The Race is On: Retailers Push For Faster Delivery

April 18, 2016

fnCall it the Amazon Prime effect.

 

The technology boom and shoppers’ buy-it-now, wear-it-now mentalities are changing consumer expectations of how quickly they can get their products. Increasingly, some major players are turning to logistics startups for help.

 

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Nordstrom and Uber recently announced an on-demand delivery pilot for the Chicago flagship on Michigan Avenue. A Nordstrom spokesperson said that the company decided to pair up with the car service to add an extra layer to its omnichannel strategy. The department store, which has not revealed whether it will expand the program to other markets, has operated a buy online/pickup program since 2008.

 

Similarly, the struggling American Apparel chain teamed with one-hour courier service Postmates, which distinguishes itself by operating not just in major coastal cities but also in areas such as Oklahoma City and Columbus, Ohio. Postmates folded American Apparel into its list of delivery options, which empowers local stores to become mini-distribution centers.

 

“American Apparel has these core basics, and we see those as things people need right away,” said Holger Luedrof, SVP of businesses at Postmates. For example, if a customer on vacation finds the weather is colder than expected, he or she could use the service to buy a sweatshirt, Luedorf said.

 

Postmates Delivery Service

 

There are obvious benefits to same-day delivery, such as helping move items through stock and engaging the shopper where they are, but retail analysts say there are some drawbacks. Marshal Cohen, chief industry analyst at The NPD Group, said that around 48 percent of in-store purchases are impulse buys — and online, that slips to 25 percent. “When you look at that, where would you rather have the customer?” he said. “This isn’t about making money. It’s about a race to market share.”

 

Farla Efros, president of HRC Advisory, said that millennial and Generation Z shoppers have pushed the trend forward, prompting retailers to act. “This is a reactive response [by retailers] to Amazon, and my concern is it gets out of control,” Efros said. (Last week, Amazon expanded same-day delivery to 11 more cities.)

 

Still, some retailers are committed to pouring resources into these types of programs. Luxury e-tailer Net-A-Porter introduced its next-day delivery program in New York in 2006 and said it’s become a key customer service part of the business. “The focus for Net-A-Porter has always been to offer our customers best-in-class service, which includes convenient delivery options for no matter where she is located,” said Heather Kaminetsky, VP of global marketing.

 

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