Americans Won’t Pay For Same-Day Delivery, Or Will They?
There are a number of companies (Amazon, eBay, Google, Instacart, Postmates, Shutl, Walmart, Zipments, etc.) tinkering around with same-day — in some cases same-hour — delivery in the U.S. Obviously, management at each of these businesses believe there is a market opportunity in the service even though the primary reason people abandon their shopping carts online, according to numerous studies, is because they don’t want to pay anything for shipping.
New research from The Boston Consulting Group (BCG) reinforces the premise that there’s an expectation of free shipping. Nearly three in four people in a survey of 1,500 U.S. consumers listed free delivery as the top factor in their decision to purchase. Number two was lower prices (50 percent) and only nine percent cited same-day delivery as the most important factor in choosing where to buy online.
One potential demographic opportunity, according to BCG, were consumers between 18 and 34 with household incomes above $150,000 living in urban areas. These "affluent millennials" represent about two percent of the U.S. retailing market.
"Same-day delivery will be a niche service in the near future," said Rob Souza, a partner at BCG, in a statement. "Retailers may choose to offer it to build customer loyalty, enhance brand awareness, or keep up with the competition. But it is unlikely to generate significant revenues for either retailers or carriers."
Affluent millennials are willing to pay up to $10 to have items they order online delivered on the same day. BCG estimates the market for same-day deliveries at between $425 million and $850 million.
The one thing that BCG’s research and other studies have made clear is that Americans are looking for deals. So, what if an offer that included same-day delivery was too good to turn down?
The big rumor this week is that Google is getting ready to introduce its answer to Amazon Prime, Amazon.com’s annual subscription program that provides shoppers with free two-day delivery on all orders. The planned Google Shopping Express, according to TechCrunch, will offer same-day delivery from major brick and mortar stores for an annual fee between $10 and $15 cheaper than that paid by Prime members.
Another report by NDTV Gadgets claims Google has already begun testing the service using third-party couriers to pick up products from stores and make deliveries to consumers.
RetailWire spoke last week with Tom Allason, CEO of Shutl, which also uses courier services to handle pick-up and deliveries. Mr. Allason told RetailWire consumers who go to a retailer’s online site can choose the "now" option for same-day delivery. In some cases, retailers partially or completely underwrite the cost of the delivery, helping to overcome the objection to paying for deliveries. The company is launching its service this month in Chicago, New York and San Francisco with plans to open in 17 other cities in the U.S. and Canada.
- U.S. Consumers Don’t Value Same-Day Delivery, Despite Rush of New Services by Retailers and Carriers – The Boston Consulting Group
- Google Is Building A Same-Day Amazon Prime Competitor, ‘Google Shopping Express’ – TechCrunch
What will it take for large numbers of Americans to go for same-day delivery? Do you see any of the current ventures or tests as a potential game changer?