The gamble some retailers are taking with same-day delivery may not pan out, say several retail supply chain experts. USA TODAY
The competition between retailers to offer the most convenience for customers with an anytime, anywhere shopping mentality has led to extended hours, seamless cross-channel experiences and more shipping options such as buying online and picking up in a store.
But the gamble some retailers are taking with same-day delivery may not pan out, say several retail supply chain experts.
Amazon, Walmart, and eBay have all rolled out same-day delivery, some just for the holiday season, in select markets. They aren’t revealing how their test markets are doing, but the concept isn’t catching on, says Jim Brownell, vice president of retail industry solutions at GT Nexus, a company that helps retailers automate their supply chains.
“I haven’t run across many people that have taken advantage of it yet,” he says. “Some of the concern is the price.”
Walmart started rolling out same-day delivery in early October and is now testing it in five markets: Northern Virginia; Philadelphia; Minneapolis; Denver; and San Jose/San Francisco. It generally costs $10 and is only applicable to some merchandise, mostly toys, electronics and other popular holiday gift items. Some markets also offer grocery items.
Amazon’s “local express delivery” costs $8.99 per shipment, plus another 99 cents per item included in the shipment. It launched in 2009 and is now available in 10 cities. EBay is testing an “eBay Now” mobile app in San Francisco and New York City, using valets to deliver products to customers wherever they are, whether it’s the office or a coffee shop, in as little as an hour. The first three deliveries are free; additional deliveries are $5.
“EBay’s goal is to give customers choice,” says spokeswoman Lina Shustarovich. “Instant gratification and purchases continue to be a key part of the shoppers’ mindset.”
The question that remains to be answered is how much more shoppers are willing to pay for instant gratification.
Chris Merritt, vice president at supply chain management company Ryder, says retailers should be focusing less on offering same-day delivery and more on reducing average delivery time, especially with free shipping promotions.
“Most customers will order enough to get a free shipping promotion,” he says. “That’s what they’re focused on.”
Ultimately, he says, the number of customers choosing same-day delivery won’t be enough to make a significant dent in a retailer’s business.
The biggest test will be in the days and hours leading up to Christmas, says Al Sambar, a logistics and retail strategist for consulting firm Kurt Salmon. That’s when retailers offering same-day delivery might win out over competitors whose fastest option is overnight or two-day shipping.