Same-Day Delivery Growing, But When Does it Make Sense?

With PetSmart becoming the latest company to offer same-day delivery – a year and a half behind rival Petco with partner Instacart – other merchants are likely asking themselves, when does this level of service make sense? For what products and for what type of customer, and in what markets?

Via partner Deliv, PetSmart.com same-day delivery is now available in California (Los Angeles, Orange County, San Francisco, San Jose), Las Vegas, Atlanta, Miami, Seattle and Chicago. By mid-November, it will be available in eight additional metro areas for a total of nearly 2,500 zip codes serviced.

But as more retailers offer same-day delivery – and more startups appear providing the service – when does it make sense to add it to your shipping repertoire? Will it drive enough demand and sales, and resonate with enough of your customers, to justify the cost?

holly-and-stella
Holly (l) and Stella

Auto parts suppliers have been doing same-day delivery to repair shops for years, so they’re a good bit ahead of the curve on this trend. Food and grocery is another logical area, as growing companies like Postmates, Peapod and Instacart – as well as Amazon and Walmart – compete to fill this regular, immediate need. Then you have Drizly for those who need to have their liquor served up quicker.

Pharmacies are another natural opportunity for same day, delivering prescriptions as well as medical supplies to nearby customers. Walgreens offers the service through Postmates, while CVS has gone another route, with same-day curbside pickup via … Curbside.

Beyond that, how much need or demand is there for same-day items? There are specialized have-to-have-it situations like an LCD TV for game day when yours goes on the fritz (Best Buy through Deliv), or maybe a sport coat for that wedding (Macy’s via Deliv, Nordstrom through UberRUSH), but how often does that happen?

While there may not be huge demand for same-day delivery this is changing, especially among younger, urban consumers with more of an “I want it now” mindset. According to a 2016 holiday survey from Deloitte, millennial shoppers are willing to pay an average of $5.50 per order to get same-day service, compared with $3.80 for all others. In the same survey, 98% of millennials consider same-day delivery to be fast shipping, but the response rate drops to 88% when it comes to two-day delivery.

As the ever-growing raft of same-day providers – Amazon Prime Now, Google Express, Deliv, UberRUSH, etc. – expand to more markets and make the service available to millions of consumers, people are getting more and more used to the idea.

Amazon, for example, offers free same-day delivery service on some items to Prime members and also provides one-hour delivery for $7.99 on thousands of products in more than two dozen U.S. cities. Once again, the company has retailers everywhere scrambling to catch up.

The question is: How much of same-day demand is organic vs. created? Some argue that Amazon has driven much of this as it expands Prime Now, making it more a part of the landscape in urban areas.

As an extension of the grocery market, pet food and supplies is a category that does make total sense for same-day delivery, so PetSmart is definitely onto something. I’ve found myself suddenly running out of kibble for Holly and Stella, our year-old Aussie Shepherd mix rescues, and rushing onto Chewy.com. They’re great, but they’re not local and it takes 2-3 days for delivery. We haven’t run out yet but it would be nice to know that PetSmart can get it to us same day if need be.

Mike O’Brien is Senior Editor of Multichannel Merchant

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