Fear of Amazon Pushes Stores to Offer Same-Day Shipping

The following is an excerpt from an article in:


The New York Times
Friday, December 28, 2012

Fear of Amazon Pushes Stores to Offer Same-Day Shipping

By STEPHANIE CLIFFORD and CLAIRE CAIN MILLER

Ivy Wu did not immediately need the navy lace cocktail dress she ordered the other day. But when a representative from Shoptiques, an e-commerce site, arrived at her Midtown Manhattan office with the dress only hours after Ms. Wu, 26, had placed her order, “I was really impressed that it was here,” she said.

This holiday season, same-day shipping has replaced free shipping as the new must-have promotion. It’s logistically complicated and money-losing — and may not even be a service that consumers want or need, analysts say. But retailers from Walmart to small shops like Shoptiques are willing to take the risk. Even the Postal Service has introduced a same-day option for retailers. And the reason is simple: fear of Amazon.com.

Amazon, the world’s biggest online retailer, has hinted that it will expand its same-day shipping service, giving customers the immediate gratification that has been the biggest advantage of brick-and-mortar stores.

For small outfits like Shoptiques, it is not an easy proposition. The courier who showed up at Ms. Wu’s office was the company’s head of boutique operations, who has put aside her regular job this holiday season to make deliveries by hand. Bigger retailers, like Toys “R” Us, Macy’s and Target, have worked with eBay to deliver items the same day, as have other old-line stores. Google has begun testing a local delivery service with several chains.

“There’s lots going on in this space, and it’s all driven by Amazon,” said Tom Allason, founder and chief executive of Shutl, a British same-day delivery service that will expand to the United States next year. “It’s not really being driven by consumers at the moment.”

The same-day delivery idea was a spectacular failure during the dot.com boom. Companies like Kozmo.com and Webvan went under because the services simply cost too much to be profitable. Amazon has offered same-day shipping since 2009, but with limits — only in big cities near Amazon warehouses on certain items ordered in the morning.

The geographical limits exist because Amazon had built warehouses far from major cities to avoid charging sales tax in certain states. But it has now given in on the sales tax fight, and in return, is erecting warehouses near cities like San Francisco, which analysts say is paving the way for faster, more widespread same-day delivery and spurring competitors.

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