UK Same Day Delivery Market Insight Report 2020

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Published: January 2020
Pages: 53
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Description

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

Key trends

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.

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 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.

About this report 2
Summary 3
About Apex Insight 5
Contents 8
The same day delivery market 11
Industries / Segments 11
B2B 11
B2C 12
Retailer B2C Offerings 12
Takeaway food 14
Adjacent markets 14
Grocery delivery 14
Last mile parcels 15
Same day delivery segments and characteristics 16
Same day operating models 18
Pools of self-employed couriers 18
Traditional, point-to-point, on demand courier services 18
Scheduled deliveries 18
In-day hubs and consolidation 18
Use of a network of distributed inventory locations 18
Leveraging of existing delivery operations 19
Barriers to adoption of same day delivery 19
Market Trends 20
Technology 20
Self-employment 20
Growth of B2C same day 21
Increased use of cargo bikes 21
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. 28
Takeaway food 28
Market Drivers 29
UK economic performance 29
Growth in internet retail sales and B2C delivery 29
Competitive Landscape 30
Overview 30
Retailers’ in-house same day delivery offerings 30
Amazon Prime Same-Day and Prime Now 30
Amazon Fresh 30
Argos 30
Established B2B operators 32
New B2C models 32
Other logistics and transport providers 34
Small local operators 34
Leading companies’ same day revenues 35
Profitability 36
Company Profiles 37
Royal Mail 37
Royal Mail Courier Services 37
eCourier 38
CitySprint 39
On the dot 41
Rico Logistics 43
Jinn 43
DHL Parcel UK 45
Courier Logistics Ltd 46
Mach 1 Couriers Limited (Absolutely) 47
Sameday plc 48
Stuart 48
ByBox 49
Addison Lee 49
Gophr 50
Paack 50
Brisqq 51
Deliveroo 51
UberEATS 52
StreetStream 52
Appendix: abbreviations 53

List of charts and tables

Types of same day delivery 17
EAV ecargo bike 22
UK Same day market value, 2010-2023, £m 24
UK GDP growth: 2013-23 / annual % change 29
UK online retail spending: value as % of all retailing / £bn, 2013-23 % 29
Argos Fast Track Delivery 31
Argos sales by channel, 2016-2019 31
Courier payment models of leading same day delivery platforms 33
Same day revenues of leading same day delivery providers, 2018, £m 35
Same day revenues of leading operators, 2011-2018, £m 36
Profitability of same day delivery companies, 2011-2018 36
Royal Mail Courier Services Ltd Revenue 2010-19 £m 37
Royal Mail Courier Services Ltd Financial Performance 2010-19 £m 37
Revisecatch Limited Ltd (eCourier) Revenue 2010-19 £m 38
Revisecatch Limited Ltd financial performance 2010-18 £m 38
CitySprint financial performance, 2010-2017 40
CitySprint financial performance, 2010-2017 40
CitySprint Acquisitions 2007-2018 40
CitySprint revenue by service, 2017 41
CitySprint revenue by customer segment, 2017 41
Rico Logistics financial performance, 2013-2017 43
DHL Parcel UK Courier Division Financial Performance, 2010-2015 45
DHL Parcel UK courier revenue and profit, 2010-2015 45
Courier Logistics Ltd Financial Performance, 2010-2018 46
Courier Logistics Ltd Financial Performance, 2010-2018 46
Mach 1 Couriers Limited (Absolutely) financial performance, 2012-2018 47
Sameday plc financial performance, 2010-2019 48
ByBox Holdings financial performance, 2010-2018 49
Addison Lee Limited financial performance, 2013-2018 50

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