Same-day delivery wars hot up in the UK, but Amazon still sets the standards
With options ranging from one-hour to drone-based delivery, Amazon is keeping its first-mover advantage
7:18PM GMT 12 Nov 2015
4 Comments
For those of you who are inveterate planners, you have probably already hidden away your smugly-wrapped Christmas presents under the bed. But for everyone else, here’s some good news: Amazon has launched unlimited same-day delivery service for customers in Greater London, parts of Hertfordshire and Berkshire.
This may sound like a minor upgrade in delivery options, but it’s significant – Amazon’s same-day gambit has raised the bar for what we, as consumers, have come to expect of all businesses.
Our expectation of pressing a button to gratify an instant desire is a result of the burgeoning on-demand economy, which embraces everything from shopping to food, pet-care, transport and even laundry.
Step outside on a rainy Friday night and open up the Uber app – your taxi pulls up in front of you within five minutes.
Fancy a Chinese takeaway from that small family-owned place? Order it on Deliveroo while you’re still at work and a hot meal will be waiting at your door.
Shoreditch-based Bizzby can find you a plumber, gardener or locksmith within 60 minutes; Covent Garden startup Jinn’s couriers can drop off some emergency loo roll or a laptop charger in London or Newcastle, if you find yourself lacking.
Even in retail, Amazon isn’t the only player in the instant delivery game – itjoins high street retailer Argos, which launched its UK-wide same-day delivery service last month. There's also eBay’s Shutl and fashion outlets such as Net-a-Porter, whose Premier service is only available in London, New York, Hong Kong, and Farfetch, which launched its same-day shipping option in London just this week.
Argos same-day delivery is now available for free, around the country
Amazon’s same-day service, which applies to a limited pick of about 1m items, ranging from televisions to toys, is free to Prime members, who currently pay an annual £79 subscription fee for unlimited free shipping. Even if you haven’t signed up for the popular Prime service yet, you can get same-day delivery if you’re willing to pay £9.99 per order.
The e-tailer’s move follows the launch of its Prime Now app in June, which, even more ambitiously, offers Prime shoppers deliveries within the hour for £6.99. This service includes frozen foods and snacks, such as Chicago Town pizzas, Birds Eye fish fingers and Ben & Jerry's ice-cream, edging towards the territory of UK grocers.
The delivery wars in the UK are intensifying by all accounts – Argos has leveraged its network of stores around the country to offer UK-wide deliveries, 7 days a week and has even flung a direct challenge at Amazon by offering the service for free in the run-up to Black Friday, the huge discount shopping day two weeks today.
As the new speedy services slowly become habitual, just like free shipping worldwide has become ingrained in our online shopping behaviour, we will come to expect it from all retailers.
UK startup Shutl, bought by eBay in 2013, is a logistics company that partners with local retailers to offer deliveries not just on the same day, but within 90 minutes. They have previously worked with Argos, and currently partner with British retailers like Hotel Chocolat, Maplin, Schuh, Coast, Karen Millen and Warehouse. Of course, this only works if one of these shops is nearby to you, because Shutl is powered by localised couriers.
Further afield, global minicab-app Uber has recently rolled out UberRush, a same-day delivery service for small merchants in three US cities including Chicago, New York and San Francisco, leveraging its cavernous network of on-demand drivers.
A study by L2 with retail consultancy Rich Relevance showed that widespread networks of couriers, like Uber drivers, have made it more economically realistic for retailers to offer same-day delivery.
Amazon’s strategy piggybacks on this – it has aggressively widened its web of global warehouses and fulfilment centres, so it can offer rush deliveries to fee-paying customers throughout the world.
In recent years, it has ramped up its network within the UK, with nine fulfilment facilities, and £1bn invested in UK operations, at last count. Distribution centres are the limiting factor for many other retailers, including Net-a-Porter, for instance.
Compared to national high-street competitors like Argos, Amazon’s advantage is sheer variety of choice – as it increases the range of items available on the same day, Argos’ catalogue just won’t be able to keep up.
And Amazon is not limiting itself to same-day deliveries by road; it wants to speed up the process by taking to the skies. In March, UK Transport Minister Robert Goodwill said he had met with the US-based e-commerce company about potentially test flying a “Prime Air” service, which would use small aerial drones to get deliveries to customers within 30 minutes.
“One day Prime Air deliveries will be as common as seeing a mail truck,” the company’s chief executive, Jeff Bezos, told my colleague James Quinn in August.
One of Amazon's flying 'octocopter' mini-drones that would be used to fly small packages to customers Photo: AFP/Getty Images
Analysts and journalists alike have speculated that the Amazon’s Prime service is too good to last – signs of cracks, they say, are that the e-commerce giant has had to move up its order cut-off time, and put up the price of annual Prime membership in order to cover increased costs of shipping.
Amazon’s growth-first, profit-later strategy seems to be working: this quarter, the company made a $79m (£51m) net profit, compared to a $437m loss in the same period in 2014, as revenues increased by 23pc to $25.4bn.
And even if Amazon starts off by losing money on its pioneering delivery services, here’s its big idea: it can gain a first-mover advantage over online and offline competitors, while also creating a whole new segment in home delivery speeds. If you can get your freshly-prepared dinner in 30 minutes, why should you wait any longer for a dress or a television that is sitting on a shelf, at a warehouse near you?
As the new speedy services slowly become habitual, just like free shipping worldwide has become ingrained in our online shopping expectations, we will come to expect it from all retailers. And as before, it's because Amazon has already set the bar high.
