Delivery in 15 Minutes? The Re-emergence of On-Demand Delivery
Can you imagine ordering a printer cartridge from Staples online and getting that purchase delivered 15 minutes later? Believe it or not, that super-premium service level once existed in major cities in the U.S., Europe, and Asia. It was called “B15” for bike messenger delivery in 15 minutes.
In the 1990s, before the widespread use of email and online document exchange, the local delivery industry was delivering all those documents that are now digital: contracts, mortgage paperwork, blueprints, advertising proofs, and banking materials, to name only a few. Competition was intense among local carriers, so service levels started to rise.
Eventually, local delivery companies started staging a pick-up person inside large buildings that had offices that initiated significant volumes of delivery orders. These pick-up couriers would be immediately dispatched by radio to the floor where the order was ready, pick it up, and head down the elevator to hand off the package(s) to bike messengers or walkers, who headed directly to the recipient’s building. The walker or biker would hand the package to the drop-off courier staged in the recipient building, or deliver it directly themselves, resulting in an incredibly rapid delivery.
It was high times for the local delivery industry and the peak of on-demand delivery. Every owner and messenger loved the sexy margins that on-demand delivery provided. So it was sad times when on-demand delivery started to decline. The demise of on-demand delivery started with the fax machine, accelerated with email and was complete with Check 21 legislation in 2004 (http://en.wikipedia.org/wiki/Check_21_Act). Anything that can be electronically transmitted goes by email or fax today. On-demand delivery is now a modest piece of the local delivery market size and B15 is long gone.
However, e-commerce, rising customer expectations and the emergence of a whole new set of players is signaling a resurgence in on-demand delivery. In San Francisco alone, there are 68 apps that offer rapid local delivery as part of their offering (furniture, alcohol, cookies, etc.). In Denver there are 11 on-demand marijuana delivery companies currently active. Starbucks, Amazon and Google all have on-demand delivery initiatives.
Is this a flash in the pan of over exuberant venture capital money or are we at the front end of the re-emergence of on-demand delivery? My bet is we’re seeing the beginning of a long term trend and the market size for local delivery will be dramatically increasing as a result. Amazon sets the standard for e-commerce and they continue to roll-out same day (now available in 11 markets) and on-demand delivery (recently expanded to Miami). So we should expect a lot more retailers, distributors and 3PLs to roll out programs as they look to match this trend towards higher service levels.
When you couple the incredible amount of venture investment for emerging companies offering on-demand delivery and significant steps by established companies on on-demand delivery, it certainly signals a real re-emergence. Importantly, the fact that customer expectations are changing along the way reinforces that it looks like a trend to stay.
Will service levels rise again all the way up to the super premium B15 service level of the 1990s? It could happen a few years down the road, as more and more commerce moves online. In dense urban areas and neighborhoods near shopping malls, the density and distance equation just might match up. With better technology, the emerging use of retail stores as pick-up points and growing delivery volumes, it’s more likely than you think.