UK Same Day Delivery Market Insight Report 2019

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Published: January 2019
Pages: 49
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Description

UK Same Day Delivery Market Insight Report 2019

 

About the report

This report reviews the UK same day delivery market. It has been completely re-researched and re-written in 2019. 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 (a change from the previous edition of this report)

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 logistics 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 £800m, having grown at an increasing rate in recent years, as the B2C online retail delivery and takeaway food segments have become 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

Key trends

Technology has had a large influence on the market from better tracking to apps enabling marketplace models to operate.

Increase in flexible working has been important with most couriers working on a self-employed basis. Also most parcel carriers now outsource their final delivery stage. 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 mainstream.

Retailers with the necessary scale, network of operations and capabilities, such as Argos and Amazon, are setting 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 are mainly focused on – principally – London and other large cities. Argos, Amazon and CitySprint are exceptions to this, as they offer national same day deliveries.

Competitive landscape

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, some of whom are now targeting the emerging B2C segment, such as CitySprint with its On the dot service
– Newer operators with specific business models focusing on B2C, such as Stuart, Paack, Brisqq, Quiqup and Gophr
– Other logistics providers, such as parcel carriers, 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.

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

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 compares well with many logistics segments with the leading operators for whom data is available having aggregate operating margins between 5-7% in recent years.

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

Our market forecast quantifies the likely impact of these and other factors

About this report 2
What does the report contain? 2
What are the sources and methodology? 2
Who is it useful for? 2
Summary 3
Market segments and operating models 3
Key trends 3
Competitive landscape 4
Outlook 4
About Apex Insight: 2019 Parcels & Logistics Research Programme – highlights 5
About Apex Insight: recent parcels, transport and logistics consulting experience 6
About Apex Insight: parcels / delivery research and consulting clients 7
Contents 8
List of charts and tables 11
The same day delivery market 12
Industries / Segments 12
B2B 12
B2C 13
Takeaway food 13
Adjacent markets 13
Grocery delivery 13
Last mile parcels 14
Same day delivery segments and characteristics 15
Same day operating models 17
Pools of self-employed couriers 17
Traditional, point-to-point, on demand courier services 17
Scheduled deliveries 17
In-day hubs and consolidation 17
Use of a network of distributed inventory locations 17
Leveraging of existing delivery operations 18
Barriers to adoption of same day delivery 18
Market Trends 19
Technology 19
Self-employment 19
Cargo bikes 20
Retailers’ in-house same day delivery offerings 20
Amazon Prime Same-Day and Prime Now 21
Amazon Fresh 21
Amazon Restaurants 21
Argos 21
Currys / PC World 22
Net-A-Porter 22
Farfetch 22
Wickes 23
MatchesFashion.com 23
Pricing of same day services 23
Returns 23
Same day services used to improve retailer supply chain efficiency 23
Enabling later next day cut-off times 23
Optimising stock allocation between stores 23
Market Size, Growth and Forecasts 24
Overall market: historical and forecast growth 24
B2B 24
B2C 25
Amazon 25
Argos 25
Third-party same day carriers 25
Outlook for future growth 25
1. The proportion of online retail for which a same day delivery option is offered 26
2. The proportion of the population which lives in an area covered by same day delivery options 27
3. The proportion which is willing to pay a premium for same day 27
4. The proportion of their deliveries for which they choose a same day option. 27
Takeaway food 28
Market Drivers 29
UK economic performance 29
Growth in internet retail sales and B2C delivery 29
Competitive Landscape 30
Overview 30
Established B2B operators 30
New B2C models 30
Other logistics and transport providers 32
Small local operators 32
Leading companies’ same day revenues 33
Profitability 34
Company Profiles 35
Royal Mail 35
Royal Mail Courier Services 35
eCourier 36
CitySprint 37
On the dot 39
Rico Logistics 40
Jinn 40
DHL Parcel UK 42
Courier Logistics Ltd 43
Mach 1 Couriers Limited (Absolutely) 44
Sameday plc 44
Stuart 45
ByBox 45
APLE Worldwide Limited 46
Addison Lee 47
Quiqup 47
Gophr 48
Paack 48
Brisqq 48
Deliveroo 49
UberEATS 49
Appendix: abbreviations 50

List of charts and tables

Types of same day delivery 16
Argos sales by channel, 2016-2018 22
UK Same day market value, 2010-2022, £m 24
UK real GDP / annual changes 29
UK e-retail spending: value as % of all retailing / £bn, 2012-22 % 29
Courier payment models of leading same day delivery platforms, 2018 31
Same day revenues of leading same day delivery providers, 2017, £m 33
Same day revenues of leading operators, 2011-2017, £m 34
Profitability of same day delivery companies, 2011-2018 34
Royal Mail Courier Services Ltd Revenue 2010-18 £m 35
Royal Mail Courier Services Ltd Financial Performance 2010-18 £m 35
Revisecatch Limited Ltd (eCourier) Revenue 2010-18 £m 36
Revisecatch Limited Ltd financial performance 2010-18 £m 36
CitySprint financial performance, 2010-2017 37
CitySprint financial performance, 2010-2017 38
CitySprint Acquisitions 2007-2018 38
CitySprint revenue by service, 2017 38
CitySprint revenue by customer segment, 2017 39
Rico Logistics financial performance, 2013-2017 40
DHL Parcel UK Courier Division Financial Performance, 2010-2015 42
DHL Parcel UK courier revenue and profit, 2010-2015 42
Courier Logistics Ltd Financial Performance, 2010-2018 43
Courier Logistics Ltd Financial Performance, 2010-2018 43
Mach 1 Couriers Limited (Absolutely) financial performance, 2011-2017 44
Sameday plc financial performance, 2010-2018 44
ByBox Holdings financial performance, 2010-2017 46
APLE Worldwide Limited financial performance, 2013-2017 47
Addison Lee Limited financial performance, 2013-2017 47

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