Owning the delivery ecosystem

The rapid rise of ecommerce in the past year has spotlighted an understated but essential part of the retail chain: delivery. The United States Postal Services (USPS) saw a historic number of shipments over the 2020 holiday season. In the last three months of 2020, the daily average number of packages delivered by United Parcel Service (UPS) rose nearly 11% with a 21% rise in revenue—hitting a record high of $24.9 billion. And FedEx reported a 29% surge in shipping volumes in its Ground unit during the quarter that ended November 30.

Richard Smith, executive president at FedEx Express, said in a January 2021 statement that the pandemic has greatly accelerated ecommerce and door-to-door delivery. Smith predicted that these sectors will continue to grow, with US residential deliveries expected to reach 100 million packages a day by 2023—a projection that was originally set for 2026.

Food delivery surge

Supermarkets and restaurants have experienced a surge in food deliveries prompted by lockdown living. On February 2 2021, Uber announced plans to acquire alcohol delivery service Drizly for $1.1 billion. This move is hot off the heels of Uber’s $2.65 billion deal to buy out food delivery service Postmates. As the ride hailing side of the business struggles, Uber sees opportunity in food delivery.

Third party delivery services are thriving. In the US, UberEats grew by 58% in December 2020 compared to January 2020, according to Comscore. DoorDash also saw a 41% increase in the same time period. In Europe, Just Eat Takeaway.com sales rose by 57% during the last three months of 2020 compared to 2019. And online grocery retailer Ocado details plans to open three new warehouses in 2021 to meet continued demand.

The rise in food delivery makes sense under lockdown constraints, but as restrictions ease the question at large is whether this trend will continue. Michael Schaefer, global head of beverages and foodservice at Euromonitor, predicts it will. “If the 20^th century was all about putting packaged food within, let’s say a 10-minute drive of every consumer, I think the 21^st is going to be all about putting prepared food within a click of every consumer,” he tells Wunderman Thompson Intelligence.

Delivery vehicle innovation

According to a study by the World Economic Forum, rising demand in ecommerce will lead to 36% more delivery vehicles in the world’s top 100 cities by 2030, with last-mile delivery expected to grow by 78%.

As the delivery industry propels, companies in this space are planning for the long-term, opting for greener options by investing in electric delivery vehicles. General Motors (GM) went all out with the launch of its new electric delivery business unit, BrightDrop. Announced in January 2021, BrightDrop aims to make commercial delivery services sustainable with its all-new electric vehicles. FedEx Express has already test-driven BrightDrop’s delivery system and is slated to be its first customer when the vehicles officially launch later this year.