Start-up looks to disrupt the same-day delivery market

In a 2013 study, Rob Souza, a partner at Boston Consulting Group stated, “Same-day delivery will be a niche service in the near future. Retailers may choose to offer it to build customer loyalty, enhance brand awareness, or keep up with the competition. But it is unlikely to generate significant revenues for either retailers or carriers.”

Indeed, building customer loyalty may be behind the recent announcements from Macy’s, Bloomingdale’s and Footlocker. Footlocker plans to test the delivery method at some of it stores in California while Macy’s and Bloomingdale’s plan to test same-day delivery for products purchased on their websites.

Footlocker is testing the same-day/next-day delivery idea at five stores in California, with plans to roll it out at its 1,300 locations across the US and Canada should it prove a success.

For retailer Macy’s, the same-day delivery pilot programme will start in eight markets, Chicago, Houston, Los Angeles, New Jersey, San Francisco, San Jose, Seattle and Washington DC, and four Bloomingdale’s markets in Chicago, Los Angeles, San Francisco and San Jose, California. In total, fifty stores will be involved, serving as fulfilment centres.

Retailers such as Macy’s, Bloomingdale’s and Footlocker may view same day delivery as building customer loyalty, but for the company providing the delivery service for these three retailers, Deliv, it is looking to disrupt the way goods are delivered.

Deliv is a crowdsourced delivery service costing around $5.00 per delivery. According to the Chief Executive Officer, it is able to charge a lower fee because it owns no vehicles or warehouses. Drivers are paid hourly and are hired when needed. Partnering with mall groups such as Simon Property Group, General Growth Properties and Macherich and Westfield, it is gaining more retail customers such as Foot Locker.

According to the Multichannel Merchant website, when an order comes in, Deliv’s IT system receives information about the destination, customer and requested delivery window. It then matches one of Deliv’s crowdsourced drivers nearby to the order in real time and determines the most optimal delivery route. The item purchased is brought by a mall employee to a central collection point in the mall. Customers get confirmation by email or text that the delivery is on the way, including a picture of the driver. They can also click on a visual map to see where the driver is.

Customers can accept their delivery via digital signature on the Deliv app. They can also rate the driver and the experience and recommend it to a friend. “The ratings are important because they impact the opportunities that driver receives in the future,” said Deliv founder and Chief Executive Officer Daphne Carmeli.

The IT behind Deliv is similar to what is offered in Europe by the likes of DPD and other couriers including Shutl which was acquired by eBay in 2013. How it translates in the US market will be interesting to observe. Deliv has received a considerable amount of funding and appears to be winning a good number of customers. However, it is one of many start-up couriers that are looking to disrupt the delivery business, particularly within the same-day delivery market. What level of success these companies can achieve remains to be seen. Also, can they remain as standalone companies or will they become acquisition targets for FedEx or perhaps UPS?