Retailers are not sitting idle while Amazon makes next-day shipping push

If next-, or one-day shipping is not quite the present yet, it looks like it will almost certainly be part of the future, to be sure.

There are more than a few examples of that, to be sure, what with Amazon announcing in late April that it is working on evolving its ubiquitous Prime Two-Day Shipping program into a One-Day Shipping program. On the global e-commerce giant’s first quarter earnings call, Amazon CFO Brian Olsavsky said the company, in recent months, has significantly expanded its one-day eligible selection and also expanded the number of zip codes eligible for one-day shipping, to get things going.

But, by not stretch does this mean Amazon is alone in its efforts to get to one-day shipping. In fact, this development has seen other retailers, in kind, step up their respective games, as well.

Not long after the late April Amazon announcement, Walmart indicated in a Tweet that Amazon may not be the sole retailer offering one-day free shipping for long: “One-day free shipping…without a membership fee. Now THAT would be groundbreaking. Stay tuned.”

And last week retailer Home Depot entered the one-day shipping fray as well, stating on its first quarter earnings call that it will get to next-day delivery of parcel for 50% of the of the U.S. population by the middle of this year.

Mark Holifield, Home Depot, executive vice president, Supply Chain & Product Development, said that, the company’s parcel shipping capabilities from its direct fulfillment centers has secondary or faster delivery for more than 90% of the U.S. population, adding that Home Depot is currently at next day for 36% of the population.

“We'll further improve our next-day delivery capability with our new direct fulfillment centers under development in both Dallas and up in the Pacific Northwest near Seattle,” said Holifield. “And then when it comes to stores, we deliver from stores every day as well. And we've talked in the past about our delivery partnerships with Deliv and Roadie for crowd-sourced delivery via car and van. And that's now available to 40% of the U.S. population for car 70% for van. And what that means for customers is we've got same-day delivery available for orders placed by 2:00 P.M. and next day after that time. And by the end of Q2, we'll have the same day and next day capabilities for small parcel items from stores moving from 40% to 50% of the population.”

While Home Depot has made its intentions clear, that does not mean the heavy lifting is over. In fact, there are many hurdles to cross, according to Brittain Ladd, a global supply chain and strategy consultant.  

“Home Depot made a wise decision to invest in providing customers with Same Day and Next Day delivery,” he told LM. “The challenge for Home Depot, however, is that Amazon has every intention of expanding heavily into the do it yourself market and become a competitor of Home Depot. Amazon acquiring Menards is a real possibility.”

As for what Home Depot’s next steps should be, Ladd said he thinks what Home Depot should do is partner with Walmart and Sam’s Club to leverage the combine freight volumes to create a lower cost and faster logistics network to meet customer demand. 

Marc Gorlin, founder and CEO of Atlanta-based Roadie, an on-the-way delivery service with the nation’s largest local same-day footprint, explained that keeping a close eye on the next moves from Amazon influence and resonate throughout the marketplace, noting that the burden of one-day delivery affects the retailers much more than the carriers themselves, as most of the obstacles of getting two-day and one-day delivery off the ground take shape before you can even think about delivery.

“Getting something to a doorstep opens up a whole host of operational challenges where you need to know how your people and products move in real-time,” said Gorlin. “Brick & mortar retailers have a real advantage over Amazon because they can use their physical footprint to get products closer to customers and build out their ground game in local communities. From there, it’s finding a delivery partner that can offer scheduled and same-day delivery anywhere, for any item, at scale.”

And with most retailers already working toward offering their customers same-day and urgent delivery, Gorlin made it clear that those who aren’t will find themselves behind the curve.

“But if anyone thinks the Amazon One-Day story is about urgency, they’re missing the real headline,” he said. “It’s more than urgency, it’s about optionality where retailers and their delivery partners need to give you a menu of options that range from two-day to two hours to 2:00 on Tuesday. Brick & mortar retailers know that customers have different delivery expectations every time they hit checkout, but if retailers can’t give them that choice, customers know Amazon will. That's why many are leveraging their physical footprints to bring the product closer to homes, launch delivery from store, and give customers more choice.”