Executive Briefings

U.K. Retailers Subsidize Same-Day Delivery

As retailers are still trying to work through their new-found infatuation with the idea of same-day deliveries, it's quickly becoming a love-hate relationship. Beyond Amazon's discovery that shoppers loved the concept of same-day but ended up not using it, it now seems that some U.K. retailers are willing to very heavily subsidize same-day delivery charges.

These chains apparently think shoppers would never pay full freight, so they're willing to pay the delivery service £10 and then only charge the shopper £6, according to the CEO of a prominent same-day retail delivery service in London, whose company is trying to move into the U.S. That calculation also assumes not that many shoppers will use the service.

Tom Allason, the CEO of Shutl.com and the source of those price comparisons, argues that the perception surrounding same-day delivery is more powerful than the benefits from the slightly faster delivery itself. "It's about more customer responsiveness," he said. "It's more for the halo effect."

In other words, shoppers like the idea that a chain is willing to hand-deliver the products to them in a few hours, but they don't necessarily want the shop to actually do it.

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Keywords: retail supply chain, value chain, 3PL, third party logistics, transportation management, logistics services

These chains apparently think shoppers would never pay full freight, so they're willing to pay the delivery service £10 and then only charge the shopper £6, according to the CEO of a prominent same-day retail delivery service in London, whose company is trying to move into the U.S. That calculation also assumes not that many shoppers will use the service.

Tom Allason, the CEO of Shutl.com and the source of those price comparisons, argues that the perception surrounding same-day delivery is more powerful than the benefits from the slightly faster delivery itself. "It's about more customer responsiveness," he said. "It's more for the halo effect."

In other words, shoppers like the idea that a chain is willing to hand-deliver the products to them in a few hours, but they don't necessarily want the shop to actually do it.

Read Full Article


Keywords: retail supply chain, value chain, 3PL, third party logistics, transportation management, logistics services