How can traditional retailers compete with same-day delivery?

These days, I buy so many products online that I’ve actually memorized my credit card number — something that hasn’t happened since I was planning my wedding. But there is one market that online retailers have yet to penetrate: the market for emergency purchases. If I run out of toothpaste, I’m still going to walk around the corner to Rite Aid.

That’s starting to change. Amazon is offering same-day delivery in 10 cities. Currently, prices are steep, and you have to order early in the day, but the service will likely get cheaper and better over time. Wal-Mart is testing the service as well. So is Google, which could leverage its network of Google Street View drivers to deliver products. eBay Now, which launched last year in NYC and San Francisco, uses couriers to deliver thousands of products to your door in less than an hour, for $5 per delivery. Startups like Shutl and Postmates are using similar courier-based models, while Uber might leverage its network of drivers to deliver packages as well as people.

For now, most consumers will use these services only for bigger-ticket items, when it’s worth paying an extra $5 or even $15 for same-day delivery. I’ll probably still rely on Rite Aid for my toothpaste. But that may not last. Brick-and-mortar retailers need to consider how to react, and they should be particularly worried about Amazon. Shutl and eBay deliver products from traditional stores — as of now, they’re potential partners for retailers, not competitors. Amazon, however, bypasses retailers altogether.

So how can retailers compete? They need to consider what “jobs” they can do better than online retail, as Clayton Christensen and Max Wessel outline in their recent HBR cover story, “Surviving Disruption.” Here are a few ideas:

  • Entertainment. Trader Joe’s, Whole Foods, and even Costco have created an entirely new reason to go grocery shopping: because it’s fun. I get the same pleasure from going to Whole Foods as I do from going clothes shopping. I get to browse and discover new things in a warm and inviting environment. New and interesting products stimulate my creativity, as I think about how I could use them. I also get to spend quality time with my husband. Amazon offers incredible convenience, but it doesn’t offer fun — at least, not yet.
  • Destination products. One secret of the success of Trader Joe’s is its focus on products that you can’t get anywhere else. The only way to get same-day delivery of TJ’s amazing Vegetable Panang Curry is to get it from Trader Joe’s.
  • Community connection. A recent article by UPS suggested that small businesses can compete by offering consumers a feeling of “real.” The article suggested “re-conceptualizing limited selection as personal curation of products … or even taking customers on ‘consumer safaris’ to see where products are made.” I would also suggest using check-in services like Foursquare to get to know  customers, reach out to them, and build relationships. This is, of course, more relevant for small businesses than large retailers like Best Buy.

And if you can’t beat them, join them. One same-day delivery service is trying to capitalize on the consumer desire for “real.” In the UK, Hubbub offers same day delivery of goods from local, independent stores.


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