UPS is rolling out its Hyperlocal delivery service to provide select customers with a ‘fast’ next-day delivery option. The move was announced by UPS CEO Carol Tomé during an analyst call last week.
Due to the e-commerce boom, customers have come to expect faster deliveries, often on the same day. However, Hyperlocal is testing the waters with next-day deliveries, to harness “profitable B2B and B2C volume,” according to Tomé.
Though details remain scant, the service seems to be UPS’s answer to faster local deliveries and changing market trends, as influenced by industry behemoths like Amazon and Shopify.
Hyperlocal and the ‘Amazon Effect’
Hyperlocal is similar to a project UPS launched five years ago which focused on same-day deliveries from local fulfillment centers. Customers could place orders as late as 9pm for next-day delivery. The service lost traction around 2019 due to competition from FedEx.
Then there’s the ‘Amazon Effect’ – the ongoing evolution and disruption of the offline retail market – which has set a speed record for delivery, leaving competitors to either innovate and catch up, or fall behind.
In a world where instant gratification drives consumer behavior, the appeal for quicker deliveries has never been higher and the need for speed is more pronounced than ever.
Transforming local deliveries
UPS isn’t starting from scratch, though. With tools like Roadie, a crowdsourced delivery platform, and Ware2Go, a warehouse solution platform, UPS could potentially transform the local delivery experience into a same-day service.
According to data from Roadie, a retailer with a 700-store footprint boosted sales by an additional $1 million in the first two weeks after using a crowdsourced delivery system. Simply because the goods could reach customers where they are, just faster.
Trends such as these are supported by a McKinsey report. It confirms that nearly 50% of shoppers would abandon the online carts if shipping times were too long.
Meeting modern delivery demands
The 2020 McKinsey report sheds light on how “young, urban, and time-constrained consumers—the most attractive segment—expect same-day deliveries.” Moreover, they are willing to pay extra for it. However, large distribution networks of warehouses or fulfillment centers are needed for this.
The McKinsey team explains: “The one central requirement for same-day delivery is simple yet challenging: a dense network of warehouses. In Germany, for example, 11 well-placed warehouses that stock the same assortment would be needed to cover all tier-1 and tier-2 cities.”
As distribution networks become more regionalized, UPS’s Hyperlocal service could potentially see broader adoption. It is a step in adjusting its sails in a market where speed is king and consumer gratification is instant.
About the author
Cheryl has contributed to various international publications, with a fervor for data and technology. She explores the intersection of emerging tech trends with logistics, focusing on how digital innovations are reshaping industries on a global scale. When she's not dissecting the latest developments in AI-driven innovation and digital solutions, Cheryl can be found gaming, kickboxing, or navigating the novel niches of consumer gadgetry.