It’s no secret that ‘e-tailers’ are rushing to offer faster, cheaper delivery. Companies are aware that delivery is regarded as ‘a defining moment’ in the online shopping experience with surveys showing that almost half of consumers have abandoned an online basket due to unsatisfactory delivery options, the majority would shop more online with one-day and same-day shipping, and almost all confirming they are more likely to shop with a merchant following a positive delivery experience.

Combine this with the continued double digit growth of e-commerce, and logistics firms have been forced to react. We have already seen the impact of these macro drivers on M&A in the sector and it will continue to drive three key strategic imperatives:

  • the development of networks via expansion and consolidation
  • the increase in fulfilment services to meet speed of delivery demands
  • the realisation of efficiencies via ‘smart logistics’

Same day specialist CitySprint is a great example of a successful consolidator, continuing to cement its position as the leading UK player having completed 29 acquisitions since 2010 (now reaching 88% of the UK within one hour). This illustrates the fragmented nature of the market well and at the current pace (seven acquisitions in the last 12 months), the likelihood of further consolidation.

FedEx, one of the world’s ten largest transportation firms (c. $50bn in sales) is another player responding to consumer demands. Until recently, it tailored its e-commerce services to giant retailers. However, it is now managing fulfilment for small businesses via local distribution centres. In its latest centre which opened in February (located in Indianapolis), it is packing merchandise for up to 400 retailers. A proprietary technology platform will then support a nationwide network of warehouses, trucks and planes that can whisk online orders to 98% of Americans within two days.

Eddie Stobart’s recent return to the UK stock market (raising £122m – the biggest float on London’s AIM this year, with a £580m market capitalisation) also highlights the continued attractiveness of the sector, with pre-flotation marketing making much of the highly fragmented market that is flourishing on the back of the booming European online retail sector.

Each of these companies is demonstrating the ongoing demand for specialist providers that have innovative technology and the ability to scale.