Could the future of same-day delivery services be framed in minutes rather than hours?
That's the future a U.K. company called Shutl is hoping for. London-based Shutl announced Tuesday it would enter the U.S. market sometime next month with same-day deliveries in New York, San Francisco, and Chicago. The company said it would add 15 U.S. markets throughout the year.
Shutl, which has operated in the U.K. for three years, said its objective is to help U.S. multichannel retailers—companies that sell both online and through traditional storefronts—better compete against Amazon.com, the Seattle-based giant, by offering faster deliveries on a more frequent basis. Shutl's network does not extend beyond 15 miles of a retailer's storefront, and it operates point-to-point deliveries made by thousands of local delivery contractors nationwide, who are combined into one platform. A multichannel retailer can integrate Shutl's IT platform into its system and offer Shutl's services as a fulfillment option to its customers, according to the company.
Shutl said its service gives retailers with physical stores an advantage over pure e-tailers by allowing stores to be used as de facto warehouses and distribution centers where inventory can be held. Under the company's model, a Shutl contractor can pick up merchandise at a local store and deliver it within less than an hour, in many cases. At this time, it isn't cost-effective for a company like Amazon to locate warehouses within 10 miles or so of their customer base, according to Shutl.
By contrast, Amazon's fulfills and delivers from regional distribution centers located far away from major urban areas. Amazon offers same-day and next-day service at a cost of $8.99 per shipment.
Amazon is adding density to its distribution network by opening more locations. By extension, it is mulling an expansion of its same-day and next-day deliveries to augment its bellwether two-day delivery product. Amazon's "Prime" service, where users pay a $79 annual fee for unlimited two-day deliveries, has been wildly successful in cementing the company's dominance in the online business-to-consumer marketplace.
Shutl guarantees deliveries within 90 minutes from the time of purchase, though the company said about one-third of its U.K. orders are delivered in under an hour. The fastest recorded time is under 15 minutes from the close of an online transaction, according to the company. Users can also choose their own one-hour delivery windows.
In an e-mail to DC VELOCITY, Tom Allason, Shutl's founder and CEO, forecast that 10 percent of U.S. consumers will use the delivery offering when buying online from retailers that work with the company. Allason has estimated the U.S. same-day delivery market would be worth $26 billion in 2016.
Shutl will charge less than $10 per shipment, though Allason said he expects many retailers to offer deliveries free of charge to their customers. Studies have shown that access to free shipping is a key factor in consumers choosing an online site.
Shutl has agreements in place with several well-known U.S. retailers, though the company declined to identify them.
Shutl received approximately $5.2 million in venture capital investment, including $2 million from the UPS Strategic Enterprise Fund, the private equity strategic investment arm of UPS Inc.
