Same-Day Delivery: The Linchpin in the Battle for the Last Mile of Commerce

Consumers are more impatient and time-starved than ever. At least that’s the impression one could derive from the seemingly unending string of same-day delivery announcements from major retailers (both brick-and-mortar and online), restaurants, convenience-store chains, startup enablers, technology companies — the list goes on.

One of the few companies to announce this year that it is actually pulling back from same-day delivery is eBay, part of an effort to “simplify the commerce experience.” Maybe the online auction and marketplace giant is on to something while the rest of the field and VC money run in the opposite direction.

You can’t blame them for trying — again and again. Most companies, whether they’re national, international, regional, or local in scale, haven’t given up on the quest to conquer that elusive last mile of commerce. But as I noted recently, there are inherent challenges with scale and consistency involved in getting a delivery across the consumer’s threshold.

Any discussion of same-day delivery, especially where food is concerned, will raise the failed specters of the first dot-com era — Webvan, Kozmo.com, et al — companies that raised millions only to go down spectacularly in flames, crushed by the weight of their sweeping ambitions.

Leaving aside whether the Web 1.0 high-flyers were ideas ahead of their time or poorly managed or an overreach — to a certain extent they were all those things — a lot has changed in the past 15 years. The internet is now entrenched, consumers do an increasing portion of their buying online, and the diffusion of smartphones and the ready availability of fast cellular and Wi-Fi network connections have made purchasing an anywhere-anytime activity.

In turn, these changes have heightened consumer expectations, promising more immediate gratification, regardless of time and space considerations. At the same time, the appeal (or the ideal, some might say) of buying local, particularly when it comes to food but also in terms of other goods and services, has reached a pinnacle, making for an interesting juxtaposition.

There are other important differences between then and now. The underlying technology for establishing and managing the complexity of a vast delivery network has improved. The labor market has shifted, giving rise to armies of independent contractors who are on the front lines of the on-demand economy (it may shift further in the wake of a California court ruling that a class action suit by Uber drivers could move ahead, with potentially significant cost implications for companies that, like Uber, rely on 1099 workers). And just as the ubiquity of mobile devices enables “always-on” shopping, it likewise makes fulfillment more efficient, taking much of the slack out of logistics systems.

Finally, a key factor that should not to be underestimated: Many (albeit not all) entrepreneurs, even some of the same ones who failed the first time around, have taken a lesson from the recent history books. They’re starting smaller, limiting their scope, and growing with the business. FreshDirect, the grocery-delivery service that launched in New York in 2002, the year after Webvan collapsed, has slowly expanded to the outlying suburbs in Connecticut and New Jersey, even reaching as far as south as Philadelphia. The downside for everyone who doesn’t live in the San Francisco or New York City metropolitan areas is they may be denied access to such conveniences.

The renewed focus on the delivery challenge leaves open a number of questions: In the race to satisfy heightened consumer expectations and trump the competition, are retailers, restaurants, grocery chains, and their technology partners only further raising the stakes? To what extent will they be compelled — in part by their own doing — to shorten delivery windows, and is that sustainable as the demands for scale and continued efficiency increase? How much in the emphasis on local is about the local distribution center vs. the local merchant?

Much of this remains to be seen, none of it without complications or contradictions. Whether some, all, or none of the latest aspirants succeed, one thing is certain: Conquering the last mile of commerce remains the goal, and companies will keep trying until they reach it.

Noah Elkin is Street Fight’s managing editor.