August 14, 2013
During grad school, I spent a summer teaching economics to university students in Uzbekistan – our summer campus was up in the mountains a few hours outside the capital city of Tashkent. To receive packages, we would have to request that the sender ship them to the university’s main office in the capital. When enough packages had arrived, the office staff would scramble to find someone to drive up to the summer campus to deliver them. The wait was often 2-3 weeks.
Last-mile deliveries are still a huge challenge. Years later, last-mile delivery to less urban areas continues to confound businesses around the globe. In almost every emerging market in the world, delivery times are still far quicker for consumers living in the big cities than those in more rural areas. A laptop ordered from a major online retailer in Brazil, for example, takes almost three weeks to get to the Amazonian capital of Manaus versus approximately one week to Rio or São Paulo. In Russia, the difference in shipping times between Moscow and Vladivostok is similar. Many online retailers piece together a variety of different courier networks or are forced to rely on local postal services to reach the most far-flung customers.
The urban-first model is becoming more widespread. In the US – as in much of Europe – we’ve become accustomed to similar delivery times regardless of location (a somewhat easier proposition in population-dense Europe as compared to the US). As some companies move toward same-day delivery, however, we have inched closer to what consumers in emerging markets have seen for years: Superior options for online shoppers in metropolitan areas. eBay Now’s same-day delivery, for example, has focused to date on its native Bay Area and on New York City — and here in NYC, it’s currently only available in the three most populous boroughs. Amazon’s same-day delivery similarly launched with an emphasis on urban areas.
Retailers’ initial focus on the most densely populated areas is a no-brainer, and clearly the breadth of same-day or next-day options will increase. However, it will take time for any retailer to offer same-day service to consumers across the country. In this case, the US has started to look more like the emerging markets that have long been marked by this urban-first approach.