Why is Petco doubling down on same-day delivery with Shipt and Instacart?

Discussion
Photo: Petco/Instagram - benji.and.ollie
Apr 22, 2019
Tom Ryan

Petco announced that it is partnering with Target-owned Shipt to expand its same-day delivery options.

A Petco spokesperson told RetailWire that the Shipt partnership is in addition to an existing delivery deal with Instacart’s PetcoNow same-day offering.

On April 18, Shipt began delivery from 1,300 Petco stores, giving nearly 70 million households access to Petco delivery in as soon as one-hour across more than 200 total markets nationwide, according to a statement.

Petco’s initial partnership formed with Instacart in 2015 was hailed as the first on-demand delivery service in the pet specialty channel and it now serves most major cities.

Petco’s Shipt expansion comes as retailers across channels increasingly embrace same-store delivery. On April, Ace Hardware announced the addition of a “buy online, deliver from store” fulfillment option that provides for same-day, next-day or standard delivery at certain locations. Home Depot, Best Buy and Staples are other non-grocery sellers that have expanded same-store delivery coverage in recent years.

For Shipt, which has focused on grocery and household necessities such as paper towels and batteries, pets represent a new category. Shipt noted that more than two-thirds of U.S. households own a pet.

Speaking to USA Today, Neil Saunders, managing director at GlobalData, said the move into pets makes more sense for Shipt than for Target, which acquired Shipt for $550 million in 2017. “Target sells pet food, and it has an increasing range of pet products under its Boots & Barkley own-brand,” said Mr. Saunders. “Its main objective should be to get people buying those products rather than going to competitors.”

DISCUSSION QUESTIONS: Is the same-day delivery opportunity big enough to warrant that Petco partner with both Shipt and Instacart? Will same-day delivery increasingly be expected from nearly all retailers?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
"Same-day delivery is here to stay and is already an expectation of retailers. Whether they can rise to that expectation is another question."
"The future is NOT same-day delivery. Same-day delivery is the world we live in now. Embrace it, expand it, and refine it.That is my council to retailers."
"Who delivers the product isn’t news, but instead how quickly should be the news. "

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19 Comments on "Why is Petco doubling down on same-day delivery with Shipt and Instacart?"


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Mark Ryski
BrainTrust

Same-day delivery has already become an expectation for consumers and in virtually every category – pet products is another natural category. By partnering with both Shipt and Instacart, Petco is hedging its bet and maximizing same-day delivery coverage for its customers.

Phil Masiello
BrainTrust

Certainly in many categories, same-day delivery has its merits. Especially when customers want instant gratification. But I would think Petco is using this to try to gain some sort of an advantage over Chewy. I am not sure that same-day delivery is enough. Chewy has formed a bond with its customers through many other ways over just fast and free shipping.

Petco is probably losing ground to other players and they think they can make it up with same-day shipping.

Paula Rosenblum
BrainTrust
Let’s see — how do I say this — yes, the opportunity is big enough. It embarrasses me when I buy boxes of kitty litter online, because it’s so heavy to ship by air. But using a delivery service is great. However, Petco continues to be plagued by out-of-stocks. That’s how they lost my cat food business (I practically begged them to order cases of what my cats eat, and there is nothing exotic about their food … still always out of stock). Chewy got that. They are consistently out of stock in the right size litter boxes — Chewy’s got that now too. I still try to order my kitty litter from Petco, but one out of three times they don’t have the brand/size I want in-stock. There’s obviously a lot of margin in it, because when I complain to Instacart that I really didn’t want what they sent me, they tell me to give it away and give me a charge-back. Now I could say Shipt “shoppers” might do a better job heeding… Read more »
Zach Zalowitz
BrainTrust

Same-day delivery is here to stay and is already an expectation of retailers. Whether they can rise to that expectation is another question. We still have so many retailers that have not effectively pulled off a BOPIS offering within same-day, and that to me is the first hurdle. End of the day, it’s pick-and-pack (albeit, it’s much more complicated in practice, but that’s the core of it).

Chris Petersen, PhD.
BrainTrust

Same-day delivery is stretching the last mile to the max. Retailers need to smartly leverage multiple options at the local level. After three failed deliveries with Amazon Prime, I as a customer no longer think Amazon first. Seamless, reliable delivery has moved very high on the customer expectation list. Speed is nice, reliable on-time delivery wins the race. Retailers need to evaluate as many options as required.

Dick Seesel
BrainTrust

Same-day delivery is becoming the norm (remember when “free shipping” was the only expectation?) and it makes a lot of sense for the pet category. The only question is why Shipt is forming an alliance with a clear competitor of its parent company Target. Maybe Target sees some benefit in allowing Shipt to grow its business outside of the corporate umbrella.

Bob Amster
BrainTrust

While it may be an expectation, same-day delivery is mostly unnecessary. Investing in the infrastructure to make it happen requires a critical mass of customers that will take advantage of it. Resorting to a partnership with a third party or parties is the way a retailer gets around building a costly delivery infrastructure while satisfying the need of some customers. Long live specialization and division of labor!

Evan Snively
BrainTrust

I wonder how some of the major brands feel about this, since in-store is an opportunity to sell impulse treats, etc. Not to say that the same can’t be done via e-commerce but it shifts the emphasis from packaging and shelf-placement to banner placement, recommended products, and digital assets.
It might also solve their hurdle of effectively passing along shipping costs because there is quite a difference between a delivery driver tossing a 30-pound bag in their trunk vs. sending that same 30-pound bag individually through USPS or FedEx.

