Friday, December 22, 2017

Big Box Retailers Looking to Compete by Combining with Same-Day Delivery Services

Over the past few years, especially during the holiday shopping season, e-commerce businesses have found themselves pulling ahead of their brick-and-mortar competitors. In this modern age, more and more shoppers value the efficiency of online purchasing over the more personalized feeling of a physical store. The economy has become based on instant gratification, and many feel that online retailers can fill that need more easily. Ronald White's L.A. Times article begs to differ: White claims that retailers are aiming to recapture the market by offering same-day delivery.

While people were once satisfied to wait up to 6 weeks for a product to arrive from a mail-order catalog, technological and business advances by companies like Amazon have led consumers to expect fast delivery, often at no extra cost. For a shipping giant like Amazon, same-day delivery isn't such a big deal, because they already built up their infrastructure over the years. For businesses like Target or Wal-Mart, things can get a little tricky. Those companies are used to delivering in bulk but tend to take several days to a week to make a delivery.

The big box chains don't have the time or the capital to build a same-day shipping platform from the ground up. So, they've turned to alternative delivery modules, most notably third-parties like Shipt, Grand Junction, and Deliv. Those services use mobile apps to connect the network of delivery drivers to the big box retailers. While some companies are on a part-time basis with those services, using them for deliveries when necessary, others are looking to make acquisitions for their future success. In fact, Target put in a $550 million acquisition offer to Shipt just last week. If the offer is accepted, Target will have their own network of same-day delivery drivers, giving the chain a competitive advantage against places like Best Buy or Wal-Mart.

These same-day delivery platforms operate under the same principle as services like Uber or Lyft. Drivers sign up to deliver packages during certain hours, deliver those packages, and get paid their set rate. If a driver gets too many negative reviews (damaged package, delayed delivery, etc) then they aren't allowed to deliver anymore. The better a deliverer's ratings, the better the perks. While services like Shipt are only economically feasible in big cities like L.A. or New York, Target s willing to make that big acquisition move because they know that the independent contractors connected through the app are faster and more reliable than mainstream delivery services like USPS or Fed-Ex.

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