Interview, Fireside Chat
Arriving Now: Retailers’ Solutions for Same Day Delivery
- Non-restaurant and non-grocery retail sectors are projected to standardize "couple of hours" or "same day" delivery post-pandemic, with customers bearing the cost.
- Third-party platforms such as Shipt, Instacart, and Rhody will maintain same-day options, with Rhody's partnerships with Tractor Supply and Home Depot expanding this model from specific retailers to consumers.
- The market is expected to segment by service type, with providers distinguishing between personal shopping/picking, delivery of "smaller objects and grocery," and "bulky items or furniture" over "longer distances."
- Cost and operational considerations will drive non-Target retailers to rely on outsourced fulfillment solutions rather than building proprietary same-day services.
- Outsourcing carries risks regarding external providers potentially failing to "uphold the company standards" for product condition upon delivery.
- Data control is projected to shift from retailers to third-party providers, potentially limiting retailer access to marketplace data.
- Retailers anticipate higher profitability from third-party fulfillment compared to traditional free two-day shipping, as customers pay for the service and the process is "less costly for the retailer."
- Utilization of third-party fulfillment will free "store employees" from picking tasks, enabling product delivery in a "shorter amount of time" than standard two-day shipping.
- Online-only retailers are expected to remain unable to replicate the "couple of hours" delivery windows achievable by brick-and-mortar stores.
- Buy online, pick up in store (BOPIS) initiatives are anticipated to complement last-mile delivery, offering "optionality" that increases the likelihood of consumer shopping.
- Customer usage of BOPIS is expected to focus on scenarios like leaving work or running to the store to avoid lines and receive items in "a couple of hours from when you've ordered it online."
- Third-party fulfillment combines the "quickness" of BOPIS with the convenience of home delivery, though this requires a cost to the consumer.