Same Day – Is it Worth It?
Evidently plenty of start-up companies seem to think Same Day delivery is worth it just by the number of new start-ups either popping up or existing ones expanding into a new city.
For the traditional delivery companies i.e. Post offices, DHL, FedEx, UPS etc. many either offer their own solution or are testing the service in certain locations.
A recent Forbes article, Tech Is Enabling Same-Day Delivery, But Is It Really Worth It For Retailers? suggests the same day delivery market is currently valued at $40 billion. Furthermore, the article quotes Michael Pachter, an analyst at Wedbush Securities who describes same day as a “logistical hell.”
So do customers really want same day delivery? You’d think so with the flurry of activity going on but a 2013 survey of online shoppers conducted by Boston Consulting Group (BCG) found that only 9% of the 1,500 U.S. consumers surveyed “cited same-day delivery as a top factor that would improve their online shopping experience, while 74% cited free delivery and 50% cited lower prices.”
Perhaps consumers have shifted in their opinions since the survey was conducted. In fact, a survey in late 2014 on behalf of PricewaterhouseCoopers, found that 61% of consumers surveyed indicated they would pay for same-day delivery, while 58% would pay for one or two-day delivery. 37% said they would pay for 90-minute delivery for a store-based purchase.
Meanwhile, Amazon continues to get closer and closer to the customer with fulfillment centers and its same-day delivery service, Prime Now, while Deliv has recently announced it had expanded into additional cities thus allowing such retailers as Macy’s to expand their same-day reach.
“When we piloted same-day delivery in eight markets initially last fall, we learned that our customers appreciate the additional option of having their purchase brought to their home or office in a matter of hours,” said R.B. Harrison, Macy’s chief omnichannel officer. “Our ability to expand same-day delivery is rooted in local merchandise inventories at Macy’s stores, as well as a newly expanded delivery footprint of our partners at Deliv.”
And there’s the catch…brick & mortar retailers are taking advantage of their brick situation and by implementing technology tools have transformed physical stores into fulfillment centers. Combined with partnering with such delivery companies as Deliv or Laser Ship, retailers are finding it a bit easier to offer same day delivery.
But, as same-day delivery catches on, business models of some of these delivery companies may be questioned and result in increased delivery charges. Many have started out as crowd-sourcing companies – relying on contractors to make the deliveries – but a good many of these companies are reclassifying contractors as employees which may result in additional costs for the companies and as such questioning the viability of the crowd-sourcing model.
Still, for many consumers, same-day delivery may remain one of those “just in case” delivery options that occasionally will be needed. So, is it worth it? For customer satisfaction and loyalty, probably so for the retailer that is battling a fierce market.