5 Ways Last-Mile Fulfillment Will Grow

CHICAGO — Last-mile delivery was a $31.2 billion market in 2018. It is projected to grow to $50 billion in 2022, and those numbers do not include the products, only the deliveries themselves.

That’s according to NACS State of the Industry Virtual Summit speaker Lori Buss Stillman, vice president of research for NACS, who outlined projections for the future growth of last-mile fulfillment and how the COVID-19 pandemic might affect its growth in the future. By 2025, Stillman said same-day delivery is projected to reach 25% market share by 2025, a projection that will only grow as more consumers become used to placing online orders from home.

Click through for five highlights from Stillman’s virtual presentation on the future of last-mile fulfillment in convenience retail …

“Instacart is by far the No. 1 last-mile fulfillment partner for most retailers,” with more than 70% of U.S. households in 5,500 cities with access to Instacart services, Stillman said. 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.

“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,” Stillman said.

Stillman cited Costco’s recent purchase of the logistics firm Innovel Solutions for $1 billion in cash. 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.

Sixty-seven percent 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.

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,” Stillman said.

She suggested consumers may want a chat bot, dialogue box or some other way to ask questions during any point in the delivery process.

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 of 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.