Retailers are promoting faster shipping options in the wake of news that Amazon plans to speed up Prime shipping from two days to just one: Walmart, in one case, is offering NextDay delivery on a selection of items from its website. (The company also points out that that offering comes “without a membership fee.”) To use the service, consumers visit the company’s website to find eligible items and add them to their carts. However, the retailer points out that all of those items must be eligible for NextDay delivery and that cut-off times depend on geography.
Walmart eCommerce U.S. President and CEO Marc Lore said in a post on the company’s website, “Our new NextDay delivery isn’t just great for customers, it also makes good business sense. Contrary to what you might think, it will cost us less — not more — to deliver orders the next day. That’s because eligible items come from a single fulfillment center located closest to the customer.” As a result, Lore noted that the orders ship in a single box or as few as needed, and also travel through ground shipping that is inexpensive. By contrast, orders can be shipped from various locations in multiple boxes — and, simply said, can be very costly.
The company also said the service will come to customers of Walmart.com in Las Vegas and Phoenix first and will then roll out to shoppers in Southern California. Over the months to come, it will launch “gradually.” The company is seeking to cover 75 percent of the population in the U.S. this year, encompassing 40 of the top 50 major metro areas in the U.S. per the company. It is described as a “stand-alone, curated shopping experience” that offers up to 220,000 products that bought most often from laundry detergent to electronics.
Walmart, however, is hardly the only retailer to make an announcement about the ways it is getting goods into consumers’ hands faster following the Amazon news: Target recently announced that its “top same-day service expands to more stores nationwide.” The company says its Drive Up service, which enables customers to place an order and pull up to their local store for pickup, is available at over 1,250 stores.
“This expansion brings us one step closer to offering Drive Up at most Target stores by the end of the year,” Target Senior Vice President, Digital, Dawn Block said in a post on the retailer’s website. “It continues to be our fastest and top-rated same-day service, and we can’t wait for more guests to experience this added ease and convenience across the country.”
Mass merchants such as Target and Walmart, however, are not the only companies impacted by the Amazon news.
The Logistics Market
Amazon’s announcement that it plans to inject $800 million to facilitate next-day delivery has created opportunities for logistics startups. These firms can then help merchants remain competitive against the eTailer. Warehouse and fulfillment marketplace Flexe, for instance, notched $43 million in a Series B funding round. Dolly, which handles larger items for shipping, announced a $7.5 million infusion of cash in recent times. And Analysts say Amazon is poised to take almost 50 percent of the $600 billion spent by U.S. shoppers online this year, and retailers need to get creative to keep up.
“Interest in logistics investments has picked up, and we’ll see even more of that this year,” Schematic Ventures Partner Julian Counihan said, according to a Bloomberg report. “Retailers traditionally invested in physical stores to increase sales. Amazon flipped that on its head and made logistics the driver of customer experience.”
Flexe, which acts as sort of an Airbnb for warehouse space, has been rapidly expanding. Dolly, on the other hand, focuses on larger items. That gives it an advantage over Amazon, which is still looking for way to more efficiently move big weight items. Dolly says it can deliver sofas, appliances and TVs in as little as 90 minutes.
As it stands, Amazon is estimated to reach more than half of all U.S. households and has upwards of 100 million paying Prime members. With the announcement as well as its widespread reach, Amazon could move the expectations of shoppers to receive ordered items in a faster timeframe. A National Retail Federation survey found that nearly 40 percent of people want their orders delivered for free and within two days. And almost three in 10 people — or 29 percent — said they didn’t buy something after they discovered it wasn’t eligible for free two-day shipping.
From Walmart to Target, mass merchants are promoting faster ways for consumers to have items delivered or picked up as Amazon ramps up its one-day Prime efforts — and possibly changes the table stakes for fulfillment of customer orders.