Delivery services are convenient, easy, and appealing—for consumers, that is. For providers, they can be challenging, expensive, and frustrating, but also necessary if the goal is to keep customers happy. In their efforts to overcome the challenges, more companies are working together, seeking economies of scale, access to new customers, and lessons learned from delivery experts.
For example, by working together, Old Navy and Postmates believe they can create a new type of supply channel. Postmates mostly has focused on delivering fresh, hot meals, but it can add in a pair of jeans or a flannel shirt to its delivery bags relatively easily. Thus it gets its name out to people who might be ordering from other food delivery services and perhaps attracts new customers. It also benefits from its share of the $8.99 delivery fee. In parallel, Old Navy can offer same-day shipping to its customers, without having to invest in the logistics infrastructure that would be necessary for it to establish such operations on its own.
Other collaborations involve Shipt, which works both with Target, the company that owns it, and the home goods retail chain Sur La Table. Target has added the Shipt delivery option directly into its mobile app, such that customers can obtain the added value service with a simple click. Although it does not achieve the same level of integration with Sur La Table, it promises delivery options in as little as one hour, which may be beneficial for hosts who find themselves short a decoration or two before a dinner party. To cover its costs, Shipt offers consumers two options: a $9.99 per delivery charge or an annual fee of $99.
These delivery-based collaborations are novel in the sense that the focal products do not have the same time constraints as, say, a hot meal or perishable groceries do. But the partners are betting that customers value having even basic household goods delivered quickly and easily, leading to benefits for everyone involved.
Discussion Questions:
- What non-food retailers are experimenting with same day delivery?
- Same day delivery is costly. How do these retailers justify this cost?
Source: Warren Shoulberg, “Old Navy Sails into Same-Day Delivery with Postmates,” Fortune, December 12, 2019; Sarah Perez, “Target Integrates Shipt’s Same-Day Delivery Service into its Mobile App,” TechCrunch, November 14, 2019