While physical retailers look to upset Amazon’s business model by providing shoppers with something they can’t get online, Amazon is attempting to do the same by giving into what shoppers want most.
This means providing the shopping experience with the option to shop when they want, where they want, and how they want, as well as the ability to get those goods delivered in a speedy fashion. And with the holiday season upon us, Amazon hopes its same-day delivery play could be the key to delivering an in-store experience — all without having to go to the store, of course.
What physical retailers bring into the mix is the ability to pick up a gift last minute, which is particularly helpful for those procrastinators, or the shopper who just needs to top off that gift with one more item. That’s why Amazon is betting big on its same-day delivery option to check off all the boxes.
Currently, Amazon offers the service in 24 metropolitan areas. That means, as a Bloomberg article on the subject points out, that more than 75 million consumers (theoretically) have access to the option. Prime Now, for Amazon, has been its bread and butter membership service and could be what gives the eCommerce giant the edge this holiday season.
“Prime Now is an absolute game changer for the holidays,” Josh Neblett, CEO of Etailz (an online retailer that sells on marketplaces like Amazon), told Bloomberg in an interview. “It opens the door to a whole new group of on-demand customers.”
And that’s what Amazon is doing as it attempts to bridge the gaps between shoppers who might prefer the physical experience, but enjoy starting their shopping experience online. As research from PYMNTS and Amazon shows in its study titled “Innovation and The Digital Shopper,” 63 percent of shoppers start from Google when they are looking for information; 45 percent will start on Amazon when they are searching for a product.
“The places where people shop online has changed. Five years ago, when a retailer talked about an omnichannel leader, it meant store, online, mobile. Today, online itself is a plurality of channels that is very different. Five years ago you would have found that marketplaces wasn’t the first place people went to buy. You probably would have seen search and their favorite merchant on the very top of the list. What we’ve been seeing is both the coming of age of marketplaces of all sorts — both big and small — and also the early emergence of social media,” Patrick Gauthier, VP of Amazon Payments, said in an interview in August.
Of course, when it comes to shipping logistics, there’s also the challenge of keeping up with the costs of providing customers with those same-day delivery demands. Guru Hariharan, the founder of Boomerang Commerce, an eCommerce analytics firm, told Bloomberg that Amazon ends up spending four times more on same-day deliveries than the costs of next-day deliveries.
Hariharan, who used to work at both Amazon and eBay before he opened up his own company, said that business model can only keep up if Amazon is able to get three to four deliveries per hour to make it cost effective, noting that “the jury is still out on same-day delivery.”
Still, Amazon will likely be banking on its same-day services to offer those last minute shoppers the chance to have the online experience, with the speed of going to a physical store perhaps beat in some cases. And if this holiday season proves to be successful for Amazon’s same-day delivery options, that’s when it’s likely the program will roll out to more cities soon.
At the same time Amazon is attempting to revamp its delivery speeds to get packages to its best customers (Prime members), who, research shows, spend more on average than non-Prime members, retailers across the U.S. are attempting to disrupt traditional retail models. That means by changing the customer experience by offering things like food (Urban Outfitters is getting into the pizza business), and other perks to enhance the in-store experience.
But what Amazon is attempting to prove is that what shoppers want in their experience is the convenience to shop wherever, whenever and not be constrained by physical store locations, or hours.
This holiday season will certainly offer interesting insight into just what consumers want out of their shopping experience — whether it’s online, in-store or a mix of both.