Dive Brief:
- Retailers have tripled their same-day delivery options over the past year, according to the 2017 Digital Commerce Benchmark Survey from Boston Retail Partners. Fifty-one percent of retailers currently offer this service, up from 16% last year.
- Sixty-five percent of retailers report they will offer same-day service within the next year, according to the survey. Brands will also be exploring autonomous fulfillment, self-driving vehicles and “helper robots” to speed up delivery.
- “With Amazon offering same-day delivery in some markets, the push is on for retailers to get items delivered to customers as soon as possible,” Jeffrey Neville, vice president at BRP, told Chain Store Age.
Dive Insight:
Same-day delivery and curbside pickup are changing the way consumers get their groceries. The convenience of placing an order online and then choosing the delivery option that works best is appealing to many customers, and grocery chains have responded.
The difficulty for many grocers is making money off the venture. Home delivery has proven expensive and inefficient to this point, while click-and-collect is mostly replacing store sales among existing customers. Both services require additional labor that cuts into margins. And since there is a growing number of retailers offering online shopping with same-day fulfillment, and the service becomes less about building sales and acquiring new shoppers and more about retaining the customers stores already have.
Retailers are hoping to sell more high-margin fresh items and prepared foods through online ordering. And many recognize it as a growing service that shoppers expect. But the big winners may very well be large chains that scale up quickly and invest in innovation.
Amazon currently accounts for a quarter of all online grocery sales and stands to gain even more share through its Whole Foods stores. Wal-Mart has also enjoyed great success with its online ordering and free store pickup. By the end of this year, the company will offer the curbside service at more than 1,000 stores, and plans to make it available at all 4,600 stores during the next few years.
Millennials, and specifically those who live in a city and don’t own a car, are the largest demographic to take advantage of same-day delivery. Some consumers will never get onboard with online grocery shopping, preferring to pick out their produce and meat themselves. However, there are many others who may weigh the convenience of home delivery with cost of the occasional bruised apple and think it’s a fair trade.