It isn’t just Amazon. Several notable retailers, including Walmart and eBay, also are pursuing the goal of same-day delivery, promising consumers that they can receive products mere hours after they place orders for them. The efforts have sparked growth in the parallel market of courier services, which facilitate the rapid deliveries.
Even as these major players continue to find ways to overcome the logistics challenges though, other barriers emerge that question the very notion that same-day service is fundamentally a good idea. In particular, studies by the Boston Consulting Group suggest that consumers just are not that interested in it. Only 9 percent of consumers listed this rapid delivery service as a determinant of their shopping choices, whereas 74 percent asked for free delivery.
In contrast, the experience of Zulily suggests that this report might underestimate the importance of at least timely shipping. This discount online retailer purposefully limits expenditures on its distribution system, to keep its costs low. It also places orders with vendors only after it receives the parallel orders from its customers. In turn, deliveries of items take three to four weeks—or longer if huge purchase rates of popular items create a backlog in its supply chain. Even customers who previously might have expressed their willingness to wait, in exchange for great deals, become frustrated enough to complain when Zulily fails to meet its predicted delivery dates or the wait times extend out to six weeks or more.
The experience of Zulily customers contrasts notably with the experience shoppers receive when they patronize same-day delivery retailers. To qualify for the same-day services, customers generally pay extra, with average charges of $6–$10 per order. In most cases, customers also must place the order early in the day (e.g., before 8:00 a.m.), which may not be convenient. Finally, most retailers set a minimum threshold, such that the order must surpass a certain price limit for the same-day service offer to kick in to gear.
Another consideration appears particularly resonant for the relatively wealthy, Millennial consumers that Amazon, Walmart, and eBay target with the promise of same-day delivery. To achieve this service, both the retailers and their courier partners rely on warehouse and delivery workers to work more hours, but also more efficiently. Reports of inordinately long hours spent in a warehouse packing shipments, or delivery drivers required to work seven days per week, may spark backlash among this generational cohort, with its well-cited interest in social justice and fair treatment of workers.
Discussion Question:
What are the advantages and disadvantages of same-day delivery from a retailer’s perspective?
Source: Daphne Howland, Retail Dive, May 12, 2014. See also Serena Ng, “Zulily Customers Play the Waiting Game,” The Wall Street Journal, May 5, 2014