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Stores offer same-day delivery to compete with Amazon

Tired of competing on price with online retailers, bricks-and-mortar chains are experimenting with same-day delivery. So far, few such services are available in sprawling Southern California.

December 14, 2012|By Shan Li, Los Angeles Times
  • Macy's was among stores that partnered with the EBay Now delivery pilot project, launched in August.
Macy's was among stores that partnered with the EBay Now delivery… (Andrew Kelly, Getty Images )

Stephen Kling is a devoted Amazon.com shopper, but lately he's been lured back to big-box retailers, buying items from Target and Office Depot. The reason? He can get same-day delivery.

Using a smartphone app from EBay, the San Francisco corporate trainer can order products from a variety of bricks-and-mortar retailers and get the items hand-delivered to him that same day, often within an hour. Last month, he ordered a $250 Nexus 7 tablet computer, and it was delivered to him within 30 minutes — at his barbershop.

The EBay Now pilot project was launched in August, partnering with the likes of Macy's, Target and Best Buy. Basically, a customer orders an item on a smartphone and an EBay "valet" personally delivers by the end of the day for a $5 fee. (The first three deliveries are free.) The service was expanded to New York last month.

"It was awesome," said Kling, 30. "I'm normally addicted to online shopping, but it literally took just 30 minutes from when I ordered the Nexus to when the concierge delivered it. I was still sitting in my barber chair."

Quiz: The year in business, 2012

It's all part of an effort by bricks-and-mortar chains to keep up with Internet rivals such as Amazon.com. So far, most of these services are not available in sprawling Southern California, but grocery stores such as Vons and Pavilions have for years offered same-day delivery at many locations.

Retailers weary of constantly competing mostly on price are testing same-day delivery to woo impatient shoppers this holiday season, a time of year when immediate delivery can be particularly important.

Experts say same-day delivery will eventually be within reach of Angelenos, although the region's congested freeways, heavy traffic and far-flung neighborhoods make it tough. "It's going to work in an urban area where stores are very clustered together and items can be delivered very fast," said Brian Sozzi, chief equities analyst at research firm NBG Productions. "If I order something from my house, and the local Wal-Mart is 10 miles away, that's going to be challenging."

Next week, the U.S. Postal Service begins an experiment in San Francisco. It's partnering with about 10 retailers, which have yet to be announced, to offer same-story delivery around the city, said spokesman John Friess.

Some companies, including several start-ups, are rushing to be middlemen between retailers and their shoppers.

Postmates, a San Francisco company founded last year, guarantees delivery within the hour from over 4,000 merchants throughout the city using 150 couriers armed with smartphones. The company hopes to expand to other cities soon, with Los Angeles at No. 6 on the list.

"It works like a remote control for your city," said Chief Executive Bastian Lehmann. "You press a button and under an hour the item that you so desire is in your hands."

Wal-Mart this fall rolled out same-day delivery for popular holiday items, such as toys and sporting equipment, in four markets including San Francisco and San Jose (where the retailer has been offering same-day grocery delivery since 2010). Shoppers are required to order online by a certain cutoff time and then pick a time slot for delivery later that day for a $10 fee.

Ravi Jariwala, a Wal-Mart spokesman, said same-day delivery was a natural progression for Wal-Mart, which found through surveys that most of its shoppers would consider using same-day delivery. Many would use on at least a monthly basis.

"If you want to shop Wal-Mart and are in a pinch and need something right away, this is a great option," he said. The goal is to win at e-commerce by creating "a deeper relationship with the customer," he added.

That's something Amazon.com, which has won over many shoppers with its popular Prime two-day delivery program, is well aware of. It's been offering same-day delivery in select markets since 2009. To reduce shipping times, the e-commerce giant has been rapidly building distribution centers, including two planned in Northern California and one that recently opened in San Bernardino.

But Chief Financial Officer Tom Szkutak recently denied rumors that Amazon planned to offer the service on a wider scale. "We don't really see a way to do same-day delivery on a broad scale economically," he said during a conference call.

That means struggling big-box retailers may really be able to stake a claim on super-fast delivery by using their bricks-and-mortar stores as warehouses conveniently located near shoppers, said Sozzi, the analyst.

"These stores have to have some shot of competing with the likes of Amazon, because they really can't compete on price," he said. "So if they can find some way to get a TV to you literally on the same day you order it from your mobile phone while picking up your kids from school, that tosses the ball back to Amazon to pick up its game."

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