The new on-demand economy can be a powerful friend for both consumers and smart retailers. Transit companies like Uber and Car2go can get more shoppers to storefronts, while companies like Curbside can add convenience to the checkout process.
For retailers of oversized items like big-screen TVs, barbecue grills, mattresses or furniture, there is a new breed of on-demand service companies that can increase sales by double digits at zero expense.
Delivery is a key component of the sale process of oversized items that most retailers would rather avoid. Maintaining a fleet of trucks and drivers that can handle peak sales time periods and seasons can be a major cost expense in a business where every percentage point of profit can mean survival or extinction. Even a behemoth like Costco does not offer delivery from its retail stores despite selling a wide assortment of oversized items. And most retailers that do provide delivery do so only several days out.
New on-demand companies such as Seattle-based Fleetzen or L.A.-based Buddytruk address the issue of last-mile delivery at zero cost to retailers and with substantial upside benefit. All the consumer has to do is download the app, take a photo of the item, and fill out the online form. These types of services promise same day, on-site delivery, and Fleetzen actually promises arrival in under an hour.
The cost to the consumer for these services is about $50 for a typical 30-minute delivery and a bit more for a two-man job. The cost to the retailer: nothing.
A recent survey of the shopping habits of 615 adults shows just how important delivery services can be. The survey showed that over 40 percent of oversized items are point-of-purchase impulse buys. Since pick-up trucks comprise only about 15 percent of auto sales, a significant majority of these purchase items will require third-party delivery assistance. If you’re at a Costco or don’t have a friend with a pick-up truck, your options are limited. Significantly, the survey showed that 11 percent of oversized items that would have been otherwise purchased are abandoned for lack of a delivery option.
Retailers will spend as much as 20 percent of sales on marketing efforts aimed at taking market share from their competitors. Many of these programs are based on subtle positioning claims, the effectiveness of which is often difficult to validate. These new on-demand delivery services of oversized items provide a major competitive advantage for the enterprising retailer, including those that already offer same-week delivery. In fact, research shows that over 80 percent of shoppers are either more likely or extremely more likely to buy an oversized item if there is a same-day delivery option.
It’s no secret that online retailers are stealing market share from their storefront cousins and one reason is the liberal delivery options that companies like Amazon and Overstock.com offer, even for oversized items. Amazon over the last year is making a major effort to provide a same-day delivery option for many sales, given the importance today’s got-to-have-it-now consumers place on instant gratification. Same-day delivery is not a benefit that local retailers should be conceding to the online shops whose warehouses are usually hundreds or even thousands of miles away from the consumer.
It also seems too good to be true that a major competitive advantage like same-day or even same-hour shipping could be free to the retailer. Yet if history is any guide, many retailers will be slow to adopt or even test new on-demand delivery services. That spells opportunity for the innovative and flexible storefront willing to kick the tires and test the waters, and possibly a lengthy head start that can translate into a more loyal customer base that will be tough to erode.
Nirdesh Mittal is co-founder of Fleetzen, a sharing-economy business that uses independent drivers to deliver oversized items like large-screen TVs, barbecue grills and patio furniture from retailers and other sellers to buyers in the same day or hour.