Will consumers buy into same-day delivery?

Package photoBIZMOLOGY — The country’s leading retailers are gearing up for a major-league battle over same-day delivery service for items ordered online. But the better question may be: Do today’s shoppers even care about the faster service?

A newly released study from The Boston Consulting Group reveals only 9 percent of US consumers think same-day delivery would be a key factor to improving their online shopping experience. Consumers instead selected free delivery (74 percent) and lower prices (50 percent) as key factors.

While Amazon.com has offered same-day delivery of certain items in selected cities for several years, more companies have entered the market in recent months. Why? Same-day delivery could generate up to $850 million annually in revenues, according to The Boston Consulting Group, and companies want to earn shoppers’ loyalty early on.  

Who else has joined the same-day delivery party? Google reportedly has started offering it through its Google Shopping Express program. Startups like Shutl and delivery companies including FedEx have also started serving the niche. Wal-Mart began testing same-day service in select markets in fall 2012.

While most online shoppers are not ready to hop on the same-day bandwagon, there is one small but wealthy consumer group willing to pay a premium for same-day delivery: the “affluent millennial.” These shoppers aged 18 to 34 have a household income over $150,000 and live in urban areas. Willing to pay up to $10 for same-day service, this coveted demographic makes up 2 percent of the market, but spends two times more than the average US consumer, according to the Boston Consulting study.  

Until the typical online consumer is willing to pay a premium price for fast service, same-day delivery services will have to compete for the attention of the digitally savvy and luxury-minded affluent millennial. The good news is that this select group is typically among the first to adopt new technologies and could be swayed by same-day convenience. Especially for the latest designer find that they can’t wait until tomorrow to try on.

Linnea Kirgan

Linnea Kirgan is an industry editor for First Research/Hoover's, covering retail and consumer topics. Follow her on Twitter.

Read more articles by Linnea Kirgan.

Comments

  1. Rebecca Mallett Rebecca Mallett says:

    One of the reasons I am a loyal Zappos customer is because they deliver in a day or two. It’s not same-day, but it also doesn’t cost more than regular ground shipping. It amazes me every time how quickly orders arrive. Generally, I would not be willing to pay more for same-day service, though. Unless I needed something immediately and it was not available in any local stores…which isn’t likely to happen often.

  2. I know people who love next-day delivery and I could see them completely enamored of same day service. It doesn’t matter so much to me, but then again there are plenty of times when a new service moves the needle on what consumers want.

    The next thing you know, you will be able to drive to an Amazon store and buy what you want right then and there! Oh, wait…

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