Taking a Tip from Amazon: Local Delivery Boosts Business
Like it or not, the retail world is changing and much of it can be attributed to Amazon. One of the keystones of the change is how easily and quickly the online giant delivers products to its customers. Over the past couple of years, three- to five-day shipping has literally been whittled to next-day or even a matter of hours if customers ask for it. And as local delivery services have improved, customers have been asking for it a lot. Big-box competitors have hustled to keep pace and there are ways independent stores can boost business and earn new customers, too, by offering local delivery.
Amazon’s delivery service is second to none in the retail industry. Heck, in 2018 the company spent $27.7 billion on shipping. That’s more than Starbucks reported in annual revenue. Its Prime Now delivery service is available in more than 10,000 cities and its grocery delivery service through Whole Foods can be found in over 60 U.S. cities.
The company has so much of its success built on product delivery, that it has built its own logistics fleet by acquiring Boeing 767s, thousands of tractor-trailer rigs and local delivery vans. And, as anybody in retail knows, the company has been experimenting with local delivery drones that could be flying packages to your door within the next few years.
Amazon’s efforts to build its own delivery logistics reached a level where earlier this year, June 2019, FedEx dropped the company as a client. FedEx, the third largest delivery company in the world behind UPS and DHL, didn’t blink when it pulled the plug on Amazon, stating the online retailer comprised only slightly more than 1% of its business.
Big Business Keeping Pace
Target is one of the companies trying to keep pace. The Minneapolis-based company is in the process of a $7 billion effort to improve its customer shopping experience which includes in-store and online shopping and delivery. Part of that effort was the company’s 2017 acquisition of Shipt, an online, same-day delivery platform.
Walmart is also devising ways to stay abreast of Amazon in local delivery and pickup. It unveiled grocery curbside pickup service in 2018 and in May 2019 added one-day shipping of approximately 220,000 items for members in 40 U.S. metropolitan markets.
Delivering the Hardware
In hardware and building materials, Home Depot and Ace have been busy improving their customer service and local delivery offerings. Home Depot makes delivery, available to homes or job sites of a wide variety of items ordered online including:
- Building materials such as concrete, lumber, plywood, pavers, drywall and roofing
- Interior design products like doors, windows, cabinets and laminate flooring
- Outdoor items such as grills and riding mowers
In September 2018, Home Depot offered up next-day and same-day local delivery in approximately three dozen U.S. metro markets. Deliveries of small items are made through the company’s partnerships with Roadi and Deliv. The company uses its own trucks for larger orders.
Ace, too, has been deploying and refining its local delivery for several years. The company started with “buy online, pick up in-store”. In April 2019, it enhanced the service with a “buy online, deliver from store” program. Participating stores offer next-day and same-day local delivery for Ace Rewards members on orders of $50 or more. It’s up to the participating stores to establish their own delivery radius and fees.
“There has been a tremendous consumer shift toward free and fast delivery in the marketplace,” Bill Kiss, head of Digital, Retail Strategy and Innovation for Ace Hardware Corporation said in a press release. “With 72 percent of U.S. households within 15 minutes of an Ace store, we are uniquely positioned to leverage that proximity to meet our customers’ home improvement needs. The introduction of delivery is another way Ace can bring our unique brand of helpfulness and convenience to customers.”
In the Midwest, Menard’s Hardware offers same-day delivery. Qualifying orders can be delivered within a 35-mile radius of participating stores.
Lowe’s is taking local delivery another step forward by teaming with FedEx in testing an autonomous delivery robot. The rolling bot can deliver small products right to your doorstep. This summer, the hardware company tested local delivery in a few markets.
“With this type of delivery, it’s not about large goods. This delivery will be things like saw blades, drill bits, 5-gallon drums of paint — things that perhaps they would have runners in the past to go pick up,” Lowe’s Executive Vice President of Supply Chain Don Frieson said to Supply Chain Dive in an interview.
Delivery Gone Too Far
Burger King has recently gone the extra mile in local delivery by testing a program to deliver food to motorists stuck in traffic. The “Traffic Jam Whopper” service uses motorcycles to deliver food ordered through a mobile app by victims of gridlock in the cities of Los Angeles, São Paulo and Shanghai. The captive motorists responded to the offering by boosting Burger King deliveries by 63% and BK app downloads by 44% during the test.
