Macy's enters the same-day-delivery wars

Brigid Sweeney, Chicago Business

Macy's Inc. is joining the same-day-shipping frenzy as the holiday shopping season sets in.

Customers in Chicago and seven other cities can now buy items on the department store chain's website and have them delivered to their door the same day. The service costs a flat $5 if online purchases exceed $99, while smaller orders are subject to standard shipping rates plus an extra $5. Customers, who must place their orders by 1 p.m. Monday through Saturday and 11 a.m. Sundays, can select a desired two-hour window for delivery.

By debuting the same-day option, Cincinnati-based Macy's is trying to better compete with a host of others and grab a larger share of big-spending “omni-channel” customers who shop across the Web, mobile and in-store locations. Those shoppers are expected to spend an average of $592 on holiday shopping this year — 66 percent more than people who spend exclusively in brick-and-mortar stores, according to Deloitte's holiday shopping survey.

'WHENEVER, WHEREVER AND HOWEVER THEY PREFER'

“Our goal remains to help our customers shop whenever, wherever and however they prefer, and to use the entire inventory of the company to satisfy demand,” Terry Lundgren, Macy's chairman and CEO, said in a statement.

Amazon.com Inc. is the dominant player in the emerging same-day drop-off game. Its service,now in 13 cities, including Chicago, applies to items including toiletries, household items, office and school supplies — even laptops — and costs $5.99 for Amazon Prime members. Non-Prime members pay $9.98 for the first item and 99 cents for each additional item. Chicagoans must place their orders by 7:45 a.m. to guarantee delivery by 9 p.m.

Google Inc. also is rushing to customers' doorsteps. After launching its own express delivery service in San Francisco last year, the digital advertising giant expanded to Chicago last month. It also continues to debut same-day delivery partnerships with major brick-and-mortar retailers including Target, Costco, Walgreens, Toys R Us and specialty stores like L'Occitane and, locally, Treasure Island and Wrigleyville Sports. Customers are charged $4.99 per order or can subscribe for $10 a month or $95 a year (compared with Amazon Prime's $99 annual fee).

Wal-Mart Stores Inc. has tested its same-day Wal-Mart To Go option, which costs $10 regardless of the size of the order, in the Virginia suburbs of Washington, Philadelphia, Minneapolis and parts of California since 2012.

DO WE REALLY WANT THIS?

A handful of startups, including Chicago-based WeDeliver, also provide the service on behalf of retailers by using crowdsourced couriers who drop off goods from their own cars (or bikes). Macy's will use Deliv, a Menlo Park, California-based company that raised nearly $7 million in Series A funding last year and $12.5 million in total. Deliv provides same-day delivery for stores in major malls owned by General Growth Properties Inc., Macerich, Westfield Corp. and others, as well as for smaller local retailers.

Working with third-party crowdsourced services allows traditional retailers to slash delivery costs and better compete with Amazon, which is testing its own fleet of trucks for same-day deliveries and has even experimented with using taxis.

Another group of more narrowly defined startups uses crowdsourced delivery people to deposit groceries (Instacart) or booze (Drizly, Ultra, Minibar) on your doorstep in as little as 30 minutes from order time.

There is, however, some question as to whether consumers really want the service for most purchases. Analysts say that while same-day delivery for groceries and perishables makes sense, larger demand in other sectors has yet to be entirely proven.

Wal-Mart, for example, has yet to expand its same-day delivery nationally. According to areport, executives say the option of ordering online and picking up in a store is more popular because customers don't want to be stuck at home waiting for their packages.

And eBay Inc., which launched its own same-day delivery test in Chicago and three other cities in 2012, said this summer that it will not meet its original goal of expanding to 25 cities by the end of the year.

Article from: http://www.chicagobusiness.com/article/20141113/NEWS07/141119897/macys-enters-the-same-day-delivery-wars