Yuppies Might Be the Only Market for Same-Day Delivery

Big online retailers are experimenting with ways to make same-day delivery the new standard of instant retail gratification. But the option of acquiring your stuff hours after you order it might never travel far beyond a few big cities.
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Big online retailers are experimenting with ways to make same-day delivery the new standard of instant retail gratification. But the option of acquiring your stuff hours after you order it might never travel far beyond a few big cities.

That's not because your favorite e-store is run by snobs. Rather, outside of a few self-important yuppies, no one else seems to care that much about getting their orders that quickly.

A new survey conducted by The Boston Consulting Group found that fewer than one-tenth of U.S. consumers see same-day delivery as an important improvement to online retail. By contrast, nearly three-quarters of the 1,500 survey participants polled said free delivery was key, while half said the same about lower prices.

The outliers in the results were what the pollsters called "affluent millennials" — urban dwellers ages 18 to 34 with an annual household income of at least $150,000. Members of this demographic said they'd be willing to pay up to $10 for same-day delivery, while others said they'd only pay up to $6.

Among the biggest online sellers trying out same-day, Amazon charges $8.99 plus 99 cents an item, while Walmart charges between $7 and $10. Only eBay's fee falls under the widely accepted range found in the survey. The company's eBay Now service charges $5 per delivery to ferry items ordered online from local stores to buyers in about an hour.

The high cost of same-day undid efforts during the first dotcom boom to provide a similar option. Famed dotcom failure Kozmo.com offered free one-hour delivery by bike messenger of a huge array of merchandise the company kept stored in urban warehouses, where the cost of real estate and inventory reportedly helped sink the company.

Experts in the field of fulfillment say that using the stock at existing stores to fill orders is one way to curb those costs. But no company is bothering to offer same-day for free. Because of the additional shipping costs, Boston Consulting's pollsters say same-day will likely remain a niche service in cities like San Francisco and New York, where most same-day trials are taking place, as well as other cities dense with the young and well-paid, such as Boston and Washington, D.C.

While its limited availability may never make same-day a big moneymaker for retailers, the small market of urban online shoppers who do want it could still spend enough to make the offering worthwhile. Even if only the two percent who qualify as "affluent millennials" are willing to pay, Boston Consulting says those same-day delivery fees alone could generate anywhere between $425 million and $850 million.