Last year saw a number of same-day and even same-hour shipping experiments kicking off with online giants as well as traditional retailers. While most of these services are very much in their formative stages, it appears that very fast delivery could soon become a competitive advantage for retailers.
Below is a look at a number of these services. While not comprehensive, it provides an overview of the levels of service and a range of business models.
EBay Now is testing local "delivery in about an hour" in a number of cities using couriers to deliver products from local retailers. The current trial carries a $5 delivery charge, but the longer-term business model isn't yet clear and may include commissions for participating stores.
Google Shopping Express launched last spring for deliveries within three to five hours. It's available in San Francisco and Silicon Valley. Participating retailers include American Eagle, Staples, Walgreens, Target and Whole Foods Market. Currently, there is a six-month free trial membership — ongoing pricing is not clear. Non-members pay $4.99 per store stop.
Grocers are increasingly getting into the game. PeaPod delivers for some of Ahold USA's chains and FreshDirect delivers for itself in the New York metro area. AmazonFresh — which is now available in Seattle, Los Angeles and San Francisco — also carries over 100,000 "traditional" Amazon.com items and is thought to be a foundational step toward same-day delivery for even more offerings. Pricing models include a mix of free, per-delivery fees, minimum purchase levels, and annual memberships.
Amazon also offers Local Express Delivery in a number of cities. Placing orders on Amazon.com as late as mid-morning or noon (depending on the city) gets same-day delivery.
Standalone service Instacart charges $3.99 for a personal shopper to pick and deliver groceries in less than two hours. Postmates has created a platform that connects orders with couriers who can fulfill in less than an hour.
Walmart To Go is testing with groceries in the Bay Area and Denver and costs $5-10 for delivery. Walmart management has discussed broader use of its stores as ecommerce distribution centers and has also raised the idea of using in-store customers to deliver orders to other customers in the area.
The specifics of these programs — prices, delivery times, etc. — will change. But retailers will have to carefully manage these new processes. For example, each store's local inventory and pricing will need to be readily available for customers to make purchase decisions and set expectations. Also, systems will be needed to manage the timeliness and quality of the deliveries by third parties.
While there are valid arguments that same day delivery is a limited market, customer expectations are rising quickly. In our connected world, all it takes is one retailer to raise the bar.
Which of the following online delivery services do you think is most likely to gain a leadership position in the marketplace?