Everyone loves delivery, until they have to pay
Published 10:34 am Tuesday, November 24, 2015
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 only comes with shopping in stores or via apps like Uber and Seamless. But the logistics and costs of same-day delivery — the fuel, labor, infrastructure and other costs — has 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 now available in 23 metro areas. And where Amazon goes, other retailers must follow.
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“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 non-retail 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.”