Everyone loves same-day delivery, until they have to pay

  • By Mae Anderson Associated Press
  • Monday, November 23, 2015 1:32pm
  • Business

NEW YORK — Everyone likes the idea of same-day delivery. But who wants to pay for it?

That’s the problem merchants face as the busy holiday shopping season approaches. They want to offer customers the near-instant gratification that usually only comes with shopping in stores or via apps like Uber and Seamless. But the logistics and costs of same-day delivery — the fuel, labor, infrastructure and other costs — has been a difficult challenge to surmount.

This year, Amazon has been making an aggressive push to offer same-day delivery to people who’ve paid its $99 fee for Prime loyalty club membership. That service is now available in 23 metro areas. And where Amazon goes, other retailers must follow.

“Over the past 18 to 24 months Amazon has been pushing the bar” for fast and cheap delivery, said Daphne Carmeli, CEO of Deliv, a startup that works with retailers to provide same-day delivery. “If you’re in retail, you have to step up to the new bar.”

Amazon, of course, doesn’t have to pay for the cost of store upkeep, not counting its new bookstore in Seattle. And it makes money from other non-retail areas, such as its cloud computing arm, so it can afford to offer delivery services others can’t.

“Retailers trying to compete with Amazon on the road Amazon created will always be at a disadvantage,” said shipping industry expert Satish Jindel. “There’s only so long they can absorb the cost, it’s a huge challenge for retailers.”

Providing hassle-free, same-day delivery has been a quixotic quest for retailers for more than a decade. During the first Internet boom, startups like Kozmo.com became ubiquitous in New York as employees with purple messenger bags fanned out to deliver snacks and household goods. But it didn’t make money, went bust, and became a cautionary tale for the future.

“I remember using Kozmo.com a decade ago,” said C.J. Dugan, 37, a TV producer in Chicago. “One night we ordered a tub of ice cream and the movie ‘Pitch Black.’ They showed up in about 30 minutes…. It was before its time, I guess.”

Fifteen years later, things are definitely different. Driver routes are easier to track with smartphone GPS technology, more brick-and-mortar retailers are speeding delivery by using their stores as de facto warehouses, and more people are willing to work in an “on-demand” fashion popularized by Uber and service apps like Taskrabbit.

So more retailers are taking on the challenge of same day. Start-up delivery service Deliv is working with Macy’s, Kohl’s, Express, Williams-Sonoma and other brick-and-mortar retailers to expand same-day delivery options. Macy’s offers same-day delivery in 17 cities; Kohl’s this month expanded same day deliveries from six to nine cities.

Craft-selling site Etsy is working with Postmates for a holiday season pilot that will let some shoppers in New York City have items delivered to their door within hours for a flat fee of $20. Apple is also working with Postmates on same-day deliveries in New York and San Francisco.

Uber is jumping into the same-day delivery game too. In October it launched an UberRush service in New York, San Francisco and Chicago that lets small businesses offer same-day delivery. Any small business within a certain geographic range in those areas can sign up for free and offer their online customers same-day delivery for a fee. In New York, UberRush will cost users $3 to start, then $2.5 per mile with a minimum of $5. Rates vary slightly in Chicago and San Francisco.

The holiday season will be a test for the new services. Not all businesses have found it’s what their customers want.

Last July, eBay shut down its eBay Now service, which it started in San Francisco in 2013 and expanded to four cities. The company said it’s now testing options that are “more relevant” to its sellers.

Rob Howard, who runs same-day delivery provider Grand Junction Inc., said eBay Now’s business model, which paid drivers to enter retail stores, buy an item and deliver it, was “very high cost and unsustainable.” Deliv, by contrast, works with retailers to have packages ready to go for drivers when they arrive.

And the cost remains a sticking point. Amazon offers some same-day deliveries for free, subsidized by revenue streams elsewhere. But others charge between $5 and $20 dollars, a cost that deters some users.

“It’s nice to have, if you can get it for free,” said Forrester analyst Sucharita Mulpuru, who tracks the e-commerce industry, describing the mindset for many.

Speedy delivery could help drive customer loyalty in some cases. Dugan, the former Kozmo.com user, doesn’t use one-day delivery a lot. But he recently ordered a mat for his standing work desk from Amazon Prime Now.

“From the time I placed the order to when it arrived at our reception was just over an hour — it was pretty awesome,” he said. “I can’t say I’ll use the service all the time, but this was about the perfect experience when I really, really needed something.”

Talk to us

> Give us your news tips.

> Send us a letter to the editor.

> More Herald contact information.

More in Business

Black Press Media operates Sound Publishing, the largest community news organization in Washington State with dailies and community news outlets in Alaska.
Black Press Media concludes transition of ownership

Black Press Media, which operates Sound Publishing, completed its sale Monday (March 25), following the formerly announced corporate restructuring.

Maygen Hetherington, executive director of the Historic Downtown Snohomish Association, laughs during an interview in her office on Thursday, Feb. 15, 2024, in Snohomish, Washington. (Ryan Berry / The Herald)
Maygen Hetherington: tireless advocate for the city of Snohomish

Historic Downtown Snohomish Association receives the Opportunity Lives Here award from Economic Alliance.

FILE - Washington Secretary of State Steve Hobbs poses in front of photos of the 15 people who previously held the office on Nov. 22, 2021, after he was sworn in at the Capitol in Olympia, Wash. Hobbs faces several challengers as he runs for election to the office he was appointed to last fall. (AP Photo/Ted S. Warren, File)
Secretary of State Steve Hobbs: ‘I wanted to serve my country’

Hobbs, a former Lake Stevens senator, is the recipient of the Henry M. Jackson Award from Economic Alliance Snohomish County.

Mark Duffy poses for a photo in his office at the Mountain Pacific Bank headquarters on Wednesday, Feb. 14, 2024 in Everett, Washington. (Annie Barker / The Herald)
Mark Duffy: Building a hometown bank; giving kids an opportunity

Mountain Pacific Bank’s founder is the recipient of the Fluke Award from Economic Alliance Snohomish County.

Barb Tolbert poses for a photo at Silver Scoop Ice Cream on Thursday, Feb. 29, 2024 in Arlington, Washington. (Annie Barker / The Herald)
Barb Tolbert: Former mayor piloted Arlington out of economic brink

Tolbert won the Elson S. Floyd Award, honoring a leader who has “created lasting opportunities” for the underserved.

Photo provided by 
Economic Alliance
Economic Alliance presented one of the Washington Rising Stem Awards to Katie Larios, a senior at Mountlake Terrace High School.
Mountlake Terrace High School senior wins state STEM award

Katie Larios was honored at an Economic Alliance gathering: “A champion for other young women of color in STEM.”

The Westwood Rainier is one of the seven ships in the Westwood line. The ships serve ports in the Pacific Northwest and Northeast Asia. (Photo provided by Swire Shipping)
Westwood Shipping Lines, an Everett mainstay, has new name

The four green-hulled Westwood vessels will keep their names, but the ships will display the Swire Shipping flag.

A Keyport ship docked at Lake Union in Seattle in June 2018. The ship spends most of the year in Alaska harvesting Golden King crab in the Bering Sea. During the summer it ties up for maintenance and repairs at Lake Union. (Keyport LLC)
In crabbers’ turbulent moment, Edmonds seafood processor ‘saved our season’

When a processing plant in Alaska closed, Edmonds-based business Keyport stepped up to solve a “no-win situation.”

Angela Harris, Executive Director of the Port of Edmonds, stands at the port’s marina on Wednesday, Jan. 24, 2024, in Edmonds, Washington. (Ryan Berry / The Herald)
Leadership, love for the Port of Edmonds got exec the job

Shoring up an aging seawall is the first order of business for Angela Harris, the first woman to lead the Edmonds port.

The Cascade Warbirds fly over Naval Station Everett. (Sue Misao / The Herald file)
Bothell High School senior awarded $2,500 to keep on flying

Cascade Warbirds scholarship helps students 16-21 continue flight training and earn a private pilot’s certificate.

Rachel Gardner, the owner of Musicology Co., a new music boutique record store on Thursday, Jan. 18, 2024 in Edmonds, Washington. Musicology Co. will open in February, selling used and new vinyl, CDs and other music-related merchandise. (Olivia Vanni / The Herald)
New Edmonds record shop intends to be a ‘destination for every musician’

Rachel Gardner opened Musicology Co. this month, filling a record store gap in Edmonds.

MyMyToyStore.com owner Tom Harrison at his brick and mortar storefront on Tuesday, Sept. 6, 2022 in Everett, Washington. (Olivia Vanni / The Herald)
Burst pipe permanently closes downtown Everett toy store

After a pipe flooded the store, MyMyToystore in downtown Everett closed. Owner Tom Harrison is already on to his next venture.

Support local journalism

If you value local news, make a gift now to support the trusted journalism you get in The Daily Herald. Donations processed in this system are not tax deductible.