgent deliveries via shared services.
– Takeaway food delivery, a new segment which has been given impetus be the advent of companies such as Deliveroo and Just Eat
The market size is around £900m, having grown at an increasing rate in recent years, as the B2C online retail delivery and takeaway food segments have become more established.
Operating models vary between the different segments and delivery types. Operational features may include:
– Traditional, point-to-point, on demand courier operations
– Scheduled deliveries with shared transport
– In-day hub operation
– Use of a network of distributed inventory locations
– Leveraging of existing delivery operations
– Marketplace aggregators and apps
– Electric cargo bikes
Technology has had a large influence on the marketfrom systems to enable combination of jobs in real time to improved tracking to apps enabling on demand models to operate.
Increase in flexible working has been important with most couriers working on a self-employed basis. Recent court cases and potential government action might lead to tightening of the rules which could impact profitability but are not likely to fundamentally change the industry.
Retailers are starting to offer same day home delivery, and some consumers have shown they are willing to pay for it, for some deliveries. This is likely to be a major growth driver as same day home delivery becomes more widespread. However, it still accounts for a very small proportion of overall home deliveries (<1%), with many in the market reporting that price remains a barrier.
Retailers with the necessary scale, network of operations and capabilities, such as Argos and Amazon, have set up their own same day delivery channels, potentially giving them competitive advantages if they can deliver a superior service.
The healthcare segment has received a boost from the introduction of electronic prescriptions, with medicines often delivered to people who are less mobile via couriers.
The trend towards more modular equipment that is easier to fix by swapping out damaged components brings more equipment service within the scope of technical couriers.
e-substitution by email and secure file sharing software has meant that the document segment has declined significantly, but there is still a requirement for some urgent documents to be couriered.
Geographical coverage of same day services is mainly focused on London and other large cities. Argos, Amazon and CitySprint are exceptions to this, as they offer national same day deliveries.
The market is served by a combination of
– In-house operations of the leading retailers such as Amazon and Argos
– Established operators who have traditionally had a B2B focus but who may now also cover B2C, such as CitySprint and Rico Logistics
– Newer operators with specific business models focusing on B2C, such as Deliveroo, Uber Eats, Stuart, Absolutely, Brisqq and Gophr
– Other logistics providers, such as parcel carriers (eg TNT and DHL), who combine a same day capability with their core operations
– A long tail of smaller, local operators.
It remains fragmented with only a few companies having significant shares and a long tail of smaller operators. These include cargo bike operators such as Zedify and PedalMe – which report rapid growth
CitySprint is the market leader, having built up its position through a series of acquisitions and developed systems to integrate them onto a common platform. It has also had success in using its courier platform to support activity which has been outsourced by larger organisations (eg delivery to Hermes parcel shops). Its On the dot subsidiary has had some success in the B2C segment but we note that some retailers have not renewed trials, citing low volumes.
Other leading companies include Rico Logistics, Royal Mail / eCourier, Absoluely, and DHL UK.
The leading firms have grown at a faster rate than the market, through a combination of acquisitions and organic growth
Overall industry profitability has historically compared well with most logistics segments. The leading operators for whom data is available have had aggregate operating margins between 5-7% in recent years – although City Sprint has reported losses in its last two sets of results.
Same Day Market Delivery Outlook
Further growth is likely as key trends appear to have further to run.
In B2C we expect to see increases in the proportion:
– of online retail for which a same day delivery option is offered
– of the population which lives in an area covered by same day delivery options
– which is willing to pay a premium for same day
– of their deliveries for which they choose a same day option.
Takeaway food delivery via aggregator websites and apps is also growing rapidly
Other segments have positive drivers, including:
– Increased use of high-tech equipment and greater emphasis on modular design
– Trends towards more healthcare being delivered in the home
– More organisations identify parts of their supply chains which could be performed better and more cost-effectively by a same day specialist
While our forecast is still for faster market growth in future we have reduced it vs last year to reflect the apparent slower take-off of same day home delivery and the failure of some retailer trials to be extended.