The clock is ticking on rapid delivery internet services. While competition increases to offer urban shoppers instant 'e-gratification', so are questions over the viability of such services.

This month alone three companies - KooBuycity.com, from Paris, In60.com and Lastorders.com (both based in Edinburgh) - plan to roll out further fast delivery services.

London has UrbanFetch, the New York-based one-hour service, as well as smaller local suppliers such as QueueJumper.com, the grocery website. But Kozmo.com, a similar US service, recently cancelled its flotation and shed its chief executive amid reports of a funding crisis.

Sceptics, including established couriers, warn that express internet delivery services face heavy fulfilment costs per order and will struggle to turn profits. For while the internet reduces marginal costs - so that one e-mail costs almost the same as 10,000 - physical delivery costs do not scale to this extent.

Furthermore, the variables of any delivery service - the distance between stock and customers, the logistics of packing and the efficiency of the courier - are all made more acute by the one-hour deadline.

Ian MacCallum, managing director of In60.com, a website offering one-hour delivery of videos for rent or sale, DVDs, food and drink, said attracting repeat business and increasing drop-off density were the key to 'e-gratification' economics.

To achieve this in Edinburgh and Glasgow, where it recently launched, In60.com has invested around £300,000 in bespokesoftware from Dow & Carter, a London and Edinburgh-based IT company which took equity as part-payment for processing website transactions and managing warehouse stock.

"We could have used a cheaper, off-the-shelf software package which would have given us around 80 per cent of the same functionality," Mr MacCallum concedes. "But it is the extra 20 per cent that customers value."

When customers enter postcodes, for instance, they are referred to the live inventory system of the nearest warehouse. (The company has only two warehouses but plans to be in seven cities across the UK by next May.) The system will calculate the nearest drop-off point for a returned video and print it on the receipt.

Deadline

While most websites only accept payment by credit or debit card, In60.com will accept cash on delivery to the courier. The site claims 2,000 orders a week in Edinburgh, which is sufficiently compact city to make the one-hour deadline feasible.

Delivery is free, although a video collection service costs users £1. Average orders are up to £10.55, with repeat business running at 70 per cent. The company said a staggering 90 per cent of people registering on the website have gone to buy, suggesting that instant delivery services do not encourage the usual kind of web browsing. In60.com believes it can reduce its delivery costs, which experts estimate are around £7 for one-hour services, to around £1 per order.

In Paris, KoobuyCity.com, which is bringing its service to London and later Frankfurt, has an average basket size of 42 euros (£25), which is similar to that of UrbanFetch.

Both KoobuyCity and UrbanFetch target upmarket customers with luxury branded goods and gifts. Transferring this model to London's congested streets will prove a challenge, particularly when the cost of running multiple warehouses is set against the low-order volumes typical of such start-ups.

Lastorders.com, an alcohol-selling website which uses third-party couriers, is spending around £1m to upgrade its back-end fulfilment systems with bespoke software from Manchester-based Mancos to provide same-day delivery beginning with a trial this month.

But the biggest threat to start-up delivery services may not be technology or logistics overheads, but incumbent service providers such as the Post Office, which is looking to provide a same-day e-fulfilment service in some cities.

Ad Scheepbouwer, chairman and chief executive officer of TNT PG, the mail, express and logistics group, says: "The mail companies are the only ones that can do low-value goods cost-effectively. It is a nonsense for people to offer one-hour delivery for an average item and make a profit. Unless, they know something we don't."