Same Day Home Delivery is the latest trend in mega online retailers to improve their reach to Customers. Often seen as a drawback for online retailers, delivery times are a critical marketing area of opportunity for companies whose business model shuns the brick and mortar business model. Expanding their offering to include same-day home delivery is a great challenge but could be extremely lucrative if they get it right as they have done in the UK.
UK Home Delivery for Groceries is Big Business
In the UK, home delivery of grocery is very common. According to analysts, online home grocery market was worth almost $275 Billion in 2013. That number is expected to grow by 4% this year, and double in the next five years. As of this year, all five of the big grocery chains in the UK offer home delivery for a small fee. In many cases, for nothing if the order reaches a certain amount, usually around $80.
My kids use home delivery in the UK all the time as they have busy lives and don’t want to spend it at the supermarket. I suspect that many of the consumers that love this service in the UK would agree with my kids on this point. So why can’t I do this at my home in Sarasota, Florida?
The US Hasn’t Embraced Home Delivery for Groceries
I have often wondered why in the US grocery retailers don’t do delivery. I had put it down to the fact that the country is larger than the UK. Size isn’t the reason, however because pizza delivery is common virtually anywhere. So why not grocery? The stores are all local. What’s the issue?
According to Foodlogistics.com, there are many reasons grocery delivery hasn’t taken off in the US. The biggest ones are that the companies will need to handle the challenges that delivery presents in some areas of the U.S. where urban sprawl and harsh weather are a factor. Both of these challenges present obstacles to reliable delivery windows, not to mention food storage for transportation, i.e., the ice cream melts by the time it gets to the consumer’s house. In addition, the US has a shortage of driver labor.
However, the hold up could be the consumer. As we have said in other posts, changing customer’s behavior can be difficult (Link once published). It requires collaboration between retailers and consumers to make home delivery of groceries a priority. Furthermore, consumers have to see the value in not going to the store.
I am also interested to see how Google and Amazon do with their same day service business models in the US. If the success and dollar in the UK are any indications, home delivery of goods, groceries or otherwise, could be an enhancement to the Customer Experience in the US. An enhancement that results in billions of additional revenue for the companies that get it right.
Amazon first launched Same Day Service over four years ago in certain areas. Last year they added fresh grocery delivery to San Francisco and Los Angeles, after years of testing in Seattle. Earlier this year, they expanded their footprint by adding more cities and increasing the window for delivery. In addition, they lowered the fees for the service from a per item price to a flat rate of $5.99 for up to 150 pounds of product for Amazon Prime members.
Google just launched a new, same-day delivery service for consumers in certain metro areas. Google Express is just $95 for a year, or $10 a month, and includes goods from retailers like Costco, Target, Smart and Final, Whole Foods and more. Provided the order is for $15 or more, same-day delivery orders will have no additional fee for the service.
Delivery has been a hurdle for online retailers since they first appeared on the World Wide Web. Many brick and mortar retailers have used this advantage over retailers like Amazon well. To help stay competitive in the changing marketplace for consumer goods, they tout the benefits of getting what you want right then over having to wait for three to five business days for your free super saver shipping window (or two days if you subscribe to Amazon Prime service).
Home delivery, however, is a big advantage, too. And mega ecommerce retailers are working hard to make it a reality in a market where home delivery has never really caught on before: the US.
Why do you think home delivery for groceries isn’t as widespread in the U.S.: Logistics or Customer Habits? I’d be interested to hear your thoughts in the comments below.
Colin Shaw is the founder and CEO of Beyond Philosophy, one of the world’s first organizations devoted to customer experience. Colin is an international author offour best-selling books and an engaging keynote speaker. To read more from Colin on LinkedIn, connect with him by clicking the follow button above or below. If you would like to follow Beyond Philosophy click here
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