Same-day delivery's big chance
- 07 January, 2015 01:31
Stats about online retailers' holiday performance poured into my inbox as the year ended, but one in particular really caught my eye. Amazon noted that its final Christmas Prime Now (same-day delivery) order was placed on Dec. 24 at 10:24 p.m. -- and was delivered 42 minutes later, at 11:06 p.m.
That's right; someone in New York City went online with just about an hour and a half of Christmas Eve to go, placed an order for the Costa Rica Clementine, Limu Lemon and Molokai Coconut flavors of an antioxidant-infused beverage called Bai5, and the doorbell rang nearly an hour before midnight. Those three 12-packs must have made someone's Christmas morning.
They probably thrilled some people at Amazon as well. For online retailers, the point of same-day delivery is to change where revenue goes on some of the highest-value days in the retail year. Bit by bit and year by year, online retailers have been encroaching on physical retailers' safe ground, those dates that are too close to an event for an online retailer to guarantee delivery on time. Before this year, online retailers had already whittled physical retailers' Christmastime safe ground to Dec. 23 and 24. Amazon's Christmas Eve miracle this year means they're about to make a push to eliminate it entirely. In fact, online retailers, already able to offer shoppers an escape from crowded stores and parking lots that have to be driven to in potentially terrible weather, could better the physical stores again. How many brick-and-mortar retail operations were making sales at 10:24 p.m. on Christmas Eve?
Despite Amazon's ability to save Mr. Antioxidant Beverage's Christmas, we're not there yet. Amazon Christmas Prime now is offered to a very small number of customers in a very small number of urban ZIP codes. (Amazon's statement was a marvel of marketers' ability to suppress relevant facts in service to what is to them a greater truth: "This holiday, Amazon customers ordered more than 10 times as many items with Same-Day Delivery, over 2013." And how many same-day deliveries was that? Amazon doesn't say, but the very absence of that figure makes one think that the comparison says more about how incredibly few same-day shipments Amazon had in 2013 than about how many more it had in 2014.)
Still, the ability to move product that quickly has huge implications for holiday shopping -- and for gift shopping for other occasions, like weddings, birthdays, anniversaries and graduations, if customization is up to the job. If Amazon can track events like those effectively, it will be in a position to make a killing among the forgetful people and procrastinators of the world.
But Amazon has a lot to overcome. Right now, its same-day deliveries rely on bike, truck and taxi. Much as Amazon would like to start drone deliveries, that won't be happening anytime soon. Regulations and paperwork are making research in the U.S. burdensome, and Amazon has said that it will move that research to the U.K. and Israel, just as Google has moved its high-flying trials to Australia. And drones have plenty of drawbacks: Battery life is short, telephone and electrical lines tend to get in the way, and even attacking dogs could be a problem.
But at least Amazon and a few startups are investing the dollars to try to make under-an-hour deliveries viable. Wall Street hasn't been patient. Amazon in 2014 suffered its worst year in the U.S. stock market since 2008, and the two biggest irritants for traders have been the company's horrible Fire Phone sales and the warehouse expansion necessary for same-day and next-day deliveries.
Of course, Wall Street can be notoriously shortsighted. It should want companies to invest in the future, to truly lead. Maybe Mr. Antioxidant Beverage will help them see that this idea can work, if sufficiently developed. If not, Wall Street's relentless focus solely on quarter-to-quarter growth will be great news for every privately held startup trying to do same-day delivery.
Evan Schuman has covered IT issues for a lot longer than he'll ever admit. The founding editor of retail technology site StorefrontBacktalk, he's been a columnist for CBSNews.com, RetailWeek and eWeek. Evan can be reached at email@example.com and he can be followed at twitter.com/eschuman. Look for his column every other Tuesday.