Retailers

The New Frontier For Ecommerce: Same-Day Delivery

by | Posted on May 29, 2019

Today, there’s a new frontier when it comes to ecommerce. In order to be able to compete effectively, retailers must conquer same-day delivery. Achieving this feat will be a massive win for any retailer who can achieve it. It’s an almost $4 trillion U.S. retail market, and companies are looking to do whatever it takes to stake their claims in the lucrative future of U.S. retail.

Just a few years ago, providing an ecommerce offering that worked for consumers was enough to be a player in this game… until Amazon came along and rewrote the rules! From then until now, their purpose-built ecommerce business has had everyone else scrambling to catch-up. As other retailers began getting their footing online, once again Amazon threw another spanner in the works with the introduction of their Prime 2-day shipping!

The Players

Amazon’s initial delivery service sent shockwaves through the retail ecosystem, and other major retailers realized they’d have to step it up if they wanted to compete. However, the reality is that there simply aren’t that many retailers who can challenge Amazon’s online dominance. Those that do stand a chance, have been doing whatever they can just to stay in the game.

Specifically Target and Walmart, the major retail leaders before Amazon spoiled their party, have been pushing hard. Primarily through strategic changes and acquisitions, these two retail giants have started challenging Amazon at their own game: offering faster and more convenient deliveries for their customers.

These two challengers have been nearing the holy grail of same-day delivery. But Amazon hasn’t been idle either. So how are these giants stacking up?

The Strategies

It makes sense to start with Amazon, the perennial first-mover. Reuters reported that Amazon has moved aggressively into the same-day delivery space, offering this service to its Prime members.

At $119 a year, Prime members have access to goods eligible for same-day and in some cases, even 2-hour delivery. An estimated 20%-25% of Amazon’s goods are available for same-day delivery.

Not to be outdone, Target’s Chief Operating Officer John Mulligan told investors during the company’s first quarter earnings call that 80% of the company’s first-quarter digital sales were fulfilled from stores. There are currently three ways for Target customers to buy online and receive goods the same-day: In-store pickup, drive-up delivery service, and home delivery from store using Shipt (acquired by Target in 2017).

Walmart meanwhile announced this month that shoppers would also enjoy same-day delivery. The world’s largest retailer is rolling out next-day delivery in Phoenix, Las Vegas and Southern California, and will expand its reach to around 75% of American consumers by the end of 2019 –  including 40 of the top 50 major metro areas.

Leveraging Their Strengths

In an impressive strategic move, Walmart and Target have been leveraging a potential liability – their massive brick & mortar store network – to beat Amazon at their own game.

Take Target, as an example. With more than 1,800 stores nationally, 1,000 of which are within a three-mile radius of customers, Target realized they were strategically placed incredibly close to their customer base. The infamous “last mile” really was just that.

Walmart say they’re on track to offer pickup for online grocery orders at 3,100 stores and same-day grocery delivery from 1,600 locations by the end of the year.

In fact, it is estimated that Walmart is capable of reaching 87% of the country with next-day delivery while Amazon can only get to 72% of the U.S. population.

It is in this context that other major moves in this space – like Amazon’s Whole Foods acquisition – suddenly seem so logical given the same-day delivery benchmark.

Omnichannel Is Where It’s At

The key to success in dominating the retail market is omnichannel mastery. Target CEO Brian Cornell said it best: “The emergence of winners will be who’s investing in business and adapting to an omnichannel environment, while those ceding share are ones that haven’t been able to evolve in a new environment.”

Winning when it comes to the omnichannel environment means leveraging all the data at your disposal, and partnering with proven winners in this space. It means leveraging AI intelligently when it comes to ecommerce, generating the right actionable insights, and understanding elements that your competitors don’t.

If these things are important to you, it may be time to get in touch with Market Beyond. Some of the world’s biggest ecommerce companies are already using Market Beyond’s insights to gain invaluable ecommerce intelligence, enabling them to succeed in today’s omnichannel environment.

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