While some players have dropped out, fast and cheap deliveries are still seen by retailers as a competitive boost — and a key to impulse purchases. Amazon, Google, Uber, Postmates, Instacart and Best Buy are among those players investing heavily in their delivery capabilities.
Each has been especially challenged by expectations set by Amazon’s Prime program, which promises two day free delivery for Prime members – and in 45 cities in seven countries, offers $7.99 PrimeNow deliveries in an hour or less.
“Customer expectations around speed are going to get faster and faster,” said PrimeNow VP Stephenie Landry, speaking this week at ShopTalk17 in Las Vegas. “Two hours sounds fast now,” but it won’t soon. A few years ago, for instance, five day delivery seemed fast.
“There are definitely things people need in an hour,” adds Landry. But it is about more than emergency services – and also, not about making direct profits for Amazon, since fast delivery costs are high . “We’re giving time back to customers.,” she said. “Sometimes, shopping is not fun.”
Amazon Echo voice search is also being deployed as a competitive asset. Some customers ordering goods via Echo are surprised that they are getting their orders delivered in an hour at no extra charge “It’s part of ‘delight’ the customer,” says Landry. It is also an excellent promotional vehicle.
PrimeNow is also positioning itself to be an asset for local stores,” said Landry. Liquor stores, pharmacies, high end groceries and restaurants are all delivering via the program. These include local grocery stores in Seattle; Eatily, the Italian gourmet market in New York; and Bartells drugs in Washington DC.
Working with stores on delivery, however, isn’t always seamless. Instacart VP and head of product Ellio Shmukler said that delivery is a net asset. But “the biggest problem is store inventory. Things aren’t always there” as much as 30 percent of the time for smaller stores who can’t update their inventory, said Shmukler.