Good Question: How Can Online Retailers Ship Same Day?
MINNEAPOLIS (WCCO) – The one thing you can’t get when you shop online is instant gratification.
Now the gratification is getting closer to instant. Wal-Mart is testing same-day delivery in four markets around the country, including Minneapolis/St. Paul, the home of its rival, Target.
But how do retailers make same-day delivery work? And if delivery is that quick and easy, will it be the future of online retailing?
“The vision is to combine the assets of a national footprint of stores with our digital capabilities,” said Ravi Jariwala, Wal-Mart Public Relations director.
Wal-Mart started the test last week, according to Jariwala, and launched in the Twin Cities on Oct. 9. It’s a beta-test for the holiday season, a time of year when about 50 percent of America will buy gifts on the Internet.
Wal-Mart has been testing a same-day delivery service of groceries in San Jose, Calif., and San Francisco, but it’s never tried doing it with general items.
“It allows customers to shop online for general merchandise, electronics, toys, sporting goods, other gifts – trying to do merchandise that’s giftable,” Jariwala said.
The service is called Walmart To Go , customers order by noon, and get to select a two-hour delivery window that evening. It costs $10 for an unlimited number of items, and there is no minimum order.
How are they doing it?
“We’re using local Wal-Mart stores to fulfill orders, they’re forward-deployed fulfillment centers,” Jariwala said.
Instead of having to fight to build new warehouses and distribution centers, Wal-Mart will use its network of 4,000 stores as that warehouse.
“Very smart move this holiday,” said Laurie Langerud, a retail strategist for Go East, a St. Paul consulting firm that works with retailers and brands.
According to Wal-Mart, “nearly half of online sales are picked up at stores now,” said Jariwala.
It’s not much of a stretch to have those items shipped directly from the store to the house.
“They have 4,000 stores that are within 5 miles of 90 percent of Americans in the US. That makes same-day delivery somewhat simple for Wal-Mart,” Langerud said.
Two-day delivery is very common online, but same-day is seen by many analysts as the next frontier.
“I think we really want it. Trends show we are increasingly shopping online, so why would we not want our stuff delivered the same day?” said David Erickson, digital strategist at Tunheim.
“I think it definitely threatens regular stores; anything that makes it easier to shop online will threaten bricks and mortar stores. The one thing they have had going for them that online shops can’t replicate is instant gratification,” he said.
The logistical challenges for accomplishing same-day shipping has always been an issue for retailers. The cost for consumers is also an issue.
“Paying $10 doesn’t sound like the typical Wal-Mart shopper?” asked WCCO reporter Jason DeRusha.
“It isn’t. I think they want to go after the affluent shopper that Target already has,” said Jill Nicholson, digital strategist for Go East. “We’re all so busy and jammed. That same day delivery is convenient.”