According to a recent Boston Consulting Group survey, most consumers are more interested in free delivery versus paying for same day delivery. However, will the upcoming holiday season see a shift in thought? It appears many providers are banking on just that.
This week, eBay announced its intentions to acquire UK-based Shutl. According to eBaymarketplaces president Devin Wenig, “Today, approximately 75% of what people buy is local, found within 15 miles from their home.” Indeed, eBay has embraced this concept as it launched its eBay Now, a one-hour delivery service available in Chicago, San Francisco and New York and with plans for an additional 25 markets in 2014. The acquisition of Shutl now allows eBay to expand its delivery service into the UK market along with utilizing its click and collect service it introduced last month with its retail partner Argos.
Amazon also offers same day delivery via its Amazon Fresh service as well as its Local Express Delivery service which operates in Baltimore, Boston, Chicago, Indianapolis, Las Vegas, New York City, Philadelphia, Phoenix, Seattle, Washington DC for $8.99 per shipment, a bit more than eBay Now’s delivery fee of $5.00.
Google has also officially introduced its service in San Francisco. It is similar to Ebay Now and also charges $5.00 per delivery.
Meanwhile, other startups are entering this space including Instacart, Zipments, Postmates, Deliv and Kozmo; the same Kozmo that rose to fame during the late 1990s and was out of business by 2001. Perhaps it was a bit before it time, but Kozmo has recently announced plans to re-launch its website.
Even the large parcel carriers, FedEx and UPS, along with the USPS and regional parcel carriers, are interested in this market, each providing its own version and/or trialing with partners.
Why the interest in this market? Boston Consulting Group estimates that the 2013 same day delivery market will generate $425m to $850m in revenue – small change for the likes of FedEx and UPS. Perhaps many view this as a way to compete against the market giant Amazon or as a way to improve the customer experience? Perhaps Ebay’s Mr. Wenig is correct in his statement that most consumers buy within 15 miles of their home. If so, consumers will indeed benefit from this type of delivery option, if they are willing to pay for it.
Regardless, this niche market is likely here to stay and will definitely be tested this holiday season – particularly in the last remaining hours leading up to the holidays.