Sunday, August 12, 2012

The Online Quest for Same Day Delivery

As e-commerce continues to skyrocket, e-retailers are now encroaching into perhaps one of the last areas in which brick and mortars have an advantage – same day delivery. We’re all familiar with Amazon’s march across the US building fulfillment centers closer and closer to its customer-base in an attempt to decrease the number of delivery days. However as brick and mortars continue to report declining sales, many are embracing ecommerce and fighting back.

Recently, eBay announced it was testing a mobile same day delivery solution in San Francisco. Known as “eBay Now”, eBay partners with such brick and mortar retailers as Target, Best Buy, Toys R Us and Nordstrom and offers delivery in as little as an hour. An interesting concept, retailers upload their stores' inventory onto eBay's online marketplace through Milo, a local shopping start-up that eBay acquired in late 2010. Shoppers involved in the test can download the app onto mobile devices such as Apple's iPhone and iPad, and then search for products to buy from local stores in San Francisco.

When they find a product, users press a "Bring It" button and the order is sent to couriers. The courier closest to the product accepts the order, drives to the store to pick up the product and then delivers it to the shopper's home.

Customers pay when the product arrives. They can pay using PayPal Here, a new service developed by eBay's PayPal unit that accepts credit and debit card payments through a small swipe device attached to iPhones or shoppers can pay by logging into their PayPal accounts through an iPhone. EBay Now couriers have iPhones to accept payments. Delivery fees are waived for the first three purchased afterwards, there is a $5.00 surcharge.

Google has created a similar product to Milo called Blue Dot which allows users to search to see if a product is in-stock at nearby stores by mobile. True, Blue Dot and Milo was originally developed for consumer research, however, if EBay’s trial is successful; expect Blue Dot to do something similar. Perhaps partnering up with the likes of UPS, FedEx or the USPS may be among the thoughts going through Google – After all, UPS began as a courier-delivery company for brick and mortar retailers over 100 years ago.

Macy’s, the almost 170 year old iconic retailer based in New York, has embraced the internet and has incorporated it into its overall strategy – not separately as so many brick and mortars appear to have done.  According to Macy’s chief financial officer, the retailer’s new order fulfillment system is positioning itself to try same day delivery. Macy's began testing its fulfillment system in 2011 and expanded it to 280 of about 800 total stores so far this year. These stores act as warehouses, shipping items to shoppers' homes or to sold-out stores. The retailer believes in the concept of "buy anywhere" is "fulfill anywhere”. According to Macy’s, the goal is to optimize inventory for customers to shop across channels with ease. "We are also beginning to be able to satisfy online demand with store inventory when the distribution center runs out of a particular item," noted the company’s spokesperson.

Perhaps the big delivery companies are working towards new product offerings to address this demand? You can bet UPS, FedEx and USPS are taking note in this quest for same day delivery particularly as couriers sprout up to take advantage of this opportunity. Not only are couriers such as Postmates and Instacart popping up, don't rule out the regional small parcel providers such as OnTrac, LoneStar and Spee-Dee all of which are more than capable to handle these types of deliveries.
Lots of opportunites - many options for retailers and e-retailers alike. The ability to think outside of the box and embrace change will win the race. However, according to Amazon's CFO, "We don't really see a way to do same-day delivery on a broad scale economically."
Maybe Amazon doesn't see a way, but I bet someone else will.