The Rise and Fall of Same-Day Delivery

August 26, 2015
 

One of our favorite things to do is keep an eye on business, retail, eCommerce and fulfillment trends. Recently we watched as Google Express closed their two major delivery hubs, effectively shutting down the same-day delivery program.  

According to Re/code, “The move is part of a broader push within Google to revamp the service, which launched in March 2013, after it failed to make a serious dent in a market crowded with Amazon and a myriad of on-demand startups. The service is not shutting down, but seems to be recalibrating a logistical plan it was testing in California.”  

We say don’t bother. While we love immediate fulfillment, and the idea of same-day delivery is great in theory, we think going the same-day delivery route isn’t the best option. Yes, Amazon offers and seems to succeed at same-day delivery, but the service itself has stipulations surrounding it’s use. The customer must be a Prime Member, their minimum order must reach $35, and the service is only available in certain areas.  

For a pure play retailer like Amazon, and a retailer who is always stretching the limits on what is possible in convenience, Amazon can afford to experiment with same-day delivery. We regard Amazon as an anomaly in this instance and can only guess that same-day delivery isn’t making them money. Same-day delivery does have a nice ring to it, but we don’t think it is a sustainable model. Our reasoning? The cost is too high. The cost to the customer for the service is too high, the cost to the company to maintain the program and spend on delivery service is too high. It becomes exponential when looked at compared to another service: in-store pickup.  

In-store pickup accomplishes the same immediacy but at a significantly lower cost to both the customer and the business. This is a huge advantage to brick-and-mortar, as pure play retailers like Amazon don’t even have the option of in-store pickup. When comparing same-day delivery and in-store pickup, you will find that significant marketing dollars must still be spent on same-day delivery. On the other hand, customers already love and participate in in-store pickup.  

According to Forrester Research, “Today, 70% of US online consumers state that they use buy online, pick up in-store (BOPIS) to some degree, with 5% of them stating that they use it every time they make a purchase with an in-store pickup enabled retailer.”*   You don’t have to convince consumers that in-store pickup is a good idea. This is due in large part to the absence of a shipping fee when ordering online. When a customer thinks of in-store pickup they think of it as if they received free shipping.  

Forrester Research states, “By far, the number one reason for US online consumers to use in-store pickup was to avoid shipping costs, with 58% stating this was the reason for taking advantage of the service. Interestingly, this would suggest that the customer had no intention of going into the store to make the purchase, but rather chose this service in lieu of ordering it online and having it delivered with a shipping charge attached.”*  

Customers don’t want to pay for shipping, and paying for same-day delivery is even more of a turn off. It’s perceived as too expensive.  Many people don’t consider time, gas, and effort to go to the store and pick up their item as a deterrent. Frequently, the trip to pick up in-store is incorporated into the commute home, while waiting for the kid’s soccer practice to finish, or as part of the after dinner let’s get out of the house and get frozen yogurt trip.  

Because the customer has already made this behavior a habit, the retailer simply has to provide the service. This also gives brands the opportunity to sell online but direct the fulfillment to their local dealers.  

In-store pickup is your secret weapon. It enhances relationships between brands and retailers, it allows brands and retailers to stay competitive, and it provides more sales. We have found in our own research that 40% of shoppers make extra purchases once they arrive to pick up their order.  

Because in-store pickup provides so many great benefits, same-day delivery seems superfluous and a waste of valuable resources. In-store pickup is a much more realistic and financially viable option. Make the benefits of in-store pickup a reality and learn how to get started today.   Request a demo Today!  

*Nailing In-Store Pickup, Forrester Research, Inc., December 30, 2014.