In July, Amazon.com CFO Thomas Szutak seemed to douse reports that the online retailer would go big with same-day shipping, with the tech executive noting that “we don’t really see a way to do same-day delivery on a broad-scale economically.”
But Wal-Mart is tinkering with the concept, and it is pushing ahead aggressively with a same-day shipping option this holiday season in 10 markets. The move is the latest volley in an intensifying war between Amazon.com and Wal-Mart. (Previously: Walmart versus Amazon: The next great tech battle?)
Of course, Wal-Mart has a huge network of stores on its side, so perhaps it believes those can help it make money on the same-day shipping concept.
However, The Wall Street Journal reports today that the brick-and-mortar stores actually can be a liability in delivering packages faster to customers. The report cites an analyst who said it can be as much as four times as expensive to pack and ship goods from a retail store versus an automated warehouse.
Wal-Mart started testing same-day delivery earlier this month in Virginia, Minneapolis and Philadelphia, and plans to offer it in the San Francisco Bay Area next month. (No word on whether Wal-Mart will bring it to Amazon.com’s backyard in Seattle).
Wal-Mart said it plans to charge $10 for delivery, with no minimum purchase except in the Bay Area where customers must have a $45 minimum purchase, the Associated Press reports.
Amazon has offered same-day delivery in a handful of cities for the past three years, and it also has been experimenting with its Amazon Fresh grocery service in Seattle as well as a new Amazon Lockers service where customers can pick up their orders at designated locations such as 7-Elevens.
What’s at stake with same-day delivery?
The New York Times’ Stephanie Clifford offers this perspective:
The first retailer to master same-day delivery on a wide scale could attract customers who have avoided online purchases because they wanted items immediately, and encourage current shoppers to add products that they usually buy from supermarkets or drugstores, including celery and toothpaste.
But some retail analysts are questioning whether the expense and difficulty of same-day delivery would be worth it.