Your favourite retailer can’t give you same-day delivery, at least not soon

Your favourite online store sends you an email that they’re now offering free same-day delivery, so you get excited and go to purchase a new conditioner. You’re at the checkout page and notice the delivery option says “Order before 12noon for same-day” — it’s now 12:26PM… darn, looks like you’re actually getting next-day delivery.

In the last-mile world, there are two dominating operating models, the carrier & courier model. Let’s dive into each and see how they work, and what that means for you as a consumer.

The Carrier Model

(# of deliveries per hour * revenue per delivery) / hourly wage of the driver
ex. (15 deliveries *$5 per delivery) / $20 per hour = 3.75

All carriers are in the business of optimizing the above equation, and, they do this by ways of sorting individual orders into highly dense routes with hubs (basically mini-warehouses where orders are consolidated):

An example of how last-mile carriers work, taken from Veho’s website

Because carriers need to consolidate orders into a hub, they need time to sort and they prefer to dispatch drivers earlier in the day (to beat traffic), because as we all know, traffic increases time to deliver — and lowers their drop density (profit equation).

So why can’t you get same-day delivery if you order past noon?

If it isn’t ‘true’ same-day, why did my store partner with a carrier?

The Courier Model

1. Working with couriers is a nightmare for a large retailer

2. Unless your Uber, a courier’s tech-stack probably sucks

3. Courier prices on a per parcel basis… are ridiculously high

So how do we get ‘true’ same-day delivery at a price that most shoppers are willing to pay?

Flexible micro-hubs

Using stores as mini-fulfillment centres

Reinventing the tech fabric for JIT deliveries



Analytics @ Amazon. Business @ Schulich School. Forever Curious.

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Aadil Kazmi

Analytics @ Amazon. Business @ Schulich School. Forever Curious.