September 4, 2013, 4:18 PM

Speed bumps

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However, while shoppers can browse Sport Chalet's site for same-day delivery purchases, they have to use live chat or call a store to buy an item and have it delivered that day. The retailer in the future plans to let shoppers request same-day delivery while checking out online.

Sport Chalet charges between $25 and $35 per delivery. The price varies based on the time of the day.

The retailer says it designed the service as a high-end program meant to appeal to time-pressed shoppers who are typically less price sensitive than other consumers. "Many of our customers are ready to get on a mountain to ski or catch a cruise ship and go snorkeling," says chairman and CEO Craig Levra.

The retailer declined to name the couriers it works with. But Levra says it manages a network of courier companies that it »found in its service areas to pick up products from its stores and deliver them to customers. The couriers do more than just drop a package at a doorstep; they deliver products to a customer's home or office and stay as the consumers tries on the gear to make sure it fits properly. If there are any issues the courier takes the item back to the store so that the shopper doesn't have to make the trip.

But while same-day delivery is gaining traction at Planet Blue and Sport Chalet, at least one retailer that tried same-day shipping over the holidays for less than both the aforementioned retailers charge did not attract a single order. Outdoor apparel and accessories retailer Moosejaw Mountaineering launched an aggressive holiday shipping trial on Dec. 22, offering same-day shipping for shoppers in the Chicago and Denver-Boulder metropolitan areas.

The service, designed as a test to see if speedy delivery resonated with last-minute gift shoppers, was available for $14.99 for orders of $99 or more until 5:00 p.m. local time on Dec. 24. But no shoppers used the service, says Eoin Comerford, Moosejaw president and CEO. The orders would have been fulfilled from Moosejaw stores which are set up to accept online orders and already fulfill as much as 20% of web orders. If consumers had used the service, packages would have been delivered via FedEx Corp.'s SameDay City service.

While Comerford says that "almost immediate gratification" shipping can drive loyalty and appease consumers who want goods fast, retailers have to consider whether they are offering shoppers a good value proposition. "Unless the perceived upcharge is minimal or included in an overall annual fee, I'd say that the take rate is low," he says.

Consumer feedback from another online retailer suggests shoppers are willing to pay around $5 more to get their goods the evening of the same day they ordered them online. U.S. Auto Parts Network Inc. in late May polled 4,000 customers visiting its site to see if they would be interested same-day shipping and also how much they would be willing to shell out for it.

"The $5 price point was generally acceptable," says CEO Shane Evangelist. After the survey, the retailer set up another survey to see how many site visitors would opt to buy on its site with same-day delivery rather than buy the same item from a local store. The results suggested that with the same-day option more consumers would buy more online. The retailer is now offering same-day delivery to consumers who live near the retailer's West Coast distribution center in Los Angeles. The company is using its own employees and trucks for the pilot, Evangelist says.

Some experts and consultants suggest retailers focus on offering next-day delivery rather than same-day delivery. 60% of the respondents in the Booz survey said they make their online purchases after 5 p.m., which is past the typical purchase window to receive same-day delivery. Those polled also indicated that overnight delivery was only 5% less valuable to them than same-day delivery.

"If a shopper is buying online after 5 p.m., that leaves a small window of time for a typical household likely to be willing to accept orders before they have to get their children and themselves to bed," Schmahl says.

While overnight delivery may not seem as alluring as same-day delivery at first glance, Schmahl says online consumers value it. What's more, retailers fulfilling orders for next-day delivery can save money by gathering orders from shoppers within a particular area overnight and deliver them in one go the next day, saving on fuel, capital and labor costs, he says.

"By smartly using their retail footprints as mini-distribution centers, retailers could have the opportunity to nearly deliver the value of same-day shipping to customers for the cost of two-to-three day shipping," he says. 

Same-day delivery is still in its infancy. And while it is gaining traction with retailers that offer it as a high-end service and that sell relatively expensive goods, others have struggled to make it work. But if retailers can keep costs down by offering the option in urban areas close to their stores or distribution centers, research suggests some consumers will pay a little more for speedier delivery.

The verdict on just how big that pool of consumers is will become clearer over the next year as more retailers gather conclusive data and gauge the return on their investments. But one thing is certain—the answer won't be delivered by the end of the day.


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