Tom Dougherty
BrainTrust

The future is NOT same-day delivery. Same-day delivery is the world we live in now. Embrace it, expand it, and refine it.That is my council to retailers.

Petco is not forward-looking with the new Shipt partnership. They are simply in the present.

Don’t agree? Ask your customers if they prefer a product that is available for immediate delivery or one with a longer delivery time, even one- to two-day delivery. Consumers get it. Retail is often a day late and a penny short.

That same-day delivery ship sailed long ago. That tells you how long consumer memory stretches. It’s not what did you do for me yesterday. It’s what will you do for me RIGHT NOW.

Ben Ball
BrainTrust

Pet food and supplies has one of the highest online ordering penetrations of all CPG categories. PetSmart has already captured a large share of that with Chewy.com. Petco needs to respond with the only potentially more desirable option — same-day delivery. Same-day delivery won’t preempt Chewy and it is a more costly delivery option, but Petco needs to fight back first and figure out the rest later.

Adrian Weidmann
BrainTrust

We live in a nano-second world in which we expect near-instant gratification. When making online purchases — not unlike shopping in a physical store — shoppers want to experience their purchase as soon as physically possible. These same-day delivery services cater to deliver that immediate fulfillment. It’s rarely a requirement but always a desire, and hence an expectation.

Frank Riso
BrainTrust

Same-day delivery is as close to brick-and-mortar shopping as you can get and that is the target here. When we go to a store we bring home our purchases for instant gratification. Retailers are seeing more consumers wanting the same result from online shopping. In the pet food/supply industry there is so much competition online that Petco needed to make this move. It is a big step in survival for Petco and will be for all retailers who want to compete with the online retailers so yes, same-day delivery will be increasingly expected by consumers for many but not all retailers going forward.

Chris Angell
Guest

Pet products is an ideal category for same-day shipping, so it makes plenty of sense for Petco to partner with both Shipt and Instacart. From a consumer perspective, that level of convenience, plus similar offerings like BOPIS, are widely expected across all retailers. It’s the Amazon effect, and consumers can get their goods on the same day from multiple retailers. Those who don’t offer it are missing out.

Lee Kent
BrainTrust

Same-day delivery is certainly a nice to have and in some categories, likely a must. If you are working on a home project, you just might find you need a special tool ASAP. When thinking pet supplies, not so much. You feed your animals every day so you kind of know when you’re getting to the bottom of the bag. Is same-day delivery going to be a deal breaker for Petco? I’m not so sure but it would be nice to have just in case. Should every retailer make this a must? No, they should think about what makes the most sense to their customer. For my 2 cents.

Phil Rubin
BrainTrust
1 month 3 days ago

We (rDialogue) found more than ample data to support the idea that “time is the new loyalty currency” in every wave of research we’ve conducted since 2017. This is not a new trend nor is it an option but rather it is what Jeff Bezos refers to when he writes about the continued escalation of consumer expectations.

So the question is not either/or but rather “both and what else?” and smart retailers like Petco are rushing – pun intended – so address the expediency of the last three feet of retail: getting goods into customers’ hands.

David Naumann
BrainTrust

Same-day delivery is becoming a common customer expectation and solving the last mile of delivery is difficult to master for most retailers. Partnering with third-party delivery services is the logical choice for retailers.

The same-day delivery demand for Petco and other pet stores will increase as more stores offer it and it will become table stakes. For heavy items like cat litter and dog food for large dogs, home delivery is a huge benefit, as most people dread lifting those items or can’t lift them. Smart move Petco!

Kai Clarke
BrainTrust

Same day, next day or any delivery expectation should be part of any retailer’s business model, since it is part of the consumer’s expectations. The real question here is why is Petco limiting their logistics carriers to just Shipt and Instacart when UPS, FedX, and even the USPS all offer same day delivery? Who delivers the product isn’t news, but instead how quickly should be the news. Petco should be refocusing their business around getting the best shipping (at the lowest costs) for themselves and their customers, not on who is doing the shipping!

Ray Allen
Guest
1 month 3 days ago

There are definitely customers who would want same day delivery at least once, but it certainly seems like an exception case and not the optimal one for either the customer or the retailer. The fast followup will need to be a UX workshop to answer “How do I generate the optimal amount of goodwill from an exception situation and convert it into a a high value subscription?”

Oliver Guy
BrainTrust

Consumers want convenience to make up for our struggles with organisation in our ever busy lives — and pet supplies are no different, the need for something urgently comes up all the time. Same day delivery will be a differentiation element until every retailer offers it. Consumers will start to expect it the way they expect retailers to sell online in the first place.

Relationships with Shipt & Instacart are yet more examples of retail ecosystem establishing … something I am really passionate about. However the relationships work (or don’t work) depending on the timely and accurate sharing of data — meaning technologies like B2B integration and API management are going to need some significant focus.

wpDiscuz
Braintrust
"Same-day delivery is here to stay and is already an expectation of retailers. Whether they can rise to that expectation is another question."
"The future is NOT same-day delivery. Same-day delivery is the world we live in now. Embrace it, expand it, and refine it.That is my council to retailers."
"Who delivers the product isn’t news, but instead how quickly should be the news. "

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