UPS wades into same-day delivery with Roadie acquisition

Dive Brief:

UPS announced Friday it will acquire Roadie, a crowdsourced same-day delivery provider. The move comes as UPS customers seek local same-day delivery for a variety of goods, including perishables and items in shopping bags instead of traditional parcels.
Roadie will continue to operate under the same name, and UPS parcel drivers will still deliver packages in the postal service's network. The goods and networks will not cross each other. The value of the acquisition was not disclosed, but the transaction is expected to close in Q4 2021.
Roadie has been on a growth trajectory, with revenue growing 2,157% from 2017 to 2020. "The company was growing steadily even before the COVID-19 pandemic skyrocketed demand for a faster, cheaper and more scalable delivery solution," the company said in August.

Dive Insight:

The Roadie acquisition will expand UPS into same-day delivery and give shippers another speedy way to move goods to their customers. During an investor day presentation in June, UPS CEO Carol Tomé said the company was looking into ways to offer same day and said pilots were underway.

"Same day could be a network out of our network, in different products and different offerings," Tomé said in June. It is the model UPS appears to be adopting with Roadie, as the two will maintain separate branding and fleets.

Roadie has grown since its founding in 2014. According to an August press release, the gig provider now has same-day delivery available to 90% of U.S. households and a network of more than 200,000 drivers, which will add a sizable presence to UPS' network.

The gig economy is a key part of same-day's growth story and retailers have integrated crowdsourced drivers into their logistics models. Bed Bath & Beyond has already teamed up with Roadie, while Walgreens announced it is expanding same-day delivery with Instacart.

Same-day delivery gained popularity alongside the growth of e-commerce. A February 2021 Digital Commerce 360/Bizrate Insights survey found 36% of shoppers ordered online for same-day delivery from an e-tailer in the previous six months, up from 24% in August 2020.

It puts shippers in a position to keep pace with consumer demands — and logistics companies to provide that service.

"This is [a] bold, timely move into the future of parcel delivery," Alan Amling, distinguished fellow at the University of Tennessee Knoxville's Global Supply Chain Institute, said on LinkedIn. Amling also worked in various roles at UPS for 27 years.

In Friday's announcement, UPS also noted the Roadie acquisition could add to UPS' small package capabilities. Supply chains anticipate another busy peak season. Upgrades to logistics networks will be essential to keep up with an anticipated flood of parcel volume during the holidays. UPS said on Thursday it intends to hire 100,000 seasonal workers.

The acquisition puts UPS ahead of FedEx when it comes to same-day delivery, according to Nate Skiver, founder of consulting firm LPF Spend Management.

"Although the acquisition may be somewhat of a surprise, UPS being ahead of FedEx on ecommerce delivery isn’t," Skiver wrote in a LinkedIn post. "In my opinion, UPS has always been well ahead of FedEx in ecommerce, positioning their solutions well with ecommerce customers for several years."