Same-day delivery is being pumped up as a major step for e-retail—the service that’ll boost online shopping sales into the next stratosphere. There’s one minor problem, though: Shoppers don’t seem to want it all that much.
Last week, TechCrunch reported that Google is getting ready to launch a same-day shipping service called Google Shopping Express. The move will put Google into what’s quickly become a crowded field of services offering speedy and same-day delivery, including web titans Amazon and eBay, the world’s biggest retailer Walmart, and smaller upstarts such as a UK upstart called Shutl.
Big money is being spent developing same-day delivery services, so the players involved obviously think that there is big money to be made down the line. But will that actually happen?
According to a survey of shoppers conducted by the Boston Consulting Group (BCG), the idea of same-day shipping doesn’t get consumers particularly excited. Shoppers are far more likely to buy online due to factors that have been boosting e-sales for years: cheap prices and free shipping. According to the press release announcing the survey results:
Only 9 percent of the 1,500 U.S. consumers surveyed cited same-day delivery as a top factor that would improve their online shopping experience, while 74 percent cited free delivery and 50 percent cited lower prices.
Same-day shipping will be merely “a niche service in the near future,” BCG partner Rob Souza said. Today’s wealthy urban millennials (household income of $150K+) are the group most likely to want the service—and be willing to pay $10 or so for it. Most other consumers, however, say they’d pay $6 tops for same-day delivery. That’s cheaper than what the service typically costs in test markets, and at that kind of price point it may be difficult if not impossible to be profitable.
“Retailers may choose to offer it to build customer loyalty, enhance brand awareness, or keep up with the competition,” Souza concluded in the BCG press release. “But it is unlikely to generate significant revenues for either retailers or carriers.”
He’s not the only skeptic. Paula Rosenblum, an RSR Research analyst, told Internet Retailer that she sees limited appeal (and upside) for same-day delivery:
“The only value I see in same-day shipping is when I’m on a business trip and realize I’ve forgotten something or broken something I need,” she says. “It’ll find its place, but it’s not a gold mine, as far as I can see.”
For the most part, it appears as if consumers don’t really want same-day delivery—not if they have to pay for it anyway. Then again, do consumers really know what they want? Apple‘s Steve Jobs famously declared that “people don’t know what they want until you show it to them.” At this point, very few consumers have seen same-day delivery in action. The service is only offered in a few cities, and only a tiny fraction of consumers in those cities have tried same-day delivery out.
In a statement, Tom Allason, CEO of same-day delivery platform Shutl, called the BCG survey both “misleading” and “unsurprising.” Since “99% of shoppers have not yet experienced same day/hour delivery,” Allason said, the service is obviously unfamiliar — so it’s no wonder consumers aren’t clamoring for it. “The thing about consumer expectations is that it only goes one way – up,” said Allason. “When catalogues were offering 4-6 week delivery consumers were very satisfied with delivery times. Every year they say that they are satisfied and yet every year the delivery times they choose accelerate. Let’s see how consumers answer the survey next year.”
So it may be premature to say that same-day delivery won’t amount to much. It could be one of those things that consumers don’t seem to care about—and then all of a sudden find they’re unable to live without.