Like Domino’s Pizza, convenience store giant 7-Eleven this year added a feature to its 7Now app that allows customers to receive local deliveries at thousands of established public locations such as parks, beaches, recreation facilities and entertainment venues. Customers can order items such as food and beverages, including wine and beer, packaged snacks, cosmetics and a variety of other products.
Small Businesses Taking It Home
Small and independent retail business owners might be thinking, “Yeah, sure. How do I compete with that?”
The answer is that small businesses have been offering home delivery for decades. People of a certain age should all remember when local dairies delivered farm-fresh milk in reusable glass bottles and eggs to their doorsteps or, in some cases, all the way into their refrigerators.
Pizza deliveries are certainly nothing new and many companies like Domino’s, Pizza Hut and Papa John’s build their stores around home delivery. Many of their stores don’t even offer an eat-in option.
The proliferation of services such as Grubhub, DoorDash and Uber Eats, shows the popularity of home delivery and they offer small, independent restaurants the tools to compete with franchises in local delivery options.
Local delivery isn’t just for food, either. Auto parts stores have couriered parts to local garages and mechanics for decades.
Bed, Bath and Beyond offers same-day delivery on orders placed by 1 p.m. in selected zip codes. A $4.99 charge is included for orders that qualify for the company’s free shipping. It’s $9.99 for orders that don’t qualify.
“Globally speaking, same day delivery is no longer just a concept. Instead, it’s the standard practice in many industries nowadays,” Nick Hartman, Marketing and Communications manager for Go People, writes on his company’s blog. Go People is a Sydney, Australia-based same-day delivery service. “Fashion retailers, food and beverage companies, medical suppliers, car accessory manufacturers, and a lot more are now offering same-day delivery service to consumers.”
The “2017 Digital Commerce Benchmark Survey” from BRP, a retail management consulting firm, showed that 51% of retailers offered same-day delivery.
Local Delivery Options
FedEx, UPS, DHL and even the U.S. Postal Service are the Mount Rushmore of product shipping companies. Most offer some form of next-day or same-day delivery for either e-commerce or retailers in major metropolitan areas.
Delivery startups like Dropoff, Deliv, GoShare and many others have been popping up for years to fill the increasingly high expectations of shoppers for smaller retailers. However, like the big boys, their services are mostly available in larger cities.
If you’re not in one of the major metropolitan areas, there are often local and regional carriers who will tote your freight. Contract rates can save you money.
Entrepreneur offers some ideas for businesses looking to save money on shipping costs.
Check out online load boards. These freight companies run prescribed shipping routes and sell any extra space on their trucks through online boards. The costs are shared by all the shippers.
Deliver off-peak. Just like energy costs are highest during peak hours of usage and broadcast advertising costs are highest during primetime, shipping rates are more expensive between 6 a.m. and 7 p.m. This may not work in all markets but shipping outside of that time frame could save money.
Shop around. The Entrepreneur story suggests using a company like uShip which connects shippers with carriers much the same way eBay links buyers and sellers.
Not all third-party local delivery services work out, though. Uber tried to add parcel delivery to its offerings in 2015 when it rolled out UberRush. Premiered in New York City, Chicago and San Francisco, the service struggled to gain traction and was garaged permanently in 2018.
Do It Yourself
Independent retailers might be better off taking their own road when it comes to offering local delivery. The first step is gauging demand. Many neighborhood businesses might have a hard time justifying the investment. Others, like independent supply companies or hardware and building materials businesses, might already have enough clientele and equipment to justify starting or expanding their local delivery services.
Companies like GoShare offer online information on how to start a delivery business and it’s a relatively painless process.
- Buy equipment. Trucks or vans are the platforms for your service.
- Tool up. You’ll need accessories like dollies or furniture movers, tie-downs, moving pads or blankets, and, if you’re packaging products, lots of boxes and packing materials.
- Cover your assets. Business owners always need to add cargo and liability insurance to standard vehicle policies to protect the freight.
Independent businesses can enhance their inventory management and local delivery services with retail platforms that offer mobile delivery features. Paladin’s Mobile²Deliver, for instance, allow outdoor sales associates and delivery drivers to create sales tickets, schedule local deliveries and collect customer signatures on mobile devices. All the transactions run through the store’s database providing real-time views of products in transit and in stock.
Independent businesses may not be able to match Amazon’s delivery services, but simply offering free delivery can boost your business.