Everyone loves same-day delivery until they have to pay

Associated Press

NEW YORK

Everyone likes the idea of same-day delivery. But who wants to pay for it?

That’s the problem merchants face as the busy holiday shopping season approaches. They want to offer customers the near-instant gratification that usually comes only with shopping in stores or via apps such as Uber and Seamless. But the logistics and costs of same-day delivery – the fuel, labor, infrastructure and other costs – have been a difficult challenge to surmount.

This year, Amazon has been making an aggressive push to offer same-day delivery to people who’ve paid its $99 fee for Prime loyalty-club membership. That service is available in 23 metro areas. And where Amazon goes, other retailers must follow.

“Over the past 18 to 24 months, Amazon has been pushing the bar” for fast and cheap delivery, said Daphne Carmeli, CEO of Deliv, a startup that works with retailers to provide same-day delivery. “If you’re in retail, you have to step up to the new bar.”

Amazon, of course, doesn’t have to pay for the cost of store upkeep, not counting its new bookstore in Seattle. And it makes money from other nonretail areas, such as its cloud computing arm, so it can afford to offer delivery services others can’t.

“Retailers trying to compete with Amazon on the road Amazon created will always be at a disadvantage,” said shipping industry expert Satish Jindel. “There’s only so long they can absorb the cost; it’s a huge challenge for retailers.”

Providing hassle-free, same-day delivery has been a quixotic quest for retailers for more than a decade. During the first Internet boom, startups such as Kozmo.com became ubiquitous in New York as employees with purple messenger bags fanned out to deliver snacks and household goods. But it didn’t make money, went bust and became a cautionary tale for the future.

Fifteen years later, things are definitely different. Driver routes are easier to track with smartphone GPS technology, more brick-and-mortar retailers are speeding delivery by using their stores as de facto warehouses and more people are willing to work in an “on-demand” fashion popularized by Uber and service apps such as Taskrabbit.

So more retailers are taking on the challenge of same-day. Startup delivery service Deliv is working with Macy’s, Kohl’s, Express, Williams-Sonoma and other brick-and-mortar retailers to expand same-day delivery options. Macy’s offers same-day delivery in 17 cities; Kohl’s this month expanded same-day deliveries from six to nine cities.

Craft-selling site Etsy is working with Postmates for a holiday-season pilot that will let some shoppers in New York City have items delivered to their door within hours for a flat fee of $20. Apple also is working with Postmates on same-day deliveries in New York and San Francisco.