Evan Schuman's StorefrontBacktalk

Large firms such as FedEx rely on a hub-and-spoke approach, which works efficiently and powerfully when delivering packages more than 10 miles away, Allason said. But the economic model is reversed when the distance is shorter than 10 miles, he argues, and then his method of hiring lots of local delivery people is the more efficient approach.

By tracking the delivery people and compensating them based on speed, accuracy and customer satisfaction, he uses performance to dictate compensation. In theory, this system would quickly weed out all but the most efficient delivery people.

This approach would theoretically work in urban areas or for other places with a very concentrated population (such as suburban areas with lots of corporate campuses or huge concentrations of high-rise apartment buildings), thus leaving rural and other suburban areas to be handled by the FedExes and UPSes of the world.

Allason said the U.S. market is “completely different from the U.K.” retail market because of one word: Amazon. The fear of Amazon’s shipments motivates “every retailer we go to here” in the U.S., he said.

As for why British—and presumably U.S.—retailers are willing to so heavily subsidize delivery costs, Allason argued that it’s a lot more than merely impressing shoppers with the offered courtesy. “It’s making consumers much more likely to purchase,” he said, an experience that was mirrored by initial Amazon same-day delivery tests.

The subsidies, of course, could be dealt with easily enough; for example, by limiting the service to orders of more than $XX, where the margin can absorb the extra delivery costs. The last thing a chain would want to do, though, is fully subsidize same-day delivery. That would remove the cost from the shopper and thereby remove the disincentive to actually do it. If it morphed into truly free shipping, then everyone would likely take advantage of it and there goes the margin.

Even if the a minimum order preserved the margin, there is a physical limit to capacity. No, the unsubsidized payment from the shopper does its job by

limiting the number of shoppers who actually do it.

In the Amazon trial, though, even when the cost was the same, many shoppers still preferred next-day to same-day. Sometimes, trying to fully understand shopper behavior is a futile effort.