Amazon Opens Pandora’s Box of Same-Day Delivery: Is It Here to Stay?
Same-day delivery seems like a genius idea, right? But the problem is, consumers have to pay for it, and as it turns out, that’s not always something they’re willing to do. More and more, retailers are beginning to offer same-day delivery programs, but industry experts still maintain their belief that same-day shipping won’t stick around for long, because “shoppers don’t want it” or “shoppers won’t pay for it.”
That’s the reality that Fierce Retail illuminated in its report earlier this month when it highlighted Forrester Research’s Sucharita Mulpuru, one analyst who agrees that same-day shipping isn’t a long-term reality. As consumers are unwilling to pay more for the privilege, and most retailers can’t handle subsidizing the costs, Mulpuru believes that many will eventually recognize that same-day delivery isn’t feasible. According to Fierce Retail, most shoppers say they won’t pay more than $2 for same-day shipping, while it costs retailers as much as $20 to offer the service. Booz & Co found that almost half of its survey respondents were unwilling to pay anything for delivery, and only 10 percent said they would pay $10 or more for same-day delivery. So what should retailers do: pull back on same-day shipping programs or subsidize deliveries? For many, the latter isn’t an option.
So far, the only company that is willing to sponsor the same-day delivery program, at least somewhat, is Amazon.com (NASDAQ:AMZN), the king of same-day shipping. Retailers have Jeff Bezos to thank for ever coming up with the idea, but they should at least rest assured that Amazon is now paying the price for it. Amazon Prime subscribers do pay annual fees to enjoy the convenience of the program, but their charges still don’t make up for the amount of money Amazon pays in its high shipping charges.