News / Parcel delivery 'arms race' all about speed, but who needs it?

© Maduranga Gunawardana |

The US ecommerce behemoths are keeping their feet firmly on the gas pedal: Amazon is rolling out a three-hour service and trialling ultra-fast deliveries within 30 minutes – moves leveraging technological superiority, but do consumers care?

Amazon kicked off its 30-minute delivery trials in Seattle and Philadelphia, following the launch of a 15-minute service in the United Arab Emirates in October.

The new offering covers a range of goods from milk, eggs, fresh produce, cosmetics and diapers to over-the-counter medicines and electronics, using a string of ‘urban micro fulfilment centres’.

These centres are backed by “advanced inventory systems that optimise product selection based on local demand patterns”. The fee for customers starts at $13.99, but is $3.99 for Amazon Prime users.

This is part of a broader bid for faster parcel moves at the company. President and CEO Andy Jassy announced  the three-hour delivery service during an earnings call in late October, when CFO Brian Olsavsky told financial analysts Amazon was “on track” to reach record Prime delivery speeds this year, the third consecutive year of faster deliveries.

In addition, the company managed to shave nearly four days off lead times for US inbound flows, Mr Olsavsky said.

This quest for faster delivery was a reply to efforts by Chinese ecommerce players. In the spring Alibaba, JD.com and Meituan were all aiming for delivery speeds of 30-60 minutes.

Amazon had had a go at one-hour deliveries for select products with its Prime Now’offering in 2014, but discontinued it in 2020. Walmart announced evening 30-minute deliveries two years ago, but appears to have quietly shifted this to a one-hour offering between 6am and 1 pm.

Still, retail giant Walmart also has its foot on the accelerator. In Q3, 35% of its store-fulfilled orders were delivered within three hours – a central plank in its push for faster delivery times, supported by automation. More than half the volume it dispatches from fulfilment centres is handled via automated systems.

Walmart and Amazon leverage technology to compete for a larger share of the third-party ecommerce delivery market and keep costs down by using crowd-sourced final-mile providers, noted Cathy Morrow Roberson, founder and head analyst of Logistics Trends & Insights.

These tactics are a threat to the parcel carriers, she believes.

“It’s hard to compete without that technology,” she said. “Small carriers have to invest in tech or wow customers with service.”

She questioned whether an ‘arms race’ focused on speed is really what consumers need or want, pointing to surveys that indicate shoppers are willing to accept slower delivery speeds, especially if this reduces costs.

And rather than accelerate deliveries, firms should give shoppers better visibility of where their shipments are, she added.

“The more a customer knows where a package is, the more understanding they are if it’s late. You should improve tracking,” she said.

But, instead, providers are leveraging their technology investments that enable faster deliveries, regardless of whether or not there is a need for this, she continued.

Moreover, this ‘arms race’ could be counter-productive for merchants, she pointed out. Drivers are under pressure to complete their deliveries within a promised time, which increases the risk of errors.

“You can be fast, but all it takes is one missed delivery or damaged package and that relationship [with the customer] is ruined – and that’s not the relationship of the customer with the delivery company,” she warned.

A study by HubBox suggests this is a massive problem. A survey of 1,000 US consumers found only 47% of online orders to home addresses were delivered without any issues, while 27% were late and 15% of packages were sent to the wrong address.

Shoppers also reported that packages had been delivered to neighbours they did not like, or were not on speaking terms with.