Online Delivery Wars Can Brick and Mortar Brands Keep Up?

The battle for the best online delivery service is heating up for retailers. With consumers expecting greater speed and smaller fees, companies are exploring a wide range of new strategies as they look to entice their customers and pull ahead of their competitors. Last month, Google launched Shopping Express, a same-day delivery service that partners with retailers and uses couriers to get products to consumers. Meanwhile, Amazon Local Express now offers same-day shipping in 12 cities. Google charges $4.99 per item, while Amazon charges $9.98 for the first item plus $0.99 for each additional item. eBay is also in the game with its eBay Now service, which partners with retailers including Best Buy and AutoZone in select cities to offer same-day delivery for only $5.00 per order.

The stakes are high for retailers trying to win the online war, as e-commerce sales in the U.S. are expected to reach $304 billion this year, up from $263 billion in 2013, according to eMarketer. Brick and mortar brands are struggling to keep up with the same perks and low delivery charges that their online-only competitors can offer. For those retailers that are looking to make same-day delivery a reality in the face of intense competition, nearly all of them have opted to partner with technology companies such as eBay or start-up companies like Deliv in order to avoid excessive investments in proprietary programs.

However, brick and mortar retailers that provide an omnichannel experience have an advantage—their stores. As they look to bring down the cost and increase the speed of delivery to their consumers, retailers are increasingly using stores as mini-distribution centers and promoting ship-from-store and buy-online-pick-up-in-store programs. Moreover, the rise of “webrooming” has also shown promising results for those that have embraced it, such as Nordstrom and other softlines retailers. With “webrooming,” consumers browse online, create and save shopping lists on social media sites like Pinterest and Wanelo, and then purchase in-store.

As major retailers continue to adopt these new strategies, we’re seeing more success stories emerge. Wal-Mart, for instance, is leveraging their vast reach and currently shipping from 50-100 of their stores, which allows them to essentially match Amazon’s distribution network. They are continuing to test same-day delivery and seem to have the resources to make it a success. Moreover, they offer a pay with cash option for online orders that are picked up in-store, allowing them to reach new consumers online. With these new strategies in place, Wal-Mart forecasts a 30 percent increase in e-commerce sales this year.

Target is making a big push, as well. In an effort to bolster its omnichannel offerings and catch up to its’ competitors, the company recently launched a new policy in which all orders over $50 ship for free, mirroring Amazon’s $35 threshold for free shipping for select items. Moreover, Target’s ship-from-store and buy-online-pick-up-in-store programs are expanding. Despite some recent improvements, though, a Wall Street Journal article this week noted that the chain is still struggling to compete with Amazon on the delivery front.

As these new initiatives indicate, there’s a heightened focus among retailers to enhance their delivery options and more effectively compete in a landscape where consumers now expect both affordability and speed. However, companies need to determine which strategies and offerings are right for their consumers while also keeping a careful eye on competition.

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