Do consumers want same-day shipping?
January 24, 2013 09:37 AM
Aiming to keep online holiday shoppers buying right up until Christmas Eve, Moosejaw Mountaineering, No. 276 in the Internet Retailer Top 500 Guide, launched an aggressive holiday shipping trial on Dec. 22, offering same-day shipping for shoppers in the Chicago and Denver-Boulder metropolitan areas. The service, designed as a test to see if speedy delivery resonated with last-minute gift shoppers, was available for $14.99 for orders of $99 or more until 5:00 p.m. local time on Dec. 24.
Shoppers didn’t take the bait, says Eoin Comerford, Moosejaw president and CEO. In fact, not a single shopper ordered items for same-day shipping, Comerford says.
“We had a couple of people call to see if it was for real, but no one ended up using the service,” he says.
Comerford attributes the lack of traction to a few factors. For starters, very few retail web sites offer same-day shipping, so consumers aren’t used to ordering online and getting the items the same day. Add to that, the timing of the test. Launching the trial during the last few days before Christmas may have not have been ideal because consumers might have been reluctant to trust their last-minute gift shopping to a service they’d never tried.
Additionally, Moosejaw didn’t heavily promote the service. The retailer sent out an e-mails to customers who had provided their e-mail addresses in Moosejaw stores in the Chicago and Denver-Boulder regions and notified site visitors with IP addresses from those markets about the offer, but that was the extent of the marketing push, Comerford says.
The retailer personalized its home page for customers coming from those locations with technology from vendor Monetate Inc. Those customers saw an announcement about the service with a link to browse inventory available in the nearby stores that would fulfill the orders.
“No consumer press picked up the story and we did not create a geo-targeted Adwords campaign or retargeting to support it,” Comerford says. “As same-day shipping becomes more prevalent we would look to implement a more holistic marketing approach.” Adwords is Google Inc.’s paid search advertising service.
Had Moosejaw received a same-day order, it would have delivered the order using FedEx Corp.’s SameDay City. The service, which debuted in 2008, serves 20 markets. Packages that FedEx picks up by noon can be delivered as early as 2:00 p.m.
“Our stores are actually well set up for this since they help fulfill as much as 20% of our Internet orders throughout the year based on inventory availability and proximity to the customer,” Comerford said at the time of the test launch.
Fiona Dias, chief strategy officer at ShopRunner, a free shipping and loyalty program that retailers can offer their customers, says same-day shipping all comes down to how badly a shopper needs a product, whether they can drive to a nearby store to get it and the cost.
“It’s a market need issue,” Dias says. “If I desperately want something today, I can go to a store and not have to pay for shipping. A classic case is diapers—a product that you need there and then. As long as same-day shipping costs something, it’s going to limit the number of people willing to pay for that much speed, especially if there’s a free alternative called driving to the store.”
However, she says it’s tough to judge the demand for the service with such a small test.
She adds that Moosejaw is on the right track in preparing its stores to deliver items quickly to nearby consumers, a capability likely to come in handy as e-retailers, notably Amazon.com Inc., offer ever-faster delivery.
“By holiday 2013, Amazon, in particular, will have dozens of new distribution centers a stone's throw away from major populations on the East and West Coasts,” Dias says. “More Amazon packages will arrive within one-to-two days, and unless store retailers start shipping from stores to nearby consumers, they will be disadvantaged in shipping speed versus Amazon and lose market share.”
Still, delivery in one or two days isn’t same-day delivery and Amazon’s chief financial officer Tom Szkutak said last year that while the web behemoth is adding fulfillment centers so that it can deliver items in just a couple days, he does not foresee Amazon trying to extend same-day delivery nationwide. Amazon offers same-day delivery to shoppers in 10 major U.S. metropolitan areas including Chicago and Boston through its Local Express Delivery Program. Each area has its own cut-off times that the order must be placed by and only certain items qualify.
Scot Wingo, CEO of e-commerce services provider ChannelAdvisor Corp., which helps retailers sell on such online marketplaces as Amazon and eBay, says Amazon drives consumers' expectations for fulfiillment.
"Amazon Prime and Amazon Lockers have forced retailers to take a serious look at this sort of shipping promotion," he says. "We’ve seen the most uptake in the top ten cities where convenience is a bigger factor."
Amazon isn’t the only major web player dabbling in same-day delivery. In August online marketplace eBay Inc. launched a test of eBay Now, an app that let consumers in San Francisco order online and have their purchases delivered the same day. It’s since added same-day delivery in Manhattan and some parts of Brooklyn, an eBay spokeswoman says. Delivery is $5 per order and can include multiple items but must contain at least $25 worth of goods. Participating retailers include apparel retailers Urban Outfitters and Free People, Walgreens Macy’s, Toys ‘R’ Us, Target and Best Buy. Orders can be placed with any e-retailer with a store in the participating areas that is also part of the Milo platform. Milo, which eBay owns, is a service that lets consumers search for products available from local bricks-and-mortar retailers.
EBay says that the same-day delivery service was popular with shoppers over the holidays. While it won’t share specific statistics, it says that the week of Dec. 16 was the program’s busiest week for the same-day shipping program. While typical delivery hours are 9 a.m. to 9 p.m. local time Monday through Saturday and 9 a.m. to 6 p.m. on Sunday, eBay extended delivery hours until midnight that week from Monday through Saturday and couriers were operating at full capacity.
Urban Outfitters is No. 48 in the Internet Retailer Top 500 Guide, Walgreens is No. 33; Macy’s, 14; Toys ‘R’ Us, 29; Target, 23; Best Buy, 11; and Amazon is No. 1.