On the busiest mailing week of the year, time is running out for buying holiday gifts online. Or is it?
More and more stores are striking deals with delivery companies like Uber, DoorDash and Postmates to get your holiday gift to you within hours. They’re going after what once was the holy grail of online shopping: same-day delivery.
On Friday, DoorDash announced a partnership with JCPenney after teaming up earlier in the year with PetSmart. Uber has partnered with BuyBuy Baby and UPS’s Roadie with Abercrombie & Fitch, while Instacart has been delivering for Dick’s Sporting Goods.
“It is an instant gratification option when needed, a sense of urgency in situations where time is of the essence,” says Prama Bhatt, chief digital officer at Ulta Beauty.
The retail chain last month partnered with DoorDash to test same-day delivery smack in the year’s busiest shopping season. In six cities, including Atlanta and Houston, shoppers can pay $9.95 to get Ulta’s beauty products from stores to their doors.
With that extra price tag, Ulta and others are targeting a fairly niche audience of people who are unable or unwilling to go into stores but also want their deliveries the same day rather than wait for the now-common two-day shipping.
Food delivery exploded during last year’s pandemic shutdowns, when millions of new shoppers turning to apps for grocery deliveries and takeout food, which they could get delivered to their homes in a matter of hours or minutes.
Now, shoppers are starting to expect ultra-fast shipping, says Mousumi Behari, digital retail strategist at the consultancy Avionos.
“If you can get your food and your groceries in that quickly,” she says, “why can’t you get that makeup kit you ordered for your niece or that basketball you ordered for your son?”
Same-day deliveries require a workforce of couriers who are willing to use their cars, bikes and even their feet, to shuttle those basketballs or makeup kits to lots of shoppers at different locations. Simply put, it’s costly and complicated.
Giants like Walmart and of course Amazon have been cracking this puzzle with their own fleets of drivers. Target bought delivery company Shipt. But for most retailers, their own last-mile logistics network is unrealistic.
“Your solution is to partner with someone who already has delivery and can do it cheaper than you,” says Karan Girotra, professor of operations and technology at Cornell University.
For stores, same-day delivery offers a way to keep making money when fewer people might visit in person, like they have during the pandemic.
For drivers, it’s an extra delivery option beyond rides or takeout food, where demand ebbs and flows at different times.
For the apps, it’s a way to grow and try to resolve their fundamental challenge: companies like Uber or Instacart have yet to deliver consistent profits.
“The only path to profitability is … if they grab a large fraction of everything that gets delivered to your home,” Girotra says. “The more you deliver, the cheaper each delivery gets … because you can bundle deliveries, you can put more things in the same route.”
And these tricks become ever so important in a whirlwind season of last-minute shopping and shipping.