Same-Day Delivery: Part II
Welcome back! This article continues our exploration of a burgeoning online retail trend: same-day delivery. Is it worth it? How have companies fared? Read on for answers!
What about companies that already depend on same-day delivery for perishable or time-sensitive products—what do they stand to gain? 1-800-Flowers.com is using the USPS Metro Post service to expand delivery options for products besides flowers, including gourmet food brands. While it’s too early to gauge consumer reaction, the program is generating buzz and has already spread to other retailers in San Francisco in a region covering 26 ZIP codes.
To take full advantage of same-day delivery, it’s necessary to have a correspondingly robust infrastructure and communication system. Accurate, reliable data needs to be transmitted quickly to delivery companies in order to provide seamless service on the customer’s end. This is made much easier when companies already offer in-store pickup for online orders. Naturally, that trend is becoming common in the U.S. as well; with real-time inventory updates and intra-store merchandise allocation in place, transmission to outside delivery entities is made that much easier.
The USPS Metro Post has the advantage of usage of its own trucks over courier-only services like Shutl and eBay Now, allowing it to accommodate web-only retailer like 1-800-Flowers with larger order volumes and extensive customer bases. They also use Postal Service software to calculate efficient routes for its four delivery vans in San Francisco. It can be tough to keep prices at or around standard ground shipping levels (~$10), but advertising certainly helps.
EBay Now’s model differs significantly: using a mobile app, customers locate the nearest available shopping assistant via built-in GPS, then tracks and communicates with the shopper if necessary to deliver a specific product on time. Shoppers can take advantage of eBay’s Milo system, offering mobile users real-time availability at nearby brick-and-mortar locations. They are also considering letting retailers set the price for promotions and other material usage. Again, it’s still too early to tell whether e-tailers will take to the service en masse.
Across the Pond
There are still some kinks to work out between Argos and Shutl, which have been involved since late 2010. Tests continue to evaluate pricing and discounts in the context of minimum order thresholds. They’re also weighing the benefits of free same-day delivery.
McCarthy is cautiously optimistic: “It is difficult to ascertain exactly the impact Shutl has had on customer conversion. The Shutl option is shown to the customer at the very end of their shopping journey and, theoretically, we have already converted the customer. However, from the repeat occurrences and the positive feedback we have received from users, it is both a fast and convenient way of getting goods to the customer, and offers yet another route that gives customers added choice and convenience.”
The cost of Shutl for retailers changes with the size of the order and the distance to the customer, but retailers can set their own price for their customers. They’ve been able to convert up to 45% of shoppers by keeping Shutl price at or below 5% of cart value.
Moving Ahead with Same-Day Delivery
As with most aspects of e-commerce, a balance must be found if same-day delivery hopes to take off. Covering e-tailers’ costs is important, of course, but everyone’s wary of repeating the mistakes of Urban Fetch and Kozmo.com. When they tried same-day delivery in the 1990s, they failed miserably because they overextended the service. Al Sambar of Kurt Salmon warns that same-day delivery has limited applications and absolutely isn’t right for every product, especially when the product itself can’t cover the cost of delivery. Convincing the customer with convenience and trustworthiness is the order of the day—only time will tell if online retailers rise to the occasion.
